New destinations will challenge old standbys

The Asean Economic Community, scheduled to kick off three years from now, is creating new business potential for beach destinations such as Palawan in the Philippines, Lombok in Indonesia and Desaru in Malaysia, as well as Thailand’s Krabi and Phangnga provinces.

C9 Hotelworks, the Phuket-based international consulting firm, predicts Asean will become very much a growth area for beach holidays.

Hopes are the Philippines’ island province of Palawan, strategically located and offering natural beauty, will become another Maldives and prove especially popular with Chinese tourists.

Indonesia’s Lombok island together with the outlying islands of Sumba, Sumbawa and Flores is a great growth quadrangle spurred by the new international airport on Lombok.

“This new tourist location has already started taking business away from Bali,” said Bill Barnett, C9’s managing director.

Desaru beach in Malaysia’s Johor state is close to the state capital of Johor Bahru, the second most-populous city in Malaysia.

It will enjoy a spillover from the massive nearby Iskandar project and other key demand generators such as Legoland.

As well, it can help to drive growth in nearby Singapore and serve visitors to that island-state.

Krabi and Phangnga are expected to follow Phuket’s success in pushing outward and defining a larger market but have yet to find their place as their own distinct destinations.

Lombok, Krabi, Palawan and Desaru must all generate greater demand, as they now have less than 20% of tourist arrivals in Bali and Phuket.

“These up-and-coming brands can induce demand, but what you see must be different to draw tourists to these markets,” said Mr Barnett.

“You also have to see what happens if the market flattens. If it becomes a price issue, more mainstream locations will be able to price themselves lower, so each of these markets will have to take a different path.”

For example, Palawan could see branded hotels and tap into the Chinese market, he said.

For the current popular beach destinations of Boracay, Koh Samui and Danang, demand for these places is being driven largely by the attraction of Bali and Phuket.

All these destinations have good infrastructure, and it is doubtful whether smaller, emerging destinations can outgrow these, said Mr Barnett.

But he said they can compete as these main destinations become too crowded.

More luxury- and niche-market tourists will be attracted to these new developing destinations, beginning again the growth cycle of Bali, Phuket and Koh Samui, all of which started as low-cost backpacker beaches.

“But again, the pathway will be different for each,” said Mr Barnett.

External target markets for Asean’s beach destinations are China, Russia and India, while Malaysia, Indonesia, the Philippines and Singapore are the focus internally.

But Mr Barnett cautioned there could be a hotel oversupply problem at each Asian resort destination in 3-5 years.

“Mass tourism cannot be sustained long-term. Old hotels and new properties with high debts are at trading risk,” he said.

“This is a function of the market. In many destinations, you have a combination of older legacy hotels built during the 1980s and 1990s that were more for European tour groups and different demographics than exist today. Also, family-owned and -operated properties catering to this same market have over time been displaced by new brands offering larger facilities.”

New trends such as pool villas and design-driven hotels reflect the changing tastes of travellers. “While some older hotels have good locations, they need to upgrade them, enter the transaction market or redevelop. Otherwise, they are economically unviable,” he said.

 

Source: Bangkok Post 04/01/2013

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