Affordable luxury democratizes global travel to Asia

Yotel Singapore is now taking bookings and will open later this year.

A recent post on JLL’s Real Views blog discussed the growing trend of “affordable luxury” hotels in Asia.

“The concept of luxury is changing, it’s no longer just razzle-dazzle extravagances for high-net-worth travelers, such as room service from crisply dressed waiters or expensive spa treatments,” Frank Sorgiovanni, head of research for hotels and hospitality at JLL Asia Pacific, wrote in the post. “The idea of luxury is more about well-designed rooms and unique experiences which allow time to relax yet also enable them to remain easily connected to the outside world.

“At the same time, travelers are becoming savvier in how they spend their money so any hotel that can offer all the creature comforts from orthopaedic mattresses to walk-in showers in a compact room at a substantially lower rate over a nearby upscale or luxury property is a tempting alternative,” Sorgiovanni said.

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It makes sense. In the age of Airbnb, travelers worldwide are seeking both quality and value in their accommodations—less concerned with fancy accessories and more interested in authentic experiences and good service.

Global hotel companies are racing to meet their demands and capture the lucrative market. Some international brands are forming partnerships with Asian companies, like Paris-based AccorHotel’s alliance with China’s Huazhu Group. This partnership, first announced in 2014 and finalized early last year, is set to accelerate AccorHotels’ brands in Asia with the opening of 350 to 400 GrandMercure, Novotel, Mercure, ibis and ibis Styles hotels in China, Taiwan and Mongolia in the coming years.

The main focus of the alliance, Global CDO Gaurav Bhushan said last year, was to help AccorHotels capture the Chinese market. Of China’s 120 million outbound travelers, 85 percent stay in the Asia-Pacific region, so the partnership places AccorHotels as a market leader for the region. “We get a very tangible benefit out of that outbound market,” he said at the time. “For us, this deal was as much about market leadership in China and actually capturing that very fast-growing and lucrative outbound Chinese market.”

Who’s Gaining Ground?

Upscale and upper-upscale brands are gaining significant traction in key markets. For example, Hong Kong-based Artyzen Hospitality Group is opening several citizenM Hotels in Asia. The hotel group, owned by conglomerate Shun Tak Holdings, has already opened one property in Taipei, and has announced plans to open hotels in Shanghai and Kuala Lumpur.

Hong Kong-based Langham Hospitality Group is stepping up its Asia investment. In recent months, the company opened its first Cordis hotel in mainland China and signed an agreement to manage the Cordis, Hangzhou, scheduled to open in 2019.

In June, IHG ANA Hotels Group Japan and GHS K.K. signed a management agreement for the ANA InterContinental Beppu Resort & Spa on the southern Japanese island of Kyushu. When it opens in 2019, the resort will be InterContinental Hotels & Resorts' first onsen resort. An onsen is a Japanese hot spring, and the term frequently refers to the bathing facilities and inns that surround the springs. The property is expected to cater to the burgeoning luxury traveler segment.

Marriott's millennial-focused Moxy Hotels brand is opening two new properties in Japan. Owned by Goldman Sachs, the Moxy Tokyo Kinshicho and Moxy Osaka Honmachi are set to open in late 2017, following the launch of the region’s first Moxy in Bandung, Indonesia slated for the third quarter of this year.

Le Méridien Hotels & Resorts, part of Marriott International, is planning to expand its portfolio within the next five years, concentrating on markets in Asia-Pacific and the Americas. Le Méridien Seoul, owned by Cheonwon, will be the first Le Méridien property in Korea when it opens next month.

Singapore, meanwhile, is slated to get its first Yotel this year—a property first announced back in 2013.