Features

Travel Spending - Recovering and Economising

30 Nov 2010

There’s no dispute that one of the most talked-about subjects in 2010 is “economic recovery”. Asia is ringing in solid growth over the year, but globally, the recession is definitely not a thing of the past.

The 16 eurozone members grew merely 0.4 percent on average in the third quarter, down from 1 percent from the previous quarter. Greece’s economy even contracted in the same period. In New Zealand, Reserve Bank Governor Alan Bollard has recently described the country’s recovery as progressing “very slowly”, and in the US, Obama seems to be spending every day of his presidency defending his economic policy.

Before things are more certain, corporations are still likely to be watchful of travel budgets. And frankly, for business travellers, there simply is no need to pay extra for luxury amenities as they rarely get to enjoy them anyway. All they want is a comfortable bed for a good night sleep, a good shower to wake themselves up and a cup of coffee to get the day started. And these things should not cost an arm and a leg.

The growing demand for budget hotels is evident in the expansion of Tune Hotels group, owned by low-cost carrier Air Asia boss Tony Fernandes and promising “five-star sleeping experience at a one-star price”. The Asian company has this year broken out of its base region and opened a property in London, near Waterloo station, with plans to open 15 more properties in the UK capital by 2017. In Asia, it has nine properties in Malaysia and Indonesia. Some 90 Tune hotels are under development worldwide.

The internet rate offered for a night at the Tune Hotel near the low-cost carrier terminal at the Kuala Lumpur International Airport in mid-December is quoted as MYR 88 (US$28.17), and that includes the room with a bed and shower, but not towels, which would cost MYR5 (US$1.6) each (a refundable deposit of RM10, or US$3.2, applies), packaged with complimentary toiletries). Using the air-conditioner – essential for the Malaysian climate – also incurs costs, with 12 hours at MYR13.49 (US$4.32) including tax.

Tune Hotel

Another well-known budget brand, Ibis, by Accor, has more than 800 hotels and is planning to add two more in the UK this month. Several are also set to open in China this year, as well as in Mumbai, Bangkok, Bahrain and Russia.

A couple of years ago Accor launched All Seasons as an alternative to Ibis, positioned as a two- to three-star option that includes internet, breakfast, tea and coffee, water and newspapers in its room rates. There are more than 90 properties in Europe and Asia-Pacific. Accor’s director for sales and marketing of the UK and Ireland told Business Traveller earlier this year that the plan was to increase the number of All Seasons properties to 200 by around 2015.

Accor also has Etap, a budget brand that sits below All Seasons and Ibis, with offers starting from as little as g21 (US$28.86).

“The economy sector is where we’re going to continue to develop our network, particularly in continental Europe, the Middle East and Asia-Pacific. This is where we’re seeing the growth and, from a business travel perspective, we see a real opportunity to capitalise on the fact that corporates are still cost-cutting,” says Jo Stevenson, Accor’s director of sales for UK and Ireland.

Other global chains are also cashing by establishing budget-conscious brands. Hilton is pushing its budget brand Hampton by Hilton, which has nearly 1,800 properties in the Americas, into Europe. There will be eight UK hotels when the Derby City property opens this month, and other European cities where the brand has presence include Berlin. Features of the brand include free breakfast and internet access, as well as a small gym.

At Intercontinental Hotels Group, Holiday Inn Express is benefiting from the US$1 billion rebranding taking place across all of its 2,090 hotels in various portfolios.

Jan Smit, managing director, IHG Asia Australasia says: “We expect to see the most growth in our limited services brand Holiday Inn Express in 2011 and beyond. It appeals to those who want to be a great city location and don’t want to pay for the facilities they are not going to use.”

About 500 new Express hotels are also reportedly in the pipeline, including 46 in Europe, the Middle East and Africa, and 16 in the UK. In June, it signed properties in Hamburg and Istanbul. To add appeal to the business travel market, free wifi is made available in all properties under this brand.

Then, there is Starwood’s Aloft, which boasts “style at a steal”. Since its launch in June 2008, the brand has grown to more than 40 properties, mainly in the US. It opened in Beijing in 2008 and Abu Dhabi last year, and has recently launched in Indian cities Chennai and Bengaluru and Brussels, Belgium. “We’ll have 50 [properties worldwide] by the end of this year, and there are roughly 50 more signed deals,” Brian McGuinness, senior vice-president of Starwood’s speciality select brands Aloft, Element and Four Points by Sheraton said.

Aloft is positioned at somewhere between budget and four-star, with king-size beds, Bliss toiletries, 42-inch flatscreen TVs and high-tech “media hubs” to link gadgets to the TV, but in the place of a minibar, room service or a full restaurant, there is a bar serving snacks and a 24-hour “grab and go” outlet. Cultural adjustments are made. For example, Aloft in Abu Dhabi has an all-day diner and three bars.

Aloft

Aloft Harlem in New York, opening this month, is offering grand opening “a-list rates” from US$239 per night that include a US$20 F&B credit. Further discounts may also be offered depending the number of nights booked and how far advance the reservation is made.

Also from the US is Hyatt’s limited service offering, Hyatt Place. With 156 properties stateside, it has 12 in the pipeline in India, with Pune to open in early 2012. Rooms have the same bed as Hyatt’s full-service brands, a “cosy corner” with a couch, and a 42-inch flatscreen TV to link your devices to.

Funky Dutch brand citizenM has brought its “affordable luxury” ethos to Glasgow this year, with two London properties slated to open in early 2012. Two more properties will spring up in New York, one of them on Times Square. The group is also looking at Milan, Paris and Zurich.

The compact, well-designed rooms of citizenM go far beyond a low-cost offering: super king-size beds dressed with Frette linens, high-tech “mood pads” controlling the lights, blinds, TV and temperature, bespoke toiletries, and free movies. The public areas feature retro custom-made furniture and quirky artwork. Online rates for a night at the Amsterdam city property in mid-December start from 79 euro (US$109).

To achieve that level of luxury while charging budget prices, citizenM minimises costs is by building its bedrooms off-site, outsourcing the housekeeping and limiting the number of services – for example, it has a 24-hour canteen rather than a full restaurant.

Whether the hotel is classified as budget or limited service, or a value-for-money brand by a global chain, it is all good news as business travellers can now truly get what they pay for – and pay for only what they need.