With the current economic conditions, what have been some of your challenges as a serviced apartment provider?
Demand has softened further over the last few months as the global economy continues to be weak. An increased supply of serviced apartments and alternative accommodation options have added pressure to an already competitive landscape where supply is likely to outpace demand in the near future. As a serviced suites provider, we are still retaining our market share and holding up against our competitors in the industry.
Weâ€™re more than halfway through 2017, and with populism taking over countries like the US and UK â€“ protectionism on labour has been on the rise. This has reduced international mobility of employees. Has the serviced apartment industry in Asia felt the impact of this?
2017 is not very different from 2016, which was a tough year for corporate travel, with many businesses tightening their spending and adopting a wait-and-see attitude to the outcome of major political events such as the US Presidential Election and Brexit. While there are no events of similar significance this year, the geopolitical situation is still uncertain and there remains a general sense of cautiousness across most sectors. Intra-regional travel in Asia-Pacific is slightly more optimistic, and we believe that Pan Pacific Hotels Group will benefit from that as the bulk of our portfolio is in this region and the key source markets for both our Pan Pacific Hotels and Resorts and ParkRoyal Hotels & Resorts brands are from within Asia. For our serviced apartment business in Singapore, we have observed an increase in assignees from China and Southeast Asia.
How do you foresee these trends further developing in 2018? Will international travel rise next year, or will things remain uncertain and volatile?
While corporates will continue to be under pressure to achieve cost efficiencies (which leads to shorter stays), there will always be a demand for international assignments. As a data point, PricewaterhouseCoopers has predicted that by 2020 there will be a 50% increase in overseas assignments undertaken, and by the same year, it is also predicted that multinationals will have assignees in 33 different countries on average. As these employers expand the search for new customers, they will push into emerging markets especially in Asia, where corporate travel spending is expected to grow four times as fast as the US and more than twice the rate in Europe over the next decade. China will continue to be one of Pan Pacific Hotels Groupâ€™s most important source markets. Our Pan Pacific online storefront on Alitrip, combined with our investments in digital marketing resources at Shanghai, give us direct access to Chinese consumers and a platform to showcase our global properties to them. AUGUST 2017