Saturday Briefing

By Mel Kaneshige

(Dr. Richard Kelley is traveling. His column will return on May 2.)

To get through these challenging times and strengthen our company for the future, it is important to adapt our business strategy – or, as Dr. Kelley might say, to be ready to deal with having our “cheese” moved. One way to do this is to take advantage of the potential for economic growth elsewhere in the world by expanding in other markets, such as the Asia-Pacific region. Familiarizing travelers to (and within) Asia with our brand will put us top of mind when those same travelers consider a vacation in Hawaii, Australia, or elsewhere in the Pacific. This article is a brief update of our progress in Asia to date.

Mel Kaneshige

Outrigger’s expansion into Asia is continuing despite the current worldwide economic downturn. As previously reported in Saturday Briefing, the 112-room boutique hotel, O-CE-N Bali by Outrigger, in Legian, Bali, Indonesia, officially opened last November, and the 78-room Outrigger Serenity Terraces Resort at Chalong Bay, Phuket, Thailand, opened earlier this month.

In addition to those resorts, we have signed management agreements for three other hotels in Asia – the 176-room Outrigger Panorama Bali Resort and Spa at Bukit, Bali; the 396-room West Sands Outrigger Resort at Mai Khao Beach, Phuket; and the 500-room Outrigger Qingshui Bay Resort at Qingshui Bay, Hainan Island, China. (Qingshui is pronounced CHING SHWAY.)

David Carey visited Qingshui Bay earlier this month and was extremely impressed by both the proposed hotel site and the resort. He will write a separate article next month about his impressions of Hainan and China, in general.

Qingshui Bay is a brand new $4 billion, 2,000-acre, 7.5-mile-long beachfront resort being developed by a partnership of Agile Property Holdings Limited, a Hong Kong-listed company, and funds managed by Morgan Stanley. The new resort is planned to have 40,000 residential units, 6,000 villas, seven hotels with a total of 3,500 rooms, three championship golf courses, and 16 million square feet of commercial and retail space. Raffles, J.W. Marriott, Hilton, Jumeirah, W, and Westin are the brands planned for the remaining hotels. The resort is under construction, and our hotel is scheduled to be completed in 2013.

Not stopping with the hotels we have signed up thus far, we are currently in discussions for more hotel management contracts in Thailand (in Phuket and Koh Samui) and also in Vietnam.

In its April edition, Global Real Estate Monitor (http://nreionline.com/globalrealestate/apr_article1.html) wrote very optimistically about the hotel business in Asia: “The fastest growing tourism destinations over the next decade will be in Asia, and there are predictions that China will emerge as the No.1 inbound tourism market within 10 years, overtaking France, Spain, and the United States. By the end of next year, international visitor arrivals into [sic] Asia are expected to more than double to 500 million people.

“Industry experts believe the short-term and long-term economic outlook for most Asian countries is better than countries in other regions, making Asia an attractive locale for hotel investment – both development and acquisition. ‘We believe that Asia will be one of the least-affected areas by the economic downturn, as the region’s financial systems are relatively resilient, following improvements made after the 1997 financial crisis in Asia,’ says Matthew Sparks, Senior Vice President of Global Development for Fairmont Raffles Hotels International (FRHI), which owns landmark properties such as The Plaza Hotel in New York and The Savoy in London. ‘Asia is also likely to see rapid recovery once the economy begins to rebound.’”

To continue our growth in Asia, we are planning to establish an Asia regional office in Phuket and have begun to build a core organization there with seasoned hotel veterans with years of experience in the region. The various Asian markets we have targeted all differ from each other, as well as from Outrigger’s traditional markets, so it is clear to us that significant experience in and with these destinations is critical to our success in Asia.

The task of building a presence from scratch in a region as big and diverse as Asia is enormous. It requires a tremendous amount of talented and dedicated individuals to lead the effort to establish contacts, build credibility, chase deals, negotiate and sign contracts, hire and build a management team for each property that opens, establish operational procedures for the countries and region as a whole, and coordinate and communicate with Outrigger’s home office here in Hawaii. Assembling an excellent leadership team is critical to the success of our efforts in Asia, and we have been fortunate to put one together:

Leading the way is Darren Edmonstone, our Senior Vice President, Asia, who reports to me here in Hawaii. Darren joined our Honolulu office in the fall of 2005, after a long career in Asia with The Hongkong and Shanghai Hotels organization (Peninsula Hotel chain) in Hong Kong, Thailand and Vietnam; he has been spearheading our efforts in Asia since 2006.

Michael Cowan is our Vice President, Operations and Projects, in Asia. In addition to overseeing our operational management and project development throughout the region, Michael also helps maintain the integrity of the Outrigger brand in Asia with a focus on new ground-up developments involving hotel and residential properties. Michael has 20 years of hospitality experience in Asia, having held senior executive positions at hotels in Thailand, Indonesia, Singapore, China, Maldives, Malaysia, and Australia.

Bob Merrigan, the newest member of the team, is Vice President, Property Services, for Asia. He directs and oversees all of Outrigger’s construction projects in Asia, including providing planning and technical services to owners of properties that are to be managed by Outrigger. Bob has 25 years of experience in the industry, including more than 20 years with the UK development and construction consultancy group, EC Harris, in Europe, Africa, and Asia, and more than 15 years working on resorts in Indonesia, Thailand, Vietnam, and China, as well as hospitality projects in Malaysia, Hong Kong, and the Philippines.

Pieter van der Hoeven is General Manager of our Phuket properties and projects. This means he oversees the development and implementation of hotel operations for Outrigger in Phuket, including at Outrigger Serenity Terraces Resort, the West Sands Outrigger Resort, and any other hotels we may manage in Phuket. Pieter’s recent Asia experience includes three years with Six Senses Resort & Spa Management and Development Company, where he was General Manager for the Evason Hua Hin Resort and Evason Hideaway at Hua Hin, Thailand, and Evason Hideaway at Ana Mandara in Vietnam, as well as five years with The Peninsula Bangkok. He held earlier management positions in his native Australia – with Hyatt in Melbourne and Adelaide – and at the Peninsula Hong Kong.

In turn, our leadership team has hired the staff needed to operate a regional office, as well as the individual properties, and they will continue hiring as more properties open. We are in the process of looking at properties in new areas that are quite exciting.

Outrigger will keep expanding its presence in Asia over time, and I will continue to report our progress, as we sign up new properties.