Hospitality in the Asia-Pacific

Mr. L. M Gupta, Director – Finance, Hotel Le Meridien, New Delhi

This paper reviews recent trends in major hospitality sectors in the Asia-Pacific region. Observes that the meetings, incentives, conventions and exhibitions, backpacker, and bed and breakfast sectors are growing, characterized by burgeoning market demand, proliferation of specialist infrastructure, sector-specific education and training, and dedicated development and marketing strategies. The casino sector is facing major challenges, seeing declining demand in some areas. Competitive forces are evident in the licensed clubs sector, where a proliferation of gambling options has undermined traditional sources of revenue. Conversely, the hotel and restaurant sectors can be considered mature. There is increased attention to facilities development, asset management, market segmentation and use of new technologies, and the restaurant sector appears focused on product revitalization. Concludes that the recent economic turmoil in Asia will no doubt produce new challenges, as well as opportunities, in the lead up to the next millennium.

Introduction

This paper reviews recent trends in key hospitality sectors in the Asia-Pacific region. While fallout from the 1997-98 Asian economic crisis will no doubt produce new opportunities and challenges, certain patterns of development underlie each of these sectors. Those enjoying significant growth in market demand are concentrating on infrastructure and market development, and striving to improve professionalism, quality standards and marketing efforts. For more mature sectors, competition is necessitating a range of responses, from product rejuvenation and enhancement, to greater attention to asset management, market segmentation and technology-assisted operations management. These trends are discussed in reference to five sectors of hospitality industries – meetings, incentives, conventions and exhibitions, casinos, licensed clubs, accommodation and restaurants.

The MICE Sector

Meetings, incentives, conventions and exhibitions (MICE) comprise one of the fastest growing sectors of tourism and hospitality industries worldwide. In the Asia-Pacific region, the MICE sector grew by 124 per cent between 1980-1996 (Hutchinson, 1997, p. 116), spawning proliferation of specialist facilities, sector-specific education and training, and dedicated development and marketing strategies at both national and regional levels. The discussion below elaborates on these developments, particularly in the region’s major convention destination, Australia, to illustrate the potential for the sector in the Asia-Pacific.

Business Trends

Within domestic markets of some countries, there is a trend towards shorter lead times in booking conferences and meetings (Bureau of Tourism Research, 1998, p. 14; McCabe and Weeks, 1998). This occurs predominantly in the corporate sector, which dominates the market for smaller conferences and meetings. Also in evidence is a healthy, competitive local market with much negotiation occurring to secure the best price. Yield management has become the key issue in a venue’s strategy.

Education and Training

The MICE industry is seeking greater professionalism and quality standards to become more competitive. National accreditation and industry based courses have been developed by the industry association (MIAA, 1998). University and vocational courses, focused specifically on convention and event management and operations, have been introduced and are well subscribed. Industry professionalism is also developing through initiatives such as the National Code of Ethics for Convention Organizers.

Facing a highly competitive environment, but generally bolstered by increased demand for dining-out facilities, restaurateurs are re-engineering nearly all-conceivable elements of their product mix to maintain market appeal. Some recent trends are outlined below:

² Branding strategies are increasing. Association with a well-known chain or franchise builds reputation, reliability and credibility in the marketplace, offering consistency of product, service and price. However, compared to the USA and Europe, chain and franchise food service systems are largely restricted to the fast food sector.

² Among independent restaurants, particularly those in major urban centers, product differentiation is increasingly being built on a new breed of “celebrity chefs”. For example, Tim Pak Poy, Cheong Liew, Steve Manfredi, Stephanie Alexander and Gay Bilson are becoming household names in Australia. Their status has been bolstered by involvement in a growing number of televised cooking shows, regular contributions to culinary sections in newspapers and gourmet magazines, and authorship of books featuring recipes for menu items offered in their restaurants.

² Certain trends reflect  increased consumer interest in the process, rather than just the output, of the culinary process. Opportunities abound to attend cooking classes run by renowned chefs. Customer involvement in the culinary process reflects new interest in the “theatre” of the dining experience, heightened by increasing numbers of restaurants that allow customers full view of kitchen operations or encourage chefs to mingle with dining room patrons.

² Removing some of the mysteries of commercial kitchens and the traditional separation between those serving and those being served, has also been spawned by incorporation of dining out into everyday life. No longer is dining out reserved for special occasions, with busier lifestyles promoting increased demand for restaurant services. However, restaurants are facing increased competition from ready-to eat meals from supermarkets, butchers and delicatessens.

² Restaurant design has also undergone subtle changes to reflect movement towards regular dining out. Extensive use of stainless steel, sculptured chairs, wooden floors, and art deco is reminiscent of the 1960s. Dining rooms are designed less to create a relaxed or romantic atmosphere conducive to conversation, but more for cleanliness, speed and to build a sense of “being where the action is”.

² Many regions have witnessed a boom in ethnic restaurants. While driven in part by changing consumer tastes, changes in the ethnic mixes of local populations have been a more important influence. In many cities, immigration has spawned large multicultural populations, with sufficient demand among particular ethnic groups to fuel the establishment of restaurants catering specifically to their traditional tastes.

² Also evident is a fusion of ethnic cuisines, with chefs increasingly moving away from traditional French cuisine, and unafraid to draw on global influences in menu items and cooking processes. This multicultural “melting pot” of Pacific-Asian influences is not just occurring on the plate, but in the staff room as well. It is not unusual to find Vietnamese chefs producing Thai dishes and Australian chefs heading up Asian style restaurants. Even family-run, key sectors International Journal of Contemporary Hospitality suburban Chinese restaurants are experimenting with a range of dishes drawn from other parts of Asia to diversify their menus.

 ² While “mega restaurants” are becoming commonplace in parts of Europe, the Asia- Pacific region has been slow to follow. The sector is characterized by numerous small to mid-scale businesses, although the immigration of many former Hong Kong residents and chefs is beginning to influence the restaurant scene in places like Sydney, where 1,000 seat Chinese restaurants are making their debut.

 ² Tourism has also been a major influence on the development of the food service sector in many Asian-Pacific nations. In long established destinations, the style of food outlets reflects mass tourism demand from particular generating regions. For example, in a study of menu items offered in Bali, Reynolds (1993) found that traditional cuisine is not being preserved, eroded by increasingly Westernised offerings to tourists. Restaurant development on Australia’s Gold Coast reflects the large numbers of Japanese tourists.

Conclusion

Clearly, the outlook for hospitality industries in the Asia-Pacific region is mixed. While the various sectors are faced with the usual opportunities and challenges associated with their stage of industry evolution, the nature and extent of the fallout from the Asian economic crisis is difficult to predict. For hospitality operators, changing patterns of currency values, tourist flows, investment risks, competition and market demand will, in all likelihood, have far-reaching effects for some time.