Interview: Dillip Rajakarier, CEO, Minor Hotels; and COO, Minor International
To what extent can Thailand further improve its soft infrastructure, especially in terms of labour, to attract a greater share of the affluent market?
DILLIP RAJAKARIER: The main priority is to improve the education system, particularly English language proficiency. It is important to establish schools to cater to the tourism sector. International schools such as Les Roches are willing to create the biggest education pool for hospitality to serve not only the country, but also the world. However, the strict requirements for getting a licence hamper the establishment of new schools.
Currently, the private sector is the primary growth driver in tourism. We would like to see the government take a more active stance in developing the sector, along with its partners on the private side.
Under Thailand 4.0, how are hotel groups adjusting to fit the government’s tourism emphasis?
RAJAKARIER: Looking at the New S-Curve industries, covering wellness, medical and luxury tourism, Thailand 4.0 is bringing new concepts to the hospitality sector. As the country is blessed with good weather, Thailand can be promoted as an all-year wellness destination. Wellness can generate millions, with Phuket leading the market as an international centre.
Medical tourism is another key segment: patients can recover at hotel properties rather than in hospital beds, with great ambiance and competitive prices. The hospitals will have better patient turnover and operate at higher capacity when patients are resting in a hotel. This will enhance the high-end tourism segment. Again, hotels can’t run hospitals, so we need partnership to provide the best service to our customers.
Community tourism is all about engaging with rural areas. Hotels can promote local products in restaurants to grow the community into another supportive arm of tourism. Thailand has myriad destinations next to the usual tourism hubs. Moving ahead, we must create value for local communities and move away from promoting areas that are already in high demand. Other destinations can be promoted, such as new ecozones.
What impact has technology had on hospitality, and how should regulators and the industry respond?
RAJAKARIER: The wholesale segment is no longer leading the business due to changes in traveller demographics. As information is easily available, online travel agencies (OTAs) have taken a major share. Hotels are fighting the OTAs to prevent a negative impact on customer experience. We need a free market, not a grid parity one. The Ministry of Tourism really needs to understand how the business is run and take action.
Moving forward, the private sector is likely to push for a single online window including all hotels. This should be handled by the government to maintain a level playing field and redistribute profits accordingly. In the future, analytics will play a significant role in how hotels will embed technology in their services.
How attractive is the merger and acquisition (M&A) environment for hospitality groups, and which markets offer the best growth potential?
RAJAKARIER: M&A depends on the strategy of a hotel. We need to look at profitability for shareholders and good value for the stakeholders, including guests, staff and suppliers. There are lots of opportunities in the industry, and with the consolidation trend worldwide, cash is cheap. The strength of a company should be combined with the strength of its potential partner, complementing the properties of each and removing the element of competition. In Asia, the cost of funds is much cheaper, and public companies can access funds because of their credibility and performance.
However, the potential locations are somewhat mismatched. Firms need to find where their presence and product offerings are lacking. China, Indonesia, India, African countries and Mexico are high-potential markets, and will surpass traditional and mature economies.
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