ASAI OF BLISS
The long-serving hotel operator is banking on its Asai brand to woo the swelling ranks of millennial travellers. By Jesus Alcocer and Srisamorn Phoosuphanusorn
Dusit Thani heir Siradej Donavanik seeks to enlarge the lifestyle hotel market in Thailand and throughout Asia.
Dusit Thani heir Siradej Donavanik is seeking to enlarge the lifestyle hotel market in Thailand and Asia through his new Asai brand, as one of the country’s oldest hotel companies strives to capitalise on the 200 million millennials who travel.
Asai plans to launch 10 projects in Asia this year and 10 additional developments every year after that, said Mr Siradej, managing director of Asai Holdings Co, the wholly owned subsidiary of Dusit Thani Group.
Dusit Thani Group has 27 hotels in Asia and is investing heavily in renovating its Silom property along with Central Pattana Group.
The market for lifestyle hotels is projected to grow 8% this year, four times the pace of its traditional counterparts. There are close to 200 million millennials, representing nearly onethird of international travellers.
“We expect the number to grow by 50% to 300 million in the coming years,” Mr Siradej said.
The new brand Asai will be 30-50% cheaper than the company’s traditional offerings and is competing at a crowded price point, which includes classic business hotel offerings like Holiday Inn Express, as well as lifestyle hotels from small independent owners and major brands like Marriott.
Many of these customers may move to traditional and more expensive offerings as they age or increase their wealth. At least some of them, however, may remain lifelong customers for lower priced, “experience focused” brands.
“I don’t think of millennials as an age range, but rather as a group of consumers defined by their spending habits,” Mr Siradej said. People are spending more on food and unique experiences, and those are the behaviours the new brand is intended to capitalise on, he said.
To develop the concept, the Asai team has not only studied similarly priced hotels, but hostels as well. Hostels provided the inspiration for the model, Mr Siradej said: “One of the things that hostels do best is build communities through large open spaces and smaller rooms.”
The idea, he said, is to build spaces that encourage conversations and connections, while maintaining the curated look and feel of a hotel.
Asai’s Sathon location sits on a 780-squaremetre site, which is several orders of magnitude smaller than the flagship properties of the parent company. The buildings are shorter (eight floors for the Sathon location), and the rooms are smaller, averaging 16 sq m. Emphasis is placed on common locations, like the restaurant and the lobby, which doubles as a bar and a co-working space.
“The rooms are smaller on purpose, because the travellers we are targeting do not want to spend much time in them anyway,” Mr Siradej said.
The hotel’s smaller sizes will also allow Dusit Thani to gain a foothold in building up cities like Singapore and Tokyo.
While the concept may be inspired by hostels around Bangkok, Mr Siradej said the company was unwilling to fully implement that concept.
“What we have, essentially, is a co-working space with rooms on top, but our experience is still in managing rooms,” he said. “In the hostel business, you are managing beds.”
Asai was originally conceived without complicated food and drink offerings.
“We wanted to strip down the hotel model, leaving only the essentials,” Mr Siradej said.
But the team decided to introduce a locally sourced restaurant after considering the marketing effects that Instagram pictures of food could have on the brand.
“The restaurant will operate almost like a stand-alone,” Mr Siradej said, “and chefs will take responsibility for the price of the ingredients, and other matters.”
The Asai chain’s only Bangkok branch, located on Sathon Soi 12, will open its doors in the first quarter of 2020.
That project represents a 480-million-baht investment, while its break-even timeline will be in the 10- to 13-year range, similar to a fivestar hotel, given the price of the land, Mr Siradej said.
Dusit Thani Group has traditionally owned the properties its hotels sit on, but the brand is open to working with a leasing model to speed up expansion.
“One option would be for the parent company buy the property and then have Asai lease it, and another route would be to lease from third parties,” Mr Siradej said.
Expanding by acquiring other brands over which the company does not have full design control is not off the table either, he said. Brands from Marriott to Accor are already consolidating the fragmented lifestyle hotel market by acquiring successful independent brands.
Mr Siradej said the new brand is projected to generate gross operating profit margins of 45-50%, higher than those of full-service hotels but in line with those of similar models in the market. According to an IBIS world report, the average profit margin of a boutique hotel is 24%, twice that of traditional hotels.
“The largest cost in a hotel is human resources,” Mr Siradej said. “In a full-service hotel, you may have a staff-to-room ratio of 1:1. In a model like Asai, you have one staff member for every three to five rooms.”
Dusit Thani is not the only company in this segment, but it’s the only Asian hospitality brand to take a stab at this booming market so far.
Boutique hotels like Hilton’s Tru and Marriott’s Moxy are among the fastest-growing hotels in the US. Tru’s rooms are 20% smaller than those of traditional Hilton hotels, but they have lobbies that are 80% larger than those in a Hampton hotel, according to a 2017 report by The Wall Street Journal.
Moxy has two locations in Japan and one in Indonesia, while there are close to 500 Tru properties in construction or being operated in the US.
The laserlike focus of many of these brands on profitability has made them a favourite among analysts. Tru, for example, uses hard floors instead of carpets and has eliminated coffee makers and other appliances to make cleaning more efficient and cheaper.
I don’t think of millennials as an age range, but rather as a group of consumers defined by their spending habits. SIRADEJ DONAVANIK Managing director, Asai Holdings Co