Exclusive by James Wilkinson
Dusit International’s Vice Chairman, Chanin Donavanik, says the global hotel industry is set for a tough 2016 on the back of the economic slowdown.
Donavanik, who was formerly the company’s Group Chief Executive Officer and was last week (Jan 20) appointed Dusit’s Vice Chairman and Chairman of the Executive Committee, told HM global issues were affecting the industry greater than first predicted.
“Generally, I believe the business outlook for 2016 will be challenging, due to a number of factors,” he told HM. “China’s economic slowdown will continue to be felt, as the impact of continuing terror threats or safety concerns for travellers worldwide.
He said Dusit, which was currently developing a resort in Queensland, was expecting a better year in the company’s home country of Thailand.
“However closer to home, I believe Thailand will have a good year, as we closed 2015 with nearly 30 million passenger arrivals to the Land of Smiles,” he said.
“Occupancy levels were over 70%, driven by demand from mainland China. December was particularly strong with occupancy levels rising to the highest levels since 1995, nearly 75%.
“I certainly hope these trends will continue into the New Year.
“Despite the economic slowdown, I believe Asia will see positive growth from the [MICE, leisure and business travel] markets – Thailand in particular should see its best growth in many years.
“However, I believe this will come more from regional as opposed to the traditional ‘long haul’ markets,” he said.
There were a number of major challenges in the hotel industry at present, Donavanik told HM.
“Major challenges for the hospitality industry will continue to be economic issues, as these will have a direct impact on whether or not people will be able to travel.
“Security will become an increasing concern as well, affecting people’s perceptions of safety and in the case of MICE and group travel, may even cause cancellations and lost business in the event of travel warnings.
“Additionally, keeping up with the expectations of ‘new’ consumers is a challenge, as huge investments must be made to keep up with changing trends in design, technology and service.
“The concept of ‘value’ has changed for the new consumer, and as such we must understand this to be able to deliver,” he said.
Donavanik said the disruptors – such as Airbnb and Uber – were not going away and the industry should be prepared for that.
“The ‘disruptors’ are here and they are here to stay,” he said. “They pose an interesting challenge to the hospitality industry, as they create even more urgency for traditional hotels companies to keep up with shifting customer demands.
“There are many opinions on the issue, such as whether the practice of Airbnb is even legal for example, but I believe we have entered a new chapter and that these sort of disruptors are a new form of competition we will have to adapt to,” he said.
Donavanik said the industry should still be confident of success from the Chinese market despite the nation’s economic slowdown.
“China will undoubtedly slow down but the Chinese outbound market will continue to do well, as demonstrated by the tourist numbers into Thailand this year,” he said.
“I believe Brazil will have a few difficult years ahead. Meanwhile, I believe Indonesia and India will do better, and these new markets will be extremely important for the travel industry going forward.”
The growth of the Middle Eastern airlines – primarily Emirates, Etihad and Qatar Airways – would continue to stimulate significant growth alongside low cost carriers, Donavanik said.
“The growth of the aviation industry goes hand in hand with the hotel industry,” he said. “The ‘big boys’ from the Middle East are changing the game, not to mention the proliferation of the low-cost carriers which continue to expand.
“These changes will continue and thus ‘traditional’ airlines will find it tough to compete.
“Meanwhile, the more destinations are served by the airlines, the more we can expect the hotel industry to grow, as more and more people can afford to travel and people look for accommodations that suit not only their budget, but their aspirations,” he said.
Dusit International is on a significant growth, with the company set to triple in size in the coming few years.
Dusit International currently has 26 properties in operation, with over 40 projects confirmed in the development pipeline in locations such as Singapore, Australia, Vietnam, Oman and Saudi Arabia.
Most recently, the group launched the luxury Dusit Thani Guam Resort, the tallest hotel and newest build since 1999 on the Micronesian island and plans to open hotels in Khao Yai, Thailand; Shanghai, China; and a second Dubai, UAE property in 2016.
“Over the last 12 months we have secured about 20 new deals, set to come on board over the next 3-4 years,” Donavanik said. “By then, the total number of Dusit Hotels and Resorts will number nearly 50.
“Asia will continue to be one of the most important markets for the next decade, therefore we will continue to work within the region.
“Plus, Africa is an up-and-coming destination, reportedly the last underserved market in the world.
“We will help meet growing demand by bringing Dusit hotels to destinations such as Tanzania and South Africa… we have already launched a hotel in Nairobi, Kenya which has been a great success in promoting the Dusit brand in this part of the world,” he said.
Donavanik said more hotels would be on the way, with the company’s aggressive expansion set to continue.
“Over the next year, we will continue to seek more management projects, especially overseas, and continue to bring our brand of gracious Thai hospitality to the world,” he told HM.
Donavanik has been succeeded as Group Chief Executive Officer by Suphajee Suthumpun, who is just the third CEO in the company’s 67-year history and the first to be named from outside of the founding family.