Hospitality romantic

ALAN Watts glimpses light at the end of the Covid-19 tunnel. As the president, Asia-Pacific, at Hilton, he has witnessed the travel and tourism industry hit by a "generational event", arguably far worse than even the global financial crisis (GFC).

But, at least in the Asia-Pacific region, he says, the industry is emerging from the crisis - all of Hilton's hotels in Greater China and Japan are open, and occupancy is recovering on a week-by-week basis.

It is a far cry from April, when 60 per cent of Hilton's hotels were closed, and it was "certainly a dark time for the industry".

As at Nov 2, 2020, 97 per cent of Hilton's system-wide hotels were open, and gradually recovering from the limitations imposed by the Covid-19 pandemic on the hotel industry.

"As a hotelier, the saddest thing you can do is close a hotel, and the most joyous thing you can do is open one," says the New Zealand-born Mr Watts.

Given that Covid is far from beaten, there is not a lot of joy at the moment, he acknowledges, but he is, to an extent, "happy with how the industry has bonded together to work with a singular voice to encourage tourism".

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Also, he points out that the hotel industry is now better equipped to deal with a global crisis, than perhaps it was during the GFC or Sars. The reason is "the rise of domestic customers".

"The Asia-Pacific hotel space used to be almost exclusively inbound, where our long-haul travellers would come in and buoy their markets accordingly.

"Now, if we look at the Asia-Pacific of today, there's a vast Chinese domestic market - all of our customers in China are over 80 per cent domestic."

The same goes for Japan and Australia. Mr Watts says: "So what that means is, if those travellers choose to rediscover their own country, particularly from a leisure perspective, then you can have a really vibrant industry, fuelled by perhaps a more familiar customer than you're used to. But you could certainly see the hotels trading, not back to 2019 levels, but trading safely."

Building momentum

While he expects the travel scene to be quieter for a period of time, he sees the recovery moving through the essential-only travel with quarantine on both sides, to essential-only travel without quarantine, and ultimately to optional travel without pre-approval. "So you're already seeing the momentum start to build. And we know there is pent-up leisure demand."

With hopes pinned on a vaccine to help restore things to normal, Mr Watts says: "I think the vaccine will certainly accelerate the recovery of travel and tourism. And I think, largely, the world has learned to adapt to Covid.

"I think before we get to the vaccine, we will end up with the equivalent of barrier walls - an arrival protocol into a receiving airport will be where the safety check is. So I think we will see fast testing, and certification for outbound travellers, or fast testing and short isolation for inbound travellers for a period of time, before we get to mass vaccination.

"If you just think of the distribution of vaccination, conservatively speaking, I think it will take all of 2021 for the world to be comfortable to travel en masse, and it may be 2022 before we see return to normalcy."

The pandemic has also pushed the hospitality industry to adapt to meet travellers' expectations for safe stays. Hilton's CleanStay and EventReady programmes are aimed at ensuring both leisure and business travellers that enhanced cleanliness, hygiene and safe-distancing protocols are being implemented.

"Customers want to see that you're doing everything possible. They also need to know that our hotels are functional and able to provide a hybrid environment. In many cases now, people are dialling into meetings - while there are some people in the room, other people are online. And so, EventReady is to meetings what CleanStay is to an individual customer."

Despite the pandemic, the company is still moving forward with its plans for the region, which Mr Watts says is leading the way particularly for hotel sector growth, and also travel and tourism in general.

"Half of the world's population lives in Asia. It's the youngest population. And what we've seen is this incredible urbanisation and mobilisation of the domestic populations," he points out, adding that as more people move into the cities, average wages, and disposable incomes, increase.

"And it's that, really, that has been fuelling the golden age of travel that has seen an explosion in construction within the hotel space over the last decades."

Signing new deals

What is interesting, he says, is that construction hasn't slowed down. This year, Hilton - a leading global hospitality company with a portfolio of 18 world-class brands comprising more than 6,300 properties with nearly one million rooms, in 118 countries and territories - will have opened more than 80 hotels, a record for the group. And it is continuing to sign new hotel deals. (see amendment note)

"Investors and the governments, which are supporting that investment and licensing that land for our hotel development, continue to believe in the strength of their domestic markets, the strength of the GDP growth, and that by the time the hotels themselves are built, Covid will be a thing of the past. And I think it's that momentum that the industry should be really excited about in the midst of Covid."

Hilton has signed a 1,000-hotel deal for a brand called Home2 Suites with China's biggest developer Country Garden. While the deal was in the works for some time before it hit the market, Mr Watts says Hilton's Chinese partners felt that as the country came out of the Covid outbreak, "it was a critical time for them to launch in the market, and for them to start announcing the individual hotels that are going to anchor that partnership".

The partnership is based on the Chinese domestic traveller and also seeks to capitalise on opportunity afforded by the Belt and Road initiative. He compares it to how the US hotel space expanded with the country's superhighways, with focused-service or limited-service hotels popping up along these superhighways as road infrastructure improved.

"And that's what's happening in China. So as what was a tier-four city of yesteryear becomes a tier-two city of today, there's a huge volume of project work and infrastructure spending."

Mr Watts adds that it is the best time there has ever been to borrow money. "There's certainly a lot of capital in the market looking for distressed assets, a lot of investor class seeking to capitalise on fast-moving land deals or low borrowing rates to be able to accelerate things.

"And I think it's those forces and confidence in Asia-Pacific, but in the industry in general, that is almost conversely driving a growth phenomenon despite the short-term trading downturn."

