Marriott Ties With Accor for top Spot in Hotel Signings and Openings 2021
Marriott’s president Asia-Pacific excluding Greater China, Rajeev Menon, sees a move by owners towards leisure hotels and resorts in “incredible” or “frontier” destinations. Photos: Marriott
Artist impression of the JW Marriott Jeju Resort & Spa, opening in May. As of mid-February, Marriott has 51 confirmed hotel openings this year
By Raini Hamdi, 4 March 2022
Marriott is neck and neck with Accor in signing new hotels in Asia-Pacific excluding China last year. The chain signed more than 50 hotels — or one a week — in 2021, representing an addition of nearly 9,200 rooms. Accor signed 48 hotels with more than 9,700 rooms last year, a survey of five global chains by Hotels-Asia shows.
The two Western chains are the largest in the region, where markets such as South-east Asia, Japan, Korea, India and Australasia are still tip-of-the-iceberg for expansion.
Marriott and Accor also had the same level of new hotel openings last year of around 30 properties and 5,000 rooms in Asia-Pacific excluding China (see chart below). This, despite the Delta variant clouding owners’ sentiments and preventing teams from traveling for signings and openings.
“Asia-Pacific was the hardest-hit region in the world because of Delta,” said Rajeev Menon, Marriott’s president Asia-Pacific excluding Greater China. “Teams could not get out of houses, let alone cities. Trying to negotiate a hotel deal, close and sign it on Zoom took a lot — there’s got to be confidence on both sides.”
As Asia and Australasia embrace an endemic approach and reopen, he expects 2022 to be stronger than the past two years. “We’ve just signed a deal that was approved internally in April last year but was held back when the Delta variant hit. Coming into this year, the owners felt more optimistic and said, let’s sign it,” said Menon.
“Likewise, hotel openings that were pushed back started to open in the fourth quarter, such as The Tasman, a Luxury Collection hotel in Hobart, or the Melbourne Marriott Hotel Docklands.”
Close to 25 percent of openings in the past two years were conversion of independent hotels and rebranding of existing properties as their management contracts came to an end. Others were due to fallouts between chains and owners. One such breakup saw the conversion of two Six Senses boutique hotels in Singapore, owned by the Garcha Group, to Marriott’s Autograph Collection, under a franchise agreement.
Menon sees “considerable” franchising opportunities for Marriott’s soft brands such as Autograph, Tribute and even Luxury Collection, on top of its select service brands that include Courtyard, Fairfield, AC Hotels and Aloft.
But despite word on the street since 2020 that franchising would soar in this region, along with third-party management companies, management contracts remain the bread-and-butter for chains.
“It’ll take a while for third parties to come in. Even though private equity and institutional investors have entered the market, many assets in Asia are still owned by individual families. For them, it’s about the relationship with an operator like us and their engagement with the asset,” said Menon. “Our ratio of management to franchise is 80:20 but it will eventually settle at 75:25.”
Marriott currently has 464 hotels in operation in 22 countries in Asia-Pacific excluding China.
Notable Shift
A more notable shift than franchising was a move by owners towards leisure hotels and resorts in “incredible” or “frontier” destinations where hotel space is scanty. Many of the properties are luxury. An example is a JW Marriott in one of India’s most prominent wildlife sanctuaries, Ranthambore National Park. Marriott signed the resort last September, along with 21 other properties in South Asia.
In Indonesia, the chain is staking out a leading position in the humble fishing village of Labuan Bajo on Flores island. Two luxury hotels, Westin and Luxury Collection, are under construction while a Courtyard, inked earlier and slated for opening in 2021, will now open in 2024.
Labuan Bajo, on the westernmost tip of Flores island, is the gateway to Komodo Island, home to more than 4,000 supersized monitor lizards. It is part of Indonesia’s effort to diversify tourism by creating 10 new Bali’s. Development there includes a planned refurbishment of the airport by a consortium comprising Singapore’s Changi Airports International and Indonesia’s Cardig Aero Service.
“The shift towards leisure, which was already growing pre-Covid, has increased manifold. A partner in Australia told me how he realized that accommodation options beyond popular resort locations in Australia are actually so few and far between that there’s opportunity to be more regional and create hotels in these places,” said Menon.
No doubt that eureka moment is linked to the rise of domestic travel during Covid-19 and increased appetite by owners to seek out potential new destinations in their backyards. Menon said owners also believe there will be strong demand from the international market for these resorts when doors reopen.
Marriott’s continued expansion in Asia may suggest that the limelight it received over two publicly aired owner disputes involving the JW Marriott Phuket and Renaissance Bangkok Ratchaprasong last year hardly made a dent on its standing among owners in the region.
According to Menon, its annual Asia-Pacific survey of owners showed increased satisfaction with Marriott in pandemic years 2020 and 2021. One reason is the chain has a lot more resources on the ground to support them, thanks to its acquisition of Starwood in 2016, said Menon.
“Pre-Starwood, Marriott had an office in Hong Kong, India and Bangkok. Today we have a massive setup in the region, including the regional office in Singapore, three area offices in India [Delhi, Mumbai and Bengaluru] and full teams in Tokyo, Seoul, Bangkok and Jakarta. When Covid hit, the infrastructure in these critical markets was almost godsend.
“Having teams on the ground meant we’re able to respond quickly, meet with owners and address issues, whether in Indonesia or in Japan,” he said.
Marriott’s fourth quarter 2021 earnings results on February 15 showed a 40 percent rise in RevPAR (revenue per available room) to US$61 in Asia-Pacific excluding China in 2021, over 2020. This was on the back of a 14 percentage points increase in average occupancy to 50 percent, and a one percent decline in average rate to US$122. Markets such as the Maldives helped boost the region’s overall showing.
“We hit rock bottom in the second and third quarters of 2021 as Delta was devastating across many countries,” said Menon. “As we transitioned into 2022, we feel optimistic this year will be better than the past two years. But, got to be clear, we’re not out of the woods yet.”
– This article is second in a series focusing on Western chains’ expansion in Asia-Pacific excluding China, in no particular order of chains. Up next soon: Accor. The first that appeared was on Hilton.
