Asia-Pacific Hotel Boom: What’s Driving the World’s Largest Pipeline

Glenn: Hey everybody, thank you so much for tuning in. I am stoked today because we’re going to be taking a look at another portion of the global pipeline. Stick around. Find out what that is. But first I want to thank my friends over at Actabl. Actabl gives you the power to profit. Please visit them at actabl.com. All right, suspense is over. We’re talking Asia-Pacific today and we in India stuff. If you want to talk about India specifically, please check the video link below. We did a whole show just on that, but they inform us on what’s going on in the rest of the world. I had to bring back my buddy, Mr. Bruce Ford, SVP Lodging Econometrics, who’s hiding out right now in New York City, a place I can’t get to because of bad trains. How are you, buddy?

 

Bruce: My tan line. Glenn.

 

Glenn: Yeah. It’s looking pretty good for you

 

Glenn: Right now, man. That India conversation we had last week was so interesting. Again, check that out. But today, Bruce, I wanted to learn a little bit about what’s going on in the rest of the Asia Pacific world. So I’m excited that you’re going to take us through that today. And before we were talking, I think the great observation to start with is, wow, how crazy this pipeline is looking right now.

 

Bruce: Well, it’s it’s bigger than anywhere else in the world. And much of what we see in Asia is really a delay that occurred during the pandemic. So this ultimately would have been delivered during the pandemic. But because many countries in Asia, particularly China really weren’t open during the pandemic to international travel. So they stopped a lot of construction and things that were going to open during that time and just said, look, you don’t have to rush to finish that. We can open it at any time. And so now that is the time okay. And so therefore we have a number of openings in 26 and 27. So China on its own okay, has almost a million guest rooms in the pipeline.

 

Glenn: Wow.

 

Bruce: On its own.

 

Glenn: Okay.

 

Bruce: Never mind the rest of the world. And so that is both probably when we started this in, in oh eight, it was more full service. But now it’s also I mean, they build 500 rooms, select service hotels in China.

 

Glenn: Yeah.

 

Glenn: This is insane.

 

Glenn: I just wouldn’t.

 

Bruce: Happen anywhere else in the.

 

Glenn: World. I just looked.

 

Glenn: Up a number real quick. And this is an AI overview, so if I’m wrong, I’m sorry about that. So apparently there are 5.7 million hotel rooms in the United States as of late 2023. You’re talking about a million just to the China pipeline. That is a huge number of rooms. If we’re looking at it through the US.

 

Bruce: China, China has three times more people than we do. Glen.

 

Glenn: Yep.

 

Bruce: Okay. So you’re just talking about the population on its own. Warrants that.

 

Glenn: Yeah. So?

 

Bruce: So what is what what drives this? So the Western brands arrival into some of these countries is really the catalyst. Okay, you start talking about Marriott, Hilton and IHG, Hyatt and a core and Wyndham and Choice and Best Western and say, okay, what how are these brands relating to that market? So some of them have what we call master franchise agreements. So Hilton has one of those with Hampton Inn. So there’s a company in China that’s physically in China that basically master licenses the Hampton Inns. So they are in charge of selling it. And they have 450 Hampton Inn projects going in China. 450.

 

Glenn: That’s wild. That’s that’s wild.

 

Glenn: Which probably shows why the upper mid scale and upscale is doing so well.

 

Glenn: But this is.

 

Bruce: This is westernized brands coming to China. Okay. That that couldn’t couldn’t have happened 15 years ago. But now it can.

 

Glenn: Okay.

 

Glenn: So I’m going to make a. Yeah. Go on. Sorry.

 

Bruce: But also we’re seeing some of the fill in too because in China there is six, eight, ten cities that are kind of the big cities that are the port cities. But then there’s markets 11 through 20.

 

Glenn: Yeah, that.

 

Bruce: Don’t have the Western brands into that market yet in terms of a, a full exposure from all the chain scales. So we’re seeing that now, whether that’s through conversion or whether that’s through new construction or whether that’s through in some cases in China, a building that’s already built.

 

Glenn: That.

 

Bruce: Isn’t even open, that we’re going to make a hotel.

 

Glenn: Right? Wow.

 

Bruce: So that happens too. And we see that a lot in China. They build the buildings with the purposes of putting services in in the buildings when the market warrants it. So we we don’t we never see that anywhere else in the world because it’s a different economy.

 

Glenn: Right.

 

Bruce: But in China when you’re building a new city in market 14 okay. That nobody knows they need to live in the city.

 

Glenn: Yeah.

 

Bruce: And once they do cluster in the city, then these buildings become what it is. And we see that a lot because you have a constructed building that’s there that’s finished on the outside, but there’s nothing on the inside.