Filling key city gaps

Besides China - the second largest lodging market in the world after the United States - Hilton has also been successful with its core brands and filling key city gaps elsewhere in Asia-Pacific. It recently announced a new Waldorf Astoria - its uber luxury flagship brand - in Tokyo, after opening one in Bangkok and the Maldives in 2019. In Singapore, the group is rebranding the Mandarin Orchard into a flagship 1,000-room Hilton property.

There is demand for Hilton brands that is fuelled not only by their market share premium, but also "where we are as an industry, and with the Asia-Pacific momentum. And so we are really happy with the amount of signings and development progress that there has been", he says.

In fact, he adds: "All across Asia-Pacific, we are seeing demand for hotels. I think the industry right across Asia-Pacific is certainly strong, and because of domestic demand it is better able to weather the storm in the short term."

With so much pent-up demand, it follows that the competition is also quite intense. For Hilton, it is important to stand for best-in-class owner returns, Mr Watts says. "Well, I think people invest in hotels, ultimately, for a market share premium. The owner - we're a third-party management company or a third-party franchising company - is making the ultimate decision.

"And so, that comes down to a couple of factors - brand recognition, and which brand an owner or investor feels is going to be the best steward of their asset."

Brand cachet

Investors appreciate the cachet of the brand, which regularly rakes in industry awards. For example, Condé Nast Traveler's 33rd annual Readers' Choice Awards recognised the Waldorf Astoria Hotels & Resorts and Conrad Hotels & Resorts brands, part of Hilton's Luxury Group, across Asia-Pacific with six property wins; and in the World Travel Awards, hotels from Waldorf Astoria and Conrad collectively picked up 31 coveted awards across various regional and country categories.

"There's a lot to be said for external recognition from our customers as having the leading brands in the market," he says.

The group was named the 2019 Global Industry Leader on the Dow Jones Sustainability Indices.

Mr Watts says: "Every company needs a sustainable policy. People know that hotels, by definition, are a large consumer of products. And it's really important that we stay at the forefront of the industry in eliminating some of those ills.

"We make sure that we're generally lowering our carbon footprint - whether it's the build of a hotel and the efficiency, recycling programmes in a hotel, or adjusting our brand standards to eliminate single-use consumables, or our seafood policy."

Hilton sets "incremental energy and water goals year on year. And then we work with our hotels on meeting those goals accordingly. So, we have a number of multi-year targets that get broken down into annual progress".

The group, which has welcomed more than three billion guests in its history, also earned a top spot on the 2020 World's Best Workplaces list.

As for what makes Hilton such a great place to work, he mentions Conrad Hilton, who "founded it under this principle of the light and warmth of hospitality".

"And I think sharing the light and warmth of hospitality also means being a shelter in a storm, as we've done over Covid."

Many of Hilton's hotels have been taking isolation business or have housed medical staff members, the company's way of giving back to the community.

Climbing the career ladder

Mr Watts points out that in a world where apprenticeships have fallen by the wayside, and access to education is increasingly getting more costly, "a pure play hospitality company is one of the few industries in the world where you can start out carrying bags or washing pots and end up as a general manager in any one of our hotels all the way around the world".

That is pretty much how he got started in the industry too. Like many people, he was saving up money for his studies and working in hotels part-time. "I found that I had a passion for it, and I really enjoyed it. And I was promoted through the system, and then I got bitten by the bug of hospitality - which is, see the world and sort of work while doing it. So the big career change for me happened."

From Christchurch in New Zealand, he went to work in Sydney in 2000, where hotels were facing a staff crunch during the Olympic Games. Then he worked in Melbourne, before moving to Kuala Lumpur, then Thailand and to Singapore.

He says: "We have programmes for people who have graduated and have a master's in hospitality. And we bring them in at a higher level. But the bulk of the workforce within Hilton and hotels in general, is people who find themselves in a position that they never realised was within their capability when they started. And I think that's really, really special."

As a leader, he has the "privilege of interacting with the teams that are engaged 24/7 in making hospitality happen". Whether it is Hilton Singapore or the Waldorf Astoria in Xiamen, he enjoys overseeing teams that are bonded together and striving to bring hospitality to life in a way that is better than the competition, and having fun doing it.

"The industry is invariably young and high energy. So the best thing you can do as a leader of a hotel business is spend time in your hotels."

For those who have a crisis of confidence within the industry, and fear that the demand may never go back to pre-Covid levels, he says: "If you asked anyone anywhere in the world what their most favourite memories are, nine times out of 10, you'd get a travel-related story - a honeymoon, a childhood holiday with parents, or a trip with friends."

And it is for this reason that the self-described "hospitality romantic" believes that once the world gets past the coronavirus crisis, business will bounce back.

ALAN WATTS

President, Asia-Pacific Hilton

1975: Born in New Zealand

Education

2017: Global management, Insead

Career

Late 1990s: Joined InterContinental Hotels Group (IHG) through its acquisition of a regional hotel company.

March 2011 - November 2012: Vice-president, Operations, IHG, South-east Asia

November 2012 - May 2013: Vice-president, Operations, IHG, Asia, Middle East and Africa

May 2013 - July 2014: Chief operating officer, IHG, Australia and Japan

July 2014 - December 2017: Chief operating officer, IHG, Asia, Middle East and Africa

Since January 2018: President, Asia-Pacific, Hilton

Amendment note: A previous version of the article said Hilton will open more than 70 hotels this year. Hilton has clarified it is in fact opening more than 80 hotels.