Threats to Hotel Industry in ASEAN Countries.

the Map of ASEAN Countries

Tourism economy of Asean countries

ASEAN’s hospitality and tourism industry has been booming year on year, peaking at 108 million tourist arrivals in 2015. According to The Travel & Tourism Competitiveness Index 2017 by the World Economic Forum, the ASEAN 61, i.e. Singapore, Malaysia, Thailand, Philippines, Indonesia and Vietnam are in the top 80 among 132 countries.

According to a research done by the group of Meltwater, Increased spending may largely be due to a trend towards spending on experiences as opposed to spending on goods in developed markets.

Although Southeast Asian consumers are very diverse, the general trend is due to an increase in median income and better availability and more affordable air fares. Even though this inclination towards spending on experiences may not be as strong in Southeast Asia as compared to the United States, there is an evident increase in Thailand, Philippines, Vietnam and Malaysia, and it is set to grow in the years to come. The graphs below show the expenditure on hotels in 4 asean countries.

Hotel Brand Analysis

This report will be focusing on five top hotel brands, which have a strong presence in ASEAN
– Shangri-La, Sheraton, Marina Bay Sands, Ritz-Carlton and W Hotels.

the properties that these hotels have in ASEAN

Threats to hotel industry in a digital world

Concept tip:
Share of voice (SOV)
is the volume of the brand’s mentions divided by the industry mentions

1. Online Reputation Management

Most hotels believe they can increase bookings significantly simply by having their own website. However, analysis shows that the hotel’s own website is not the best choice for guests to book a room. Due to the slow updating of the hotel website, there are no eye-catching promotion activities on the webpage, nor eye-catching preferential feedback; There is no additional product information, and no promotion of its own features. Thus, most hotels choose to build their own communication channels. The power of social media cannot be underestimated. Reputation, as an intangible asset of a hotel, should be managed effectively. Some hotels simply ignore comments on their websites and never respond politely.

The social media handles listed below are used for analyzing the use of owned Communication Channels and Feedback

Brands who interact with their audiences more frequently will find that it is easier to maintain engagement rates and keep their fans coming back for more. Users tend to follow and interact with social media pages where they are able to get something in return – in the form of promotions and giveaways, or exclusive news.

Case Study: Ritz-Carlton

Ritz-Carlton has the highest number of interactions on social media on Twitter and Facebook.

The top posts with most interaction on Ritz-Carlton Bali Facebook page feature photos focusing on the scenery at RitzCarlton Bali – sand, sea and sunsets.
Ritz-Carlton uses social media as a platform for memory storing after lifelong memories are created when customers stay at Ritz-Carlton hotels.

Twitter is used to encourage guests to share their memories with them, using the hashtag – #RCmemories. This helps to evoke an emotional response to the brand.

On Instagram, most Ritz-Carlton posts rely on user-generated content where they repose users’ photos with the hashtag #RCmemories onto their feed. Because they are guest photos, the brand creates a stronger bond with their fans and it also has higher credibility to other customers since they are not professionally curated by their PR or marketing team.

2. The Sharing Economy

Recent years have seen a spike in sites like Airbnb, Homestay, HomeAway and HouseTrip. Airbnb, with about 150 million users, is the most significant threat. According to a report by Morgan Stanley, hotel cannibalization from Airbnb was around 51 percent in 2017 and is expected to increase to 54 percent in 2018.

Airbnb entered the Southeast Asian market in 2012 and listings have been increasing ever since. Airbnb has attained 500,000 listings in Asia as of January 2017, with inventory growth surpassing that of the growth of hotels.

What Airbnb has done differently

Airbnb’s CEO, Brian Chesky, is a good example of how brands should utilize Twitter to bring a human touch to their brands. Chesky does not only post a thought provoking tweet but goes further to reply to users who gave suggestions. Through this conversation, he can gain insights into what consumers want. The fact that the CEO of Airbnb is communicating directly with the public has changed people’s perception of how CEOs are supposed to behave. Through this conversation, Airbnb not only manages to get feedback from the people who matter, but it also builds up Brian Chesky’s image as a down-to-earth CEO who listens to his customers which garners a lot of trust and respect as seen from the tweets.

Chris Lehane talks about how airbnb influence the global hospitality industry

3. OTAs

This report will be focusing on the top three OTAs with a strong presence in ASEAN
– Expedia.com, Agoda.com and TripAdvisor.com.

Online Travel Agencies (OTAs) is an alternative name for travel websites that provide online booking services for hotels, airlines, cars and other travel related services to users.

The leading online travel agencies in Thailand and Vietnam is Agoda, while Expedia tops the list of OTAs in Singapore. OTAs typically depend on word-of-mouth recommendations, similar to that of the short-term rental sites, purely because of the nature of the business model and network effects.

There is an interesting relationship between hotel brands and OTAs. High commission rates from every booking facilitated threatens a sizable percentage of hotels’ revenue, however being listed on OTAs definitely gives hotels more exposure to consumers – albeit more beneficial for independent brands.

Agoda dominates the social media sphere, capturing just over 60% of the share of voice, followed by TripAdvisor at 30.46%. Upon analyzing where the bulk of the content originates from, we found that the top two countries contributing the most amount of content on social media are as follows:

Expedia: Philippines (36%) and Indonesia (24%)
Agoda: Thailand (54%) and Indonesia (24%)
TripAdvisor: Indonesia (48%) and Philippines (18%)

4. Cybersecurity

In late November, Marriott International revealed that a massive cyberattack compromised personal information for up to half a billion individual guests of its properties. Other major organizations in the hospitality industry, including Hilton and Hyatt, have reported similar attacks.

Facing a changing regulatory landscape designed to heighten responsibility by threatening fines, many hospitality companies are reconsidering their cybersecurity infrastructure. However, industry specific challenges like high employee turnover continue to expose the sector. Additionally, even by adopting cutting-edge cybersecurity technologies, the important question of strategic implementation remains. 

CONCLUSION

——Hotels, sharing economy and OTAs – are they friends or foes?

Airbnb has the largest share of voice on both news and social media channels, in comparison with the other brands, some of which have been in operation much longer.

For news publications, Airbnb captured over 21% of the total SOV on news channels, followed closely by Sheraton at 17%.

For social media channels, Airbnb dominated over 55% of the total SOV on social channels, with the next closest, TripAdvisor, at only 17%.

Disruption is inevitable in today’s digital world and we have seen that players such as Airbnb are game changing. This has changed the way consumers think about travel and opened their minds to the myriad of experiences that they can get. Among all the different stakeholders, the clear winners of this industry’s disruption are the consumers. Instead of viewing disruption as a threat to the company’s bottom line, brands should embrace it and capitalize on any opportunities in the industry similar to Ritz-Carlton’s social media strategy, which focuses on high engagement with fans and posting frequency.

With the advent of OTAs, travelers are communicating directly with one another via customer review platforms such as TripAdvisor. Travelers may perceive these platforms to be more trustworthy, in comparison with posts on the brands’ owned channels. On the contrary, OTAs may even increase direct hotel bookings. By being listed on OTAs, more hotels now become part of the traveler consideration list.

Hotels and OTAs are currently fiercely competing for direct bookings. Only time can tell, whether they will collaborate or draw a line between them.

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