A slew of new sub-brands by both global and Asian hotel chains are jostling for acceptance in Asia, but while chains see huge potential.

A slew of new sub-brands by both global and Asian hotel chains are jostling for acceptance in Asia, but while chains see huge potential, there is some skepticism over these so-called lifestyle, Millennial-minded, next-Gen brands.

While Starwood’s W, InterContinental’s Indigo and Hyatt’s Andaz have had a presence in the region, the past six months saw the launch of Radisson Red, Canopy by Hilton, Jumeirah’s Venu and Shangri-La’s Hotel Jen in Asia To date, only W Hotels has been developed on a larger scale and institutionalized.

But the fast-growing Asian regional market, increased influence of Millennials, particularly in huge markets such as China, India and Indonesia, and booming hotel development in the region are what is behind the second wave of sub-brand launches. Asian players too are joining the fray: Shangri-La aside, Shun Tak has tied up with Artyzen Hospitality Group to bring CitizenM to the region, Langham is re-engineering its Eaton as a lifestyle brand and Rosewood is fielding Penta, to name a few.

Hotel Jen Orchardgateway Singapore, the new-build by Shangri-La

These are early days yet for them and thus far just one Radisson Red, in Shenyang, China, has been secured, marking the first signing of the sub-brand in the world. The owner earlier picked Radisson Blu for one of the twin hotel development and, according to Carlson Rezidor Asia Pacific President Thorsten Kirsche, did not need much convincing to see Red, “as it will help to capture a new market segment – the Millennial-minded travellers who seek a non-traditional, lifestyle-elect stay experience” while Blu provides the traditional upper-upscale experience.

Shangri-La opened its first Hotel Jen last September, a new-build in the prime area of Orchard Road Singapore, and has rebranded its Traders Hotel’s in Singapore, Hong Kong, Penang, Manila, Brisbane and the Maldives to Hotel Jen. Three upcoming Hotel Jen’s in Shenyang, Beijing and Johor Bahru (Malaysia) will bring the total to 10 by April 1.

“Fortunately, at this juncture, our third-party (Traders) owners have bought into Jen’s story and have agreed to convert,” said Howard Ho, director of development for Hotel Jen.

Of the 10, however, six are owned by Shangri-La.

Jumeirah is in talks with Dubai-based Meraas Holding to operate the first Venu on Bluewaters island in Dubai and is eyeing China and Southeast Asia, including Thailand, Malaysia and Indonesia as the primary locations, according to Matt Balcik, vice president of operations and brand development, who is spearheading the expansion.

Local cynics

Owner-developers and consultants believe this category of sub-brands will continue to face an uphill climb in Asia.

Giovanni Angelini, former Shangri-La CEO who now runs Angelini Hospitality, said there is indeed demand for the non-standard hotel in Asia but the industry has not been able to identify how big the market is and, more importantly, if it’s here to stay. There is also confusion among owner-developers, and consumers, on what their difference is to traditional hotels, which have themselves been modernized.

Adding to the confusion, Angelini said, is a lack of clarity on the market positioning of these lifestyle or Millennium-minded brands, which run the gamut from upscale and mid-scale to economy.

And, as more of these brands debut with more or less similar values – technology, design, neighborhood colors, art – commoditization may creep faster than signings.

All this throw question marks, Angelini said, if these sub-brands are developed to stand on their own or as supporting products of the main brand; if they can create their own distinctive clientele (and compete with the main brands) or are just a ploy to tap the fast-growing Asian middle-class, including the younger generation who cannot afford upscale hotels; or if they can be consistent in product, facilities and services throughout Asia.

Bill Barnett, managing director, C9 Hotelworks, Bangkok, calls these brands an offshoot of Asia’s hotel surge in development. “When you look at country roll-outs of brands, it works in major urban CBD markets, say Jakarta in Indonesia, but can they be spread in secondary markets like Surabaya, Bandung or Manado where hotel development has been domesticated post-GFC – Thailand, Philippines and Indonesia are great cases too – and where rates in tertiary cities disconnect with the traveller profiles?” questioned Barnett.

Big players not deterred

But chains remain gung-ho. Carlson Rezidor’s Kirchske said Radisson Red had received lots of interest from markets like Australia, Indonesia and China, “and we are in the midst of several advanced discussions.

“We also have strong leads in the U.S., including one in Minnesota, the hometown of Carlson. There are also opportunities to manage resorts in key destinations under the Radisson Red flag, testimonial of the brand’s adaptability and flexibility to hotel owners’ needs,” Kirchske added.

Martin Rinck, president of Hilton Asia Pacific, pointed out that Canopy was designed such that it would be easy to build or convert, and would generate huge ROI for owners.

“We took the emphasis off capital-intensive, high design to focus on delivering exactly what our target guests desire: a comfortable stay with more included value (free Wi-Fi, complimentary breakfast, locally relevant welcome gifts and food offerings, and eco-friendly filtered water ‘fountains’ where guests can refill their water bottles),” Rinck said.

And despite the increased competition, chains believe there is room for everyone and each has its own edge. Ho, for example, pointed out Shangri-La had spent the last 40 years operating in China. “In fact, many of the Millennial traits are driven by Chinese consumers,” Ho said. “Remember that China essentially went straight to mobile, skipping PCs, laptops, and going straight to smartphones and tablets. Mobile is like a native language to them.

“China outbound has more than doubled in the past five years and has exceeded 100 million for the first time in 2014. Shangri-La, as a whole, has spent the last 40 years operating in China. We are ready to leverage this brand awareness into global gateways to welcome Chinese travellers.”

Jumeirah’s Balcik, on the other hand, believes Venu has an upper hand in China as Jumeirah is able to infuse luxury, which is priced by the Chinese, with the Millennial mindset.