The future of mid-market hotels is uncertain as more Asian travellers choose luxury brands or good quality economy product, Accor’s Asia Pacific chief has warned.
Michael Issenberg told a conference that mid-market brands across several industries are “getting squeezed”, with the accommodation sector among those affected.
He also said Australia’s luxury hotel product is expensive and of inferior quality to Asia’s five star market, and advised the tourism industry not to even bother trying to compete.
Some of Accor’s new Sofitel properties in Asia, and those being developed by rivals, are of “extraordinary quality and are inexpensive”, he said.
“We are not competitive and we will not be competitive so that is not really what we should be focusing on,” he said. “We are not going to out-luxury the Asians.”
Instead, Australia should focus on other market segments.
In the “affordable luxury” category, such as Accor’s Pullman brand, the quality gap with Asia is closer, Issenberg said, while the mid-market properties are on a par.
But that is a market being squeezed, he said.
“In Australia we are seeing the biggest movement in new hotel supply in over a decade which is fantastic, but we need to make sure we are building relevant product,” he told a Tourism and Transport Forum Outlook summit.
“The mid-market is really getting squeezed. If you look at what is happening in fashion, the high end labels are still doing very well, as are some of the low end fashion labels. But the mid-market brands are being squeezed, not unlike the hotel market.”
It is the economy market where Australia can really benefit, Issenberg continued, as Asian travellers look for a quality product but at a cheaper price.
“The economy market is taking off at a rate of knots in Asia and the economy product we have here is every bit as good as Asia, if not better,” he said. “There is an incredible amount of innovation with our Ibis product which is at the other end of luxury. It is something we have to be clever at and I think we are leading the way.”
He said it is “cool to be frugal” with travellers looking for a great deal. But a great deal now is far removed from a great deal a decade ago.
“The quality expectation is significantly higher now,” Issenberg said. “People are still looking for that inexpensive holiday or that piece of fashion but they want to be proud of what they are buying.”
