Designer hotels the next big thing

Source : Business Times - 27 Mar 2009

THE next big thing in the hotel industry is something which will be coined ‘designer hotels’, or so believes hotelier Ted Fang. And that’s exactly what he plans to do next.

The Singaporean entrepreneur made his mark in the hotel industry when he acquired the master franchise of Day’s Inn hotels in China (including Greater China) in 2003. With 58 hotels already in the chain, the Day’s Inn brand is already the fastest growing three and four star hotel chain in China.

Now, though, he wants to go upscale, so Mr Fang - who runs the company Frontier Group with his brothers Harry and David Tan - is looking to create a new breed of hotels to target a growing breed of independent-minded travellers.

‘Our idea of a designer hotel is a cross between a boutique and a luxury hotel,’ says Mr Fang. ‘Unlike a typical boutique hotel with about 50 rooms, we’re aiming for at least 100 rooms with designer fittings created by international designers.

‘But although it is designer, it won’t be a six-star super luxurious offering. Instead our target market really would be a hip business traveller who doesn’t want to live somewhere too staid and wants something that is comfortable yet fashionable.

‘Imagine a W Hotel but less pricey and more functional and you pretty much get the picture.’

This new brand of hotels marks the company’s first move to create a completely new brand separate from the already established name of Day’s Inn.

He adds that the brand will be created by the brothers as an expansion to their hotel management business by buying over properties to gain more control over the hotels.

Through Tera Capital - an investment management company started and run by Mr Fang, the brothers are also looking to lease or purchase existing properties/projects in China.

Previous Day’s Inn projects were franchise/ma nagement deals between Frontier and developers/owners in China. Frontier does not own any of the hotels outright, a situation Mr Fang says will change.

‘In a short span of four years, from one Day’s Inn hotel in China there are now 58,’ says Mr Fang. ‘Having done well, we think that now is the right time to take that step into actual ownership of hotels.’

Especially as he believes the hospitality market is on an upward trend.

He says: ‘The hospitality market will continue to grow very rapidly and you will see a boom within the next five years in China’s consumer market.

‘As China becomes less reliant on export-oriented businesses, the domestic market and middle class will grow and expand very quickly in the coming years. And we are positioning ourselves to benefit directly from this by being the dominant player in our markets. We still have a very long road of growth ahead of us.’

Although the company has been looking into ownership for awhile, ironically it was the economic crisis that pushed them over the edge.

Muses Mr Fang: ‘Previously, land and property prices were just too expensive. It didn’t make economic sense to buy. Especially with the room rates of the Day’s Inn (around US$50) and Day’s Hotels (around US$90) so affordable, the numbers simply didn’t add up.

‘Now, with prices of property so much lower, our calculations show that it now makes economic sense to buy. In fact, with prices so attractive, I’m going to be bullish and say if we don’t buy now, then when?’