 

Glenn: That’s

 

Glenn: That’s fascinating.

 

Glenn: That sounds like It sounds like all of a sudden.

 

Bruce: We have a franchise agreement.

 

Glenn: Yeah.

 

Bruce: And 20 floors of the building is going to be a hotel.

 

Glenn: Yeah, that’s.

 

Glenn: That’s pretty it’s pretty wild. So I’ll go back to this chart. It looks like everything’s in China on the top five. Except Thailand’s got one in here with with with Bangkok. Go, go. Thailand.

 

Glenn: So so.

 

Bruce: So Bangkok also has a need to have more Western brands there.

 

Glenn: Right.

 

Bruce: Additionally to that, Bangkok has also been seeing a lot of investment because it’s becoming a more of a central hub for Asia because keep in mind that Hong Kong is not going to be part of the British monarchy pretty soon, right? Okay. Pretty soon. So there’s been several countries that have been kind of competing to take over that mantle. And whether that’s Jakarta or Bangkok or Singapore.

 

Glenn: Yeah, yeah.

 

Bruce: Any of those.

 

Glenn: And what I.

 

Glenn: Think. What, Bruce, what you mean is, even though the UK ceded the territory in 1999, there’s still been a very strong Western political and governmental influence. But that’s now becoming more mainland China as opposed to a separate territory.

 

Bruce: Yes, it’s going to be mainland China very soon.

 

Glenn: Yeah.

 

Bruce: And so that will change the way Hong Kong functions, and it changes the way investment works and it changes the way people view it from the outside.

 

Glenn: Whoa.

 

Glenn: I feel like there’s a rip in the time space continuum. Bruce Ford tried to get out of my next question, ran to the Javits Center, but he’s back. Bruce, what’s going on in Indonesia?

 

Bruce: Full speed, Glenn. Full speed. Indonesia. These days, it’s not just about Jakarta, it’s also about Bali, but it’s also about like 7 or 8 other locations that are not major urban centers where there is resort development. That is just a different thing. It’s kind of like you remember the Riviera Maya Glen. You remember when we used to go to Mexico?

 

Glenn: I do remember that those were the good old days.

 

Glenn: But I feel like people from Australia.

 

Glenn: People from Australia and New Zealand are going to Indonesia, I think. Right?

 

Bruce: 100%. And it is an enchanting destination. Okay.

 

Glenn: Yeah.

 

Bruce: At the same time, this is why luxury hotels continue to be such a story. Because in these enchanting locations where they’re able to build these luxury hotels. They’re looking for places where they can charge $1,000 a night.

 

Glenn: Yeah.

 

Bruce: That’s what luxury hotels want to do. They are markets.

 

Glenn: Particularly here in the United States. There’s more than ever. Not only that, but when you talk about Indonesia, my guess is it’s probably labor costs a little bit less and there’s an opportunity for even higher profits at, at at that price per night.

 

Bruce: Well, the weather is fine. Okay. It’s equator. Equator esque, shall we say. And that, you know, that always helps. But a thousand bucks a night, Glenn? Yeah, you’re right in that track.

 

Glenn: No, I’m not writing that check. I’m not.

 

Bruce: But but you you’ll you’re happy to be invited, though, right?

 

Glenn: I’m happy to be invited to people who can certainly afford to write those kind of checks. Listen.

 

Bruce: So that’s that’s where we’re going now. It’s the haves and the have nots. Yeah. Okay. That’s the difference in travel today. The people who have are definitely spending and the people who are feeling the pinch all over the place, they’re not. Okay. And hopefully the momentum that we’re seeing today is, is going to lead us to an open government because that’s very important for the travel industry.

 

Glenn: Fingers.

 

Bruce: Crossed as we’re.

 

Glenn: Recording this.

 

Bruce: On November Cross.

 

Glenn: We are hopeful. We are thankful. But, you know, it’s a gamble out there. One thing that’s not a gamble, though, is connecting with our buddy Bruce Ford to learn what’s going on out there.

 

Bruce: So you can find us on LinkedIn. You can find us on Facebook, you can find us on Instagram. You can find us on Twitter. You can visit Lodging Econometrics. Com slash Global Insights and get all of our recent third quarter press releases. And ladies and gentlemen, everybody needs a strategy, so don’t be afraid to ask. I’m happy to provide you that. I even was strategizing with Glenn this morning.

 

Glenn: Yes. That’s that that’s right. We’ll see you guys later. We’ll be back with more fun shows like this in the near future. Remember, you’ve got one life, so blaze up. See you later, everybody. Bye.