PRESS COVERAGE: Hospitality News Philippines15 November 2015
Magazine: Hospitality News Philippines | Issue 52 | July 25, 2015
Vanguard's CEO, Bruce Musick, was interviewed by Hospitality News Philippines magazine about Vanguard's plans in Philippines and shedding light on what the future of the hotel industry looks like.
Complete Q&A copy below:
In 2013, Vanguard Hotels Pte Ltd and Roxaco Land forged a joint venture that acquired the rights to expand Go Hotels in city centers in the Philippines. Go Hotels is a budget hotel brand of Robinsons Land Corp. The joint venture is currently developing 963 rooms in Metro Manila in five properties. The first one-Go Hotel Manila Airport will open in December 2015.
HNP: Why have you chosen a local brand, Go Hotels, instead of bringing in an international brand?
BM: It's part of our philosophy that-you know in Southeast Asia-good partners means good business. And when we saw the opportunity to work and discuss with RLC [Robinsons Land Corp.] the opportunity to find a symbiotic relationship between low cost airline travel and low cost hotel business, it gives the customer-if we can fully develop that over time-the best possible low cost travel platform.
We really thought that RLC had a sister company that's the leader in low cost travel in the country, a land division that knows the customer with 39 malls when we started work ing with them. It just seemed to be a really good fit. We were laser-focused on affordable travel, hospitality, and they have all these other skill sets and market knowledge. That's where we ended up.
We like the name "Go"; we thought that's a really good name for an affordable hotel. We felt that was the best option.
I've come from the U.S. franchise industry, and I think sometimes people pay for rights to brands that have no value in the market. The awareness level of most U.S. affordable hotel brands in the Philippines are very low. We would have done all the heavy lifting yet pay for the right to do so. Same that applies to brands in Southeast Asian countries. Why not create a true Filipino brand? Working with Robinsons, create the Philippines' top affordable hotel brand, not from somewhere else but from here. I think once we fully optimize that, that 's a unique point of difference, isn't it? With everybody else coming in from the outside, Go Hotels is a Filipino brand, founded in the Philippines, built for the Philippines, optimized for the Philippines. That's going to be a good thing, right?
HNP: What innovations will you introduce?
BM: We're introducing, for the first time in the Philippines' hotel industry, new technologies to build buildings. We're using prefabricated building materials for faster construction. We're using steel instead of concrete structures. We're using a magnesium oxide panels instead of brick traditional wet works and we're doing it to make them lighter, stronger, greener, and also allows us to build them faster.
HNP: Will ancillary be an important component of the business?
BM: F&B directors were told to always keep [guests] in the hotel. Those days are long gone. That attempt, it doesn't work anymore.
I think what better way to approach it is being the best of what we can provide, which is clean, safe, comfortable, conveniently located, and affordable rooms. Be good at that, and let our leisure or business customers walk out the front door and go out into the city and get the best dining experiences or the best business experiences, because the city has more to offer than we do.
So the answer to that question is: No, ancillary is really not a big part of this. The way that that we think about it at Vanguard is: Ancillary in an affordable hotel should be based on what do they need and not what they want.
HNP: How do you see OTAs contributing to your sales mix in the future and how will you attract more direct bookings?
BM: What we've seen in the Philippines so far is that over 60 percent of all hotel bookings in Go Hotels are direct bookings. And I think that it will just increase over time. That is our goal: to pro vide the best price, the best offers, the best promotions for our site.
The OTAs have a role to play. It would be our hope that we would have more direct booking and it will make up a lion share of the rooms because we are able to speak to them directly and give them the most effective offers. Like here in the Philippines with the provincial hotels, the city hotels, I think as long as we promote well locally we should be able to get most of the rooms booked through direct mechanisms.
One thing that may surprise you though-it certainly surprises me is the level of corporate bookings we get. It's nothing I've experienced anywhere else in the region. Vanguard has not experienced this, planning no such activity anywhere else in the region, but we are here. And that is that up to 20 percent of the bookings can be corporate users. Not every corporate entity is somebody who can afford PHP5,ooo hotel room for their traveling sales people or engineer. It comes back to this word "Trust." If I'm going to sign a deal with a hotel chain, I've got to be able to trust it. The problem is, the budget or the affordable space level has very little things to trust.
So I guess, in some aspect it shouldn't be a surprise, because what happened is companies will say, "Well you may not have a restaurant, banqueting, and all of that, but I can put 30 people into the hotel and maybe I'll take them for dinner."You know, we have meeting rooms for those people not lavish banqueting- but we have meeting rooms. This is something we learned and reacted to from the market. The market told us this.
We think 60 percent direct booking, up to 20 percent corporate is what we're seeing in the affordable hotel space in the market. And we'll use OTAs but maybe not to the degree that the big chains will use them.
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