Growth spurt for Frasers Hospitality

/ EdgeProp Singapore |

April 14, 2018 8:00 AM SGT

As Frasers Hospitality turns 20, its CEO, Choe Peng Sum, is tapping the huge millennial traveller market and testing new technology to cater for their ever-changing needs

After more than three decades in the hospitality industry, Choe Peng Sum has learnt to be receptive to changes in trends. The globe-trotting CEO of Frasers Hospitality has built the portfolio from just two properties in Singapore in 1998 to 150 properties across 80 countries over the past 20 years.

Choe feels that being customer-centric is of foremost importance. “Today, the millennial traveller market is huge,” he says. To cater for this burgeoning group of travellers, he recognises the importance of having vibrant communal spaces in the various properties owned and managed by Frasers Hospitality, a unit of Singapore-listed Frasers Property. “Traditional hotel lobbies tend to be formal and cold, but they are moving towards the cosy, living room [ambience],” he says. “You can have a bar at the front desk and communal seating at the lounge.”

Choe: Today, the millennial traveler market is huge (Credit: Albert Chua/EdgeProp Singapore)

He learnt this from observing co-working spaces too. He wanted to house his staff in Japan in a co-working space and visited the WeWork premises in Marunouchi Kitaguchi Building in Tokyo. “They had just completed the space, but it was already fully taken up,” Choe recalls. “We had to tell them to reserve space for us at the upcoming WeWork in Ginza.”

Intrigued by the strong demand for such spaces, Choe also visited the co-working giant’s flagship property in Singapore — WeWork Beach Centre — last December. “I think they got it right — the mix of communal space and private office space. They have a good network in different countries. And it works because that’s what millennials want.”

Experimenting with co-living

While Choe believes in co-working, he also sees opportunities in co-living. In the US, WeWork has also expanded into co-living, by offering dorm-like WeLive apartments that are supplemented by communal facilities. However, Choe would like to work with WeWork to come up with a co-living concept suited for the Asian market. “Generally, in the US, most co-living spaces are similar to serviced apartments,” he says.

Artist's impression of the executive lounge at Capri by Fraser, China Square (Credit: Frasers Hospitality)

He feels that the co-living concept adopted in Asia has to be a hybrid of WeWork and CitizenM, a luxury boutique hotel chain started in the Netherlands in 2008. “At CitizenM, the hotel rooms are small but tastefully decorated, comfortable and clean,” says Choe. “You don’t mind the compact room size because you will only return to your room to shower and retire for the night.”

What’s important is that when guests step out of their rooms, they will find a vibrant lobby and communal area with a lounge, a bar and restaurants open to both hotel guests and the public, adds Choe.

He intends to test his idea of co-living at the upcoming Capri by Fraser, China Square in Singapore’s CBD. It is part of an integrated development at China Square Central, which has retail and office components that are currently being rejuvenated.

Incidentally, WeWork has signed up for 28,000 sq ft of co-working space at China Square Central, and Choe intends to incorporate a corridor linking the Capri property to WeWork’s premises. Capri by Fraser, China Square is scheduled to open in 1Q2019.

Lobby of Capri by Fraser, China Square in Singapore (Credit: Frasers Hospitality)

Testbed for innovation

Technology is becoming increasingly important. “However, we are careful never to innovate for innovation’s sake,” says Choe. “All the initiatives must be user-centric.”

Capri by Fraser, China Square will be a testbed for the group’s new guest experience app that leverages chatbot technology. The app offers a comprehensive menu of services, from allowing guests to make reservations and check in to requesting for extra towels or pillows from housekeeping.

The hotel will also be one of the first in Singapore to adopt a linen delivery process via RFID (radio-frequency identification) tags on items to be washed. These will be handled by back-of-house robots, freeing housekeepers from manual labour.

It will also deploy robotics and apps to integrate workflow management and smart room control systems to help housekeepers prioritise rooms to be cleaned, thereby reducing guest wait times.

The gym at Capri by Fraser, China Square also features an interactive app that gamifies floor workouts with music and lighting.

Capri by Fraser, China Square's rooftop facilities deck with swimming pool and gym (Credit: Frasers Hospitality)

Catering for millennials

For Choe, it is important to keep adapting to cater for the needs of millennial travellers. For instance, people are spending more time in the bathroom. “In the past, a bathroom made up just a third of the space in a hotel room,” he observes. “Today, it’s about half of the hotel room.”

For the young, it is important to have music, even in the bathroom. Frasers Hospitality is working with US company Kohler, which recently introduced a line of shower heads with speakers. “The sound of the music coming from the shower head is amazing,” says Choe.

For the young, it is not just about speedy internet access, but also fast check-in. “We’re working on an app where you already know your room number before you arrive, and we would already have your credit card details processed,” Choe says. “When you arrive, you can go straight to your room.” While paperless check-in is already in place, deskless check-in will take some time to implement, he adds.

Growing the Capri footprint

The 304-room Capri by Fraser, China Square is the second Capri-branded hotel residence in Singapore. Its flagship property, Capri by Fraser, Changi City, opened in 2012. The 315- room suites contain fully equipped kitchenettes, high-speed internet access and a state-of- the-art home entertainment system. Today, it still has a high occupancy rate of mid-80% to 90%. “On weekdays, it attracts corporate travellers, and on weekends, we have the leisure crowd, or locals on staycation,” says Choe.

A suite at the flagship Capri by Fraser, Changi City, which opened in 2012 (Credit: Samuel Isaac Chua/EdgeProp Singapore)

Capri was launched to cater for the rise in millennial travellers. “We noticed that corporate travellers were getting younger, and they typically stayed just a few days or were here on a project basis, and therefore shorter-term stays,” Choe says.

Today, Capri has 16 properties in 14 cities across Asia and Europe, including Barcelona, Berlin, Frankfurt, Leipzig, Ho Chi Minh City, Kuala Lumpur, Johor Bahru, Jakarta, Shenzhen, Wuhan, Singapore and Tokyo.

The new Capri by Frasers, China Square is a 16-storey development built on a site purchased on a long-term lease for $44.5 million in 2015. The site was acquired from Frasers Hospitality’s sister company, Singapore-listed Frasers Commercial Trust, a commercial and office real estate investment trust with commercial and office properties primarily in Singapore and Australia. Incidentally, FCT owns China Square Central.

Capri by Fraser in Hamburg, one of 16 Capri-branded properties around the world today (Credit: Frasers Hospitaliyt)

New brands, boutique offerings

In 2010, Frasers Hospitality launched Modena, a mid-scale hotel brand catering for millennials. Hence, it serves a different market segment compared with Capri, which is an upscale brand, says Choe.

Another evolution in the hospitality industry is the rise of more boutique hotel offerings with greater differentiation. “Millennials don’t want cookie-cutter hotel chains,” says Choe. “They want novel experiences. So, we decided to buy a chain of branded boutique hotels that we could then bring to Asia.”

In 2015, Frasers Hospitality acquired the Malmaison Hotel du Vin group for £363.4 million. The group owned 29 boutique hotels in cities across the UK. In December 2015, Frasers Hospitality bought four hotel properties in the UK from Swire Group for £36.1 million. It subsequently acquired six more hotels in the UK and Europe and the 10 hotels were then rebranded as Malmaison and Hotel du Vin properties.

Hotel du Vin & Bistro in Bristol, one of the hotels in the Malmaison Hotel du Vin portfolio (Credit: Frasers Hospitality)

Growth opportunities

The first Malmaison branded hotel in Asia will be at One Bangkok, a US$3.55 billion ($4.64 billion) integrated development by TCC Group’s TCC Assets (Thailand) Co and Frasers Property. The introduction of the Malmaison and Hotel du Vin brands will bring Fraser Hospitality’s stable of hospitality brands to five — the Fraser brand (Fraser Place, Fraser Residences and Fraser Suites) along with Capri and Modena.

Excluding the Malmaison and Hotel du Vin assets, Frasers Hospitality acquired 46 other properties over the last three years, adding 8,000 units to its inventory, including those under development. About 2,000 of the units are in Europe and the Middle East. North Asia, especially China, accounted for another 2,000 units. The remaining 4,000 units include all the other assets in Asia, including Japan and Australia.

Frasers Hospitality continues to be bullish about growth in Europe, particularly in Germany, Italy and Spain. Choe also sees opportunity to grow the group’s brands in China, Japan and Southeast Asia.

Fraser Suites in Hamburg, one of the properties in Europe, where Frasers Hospitality sees opportunities to grow its footprint (Credit: Frasers Hospitality)

He is optimistic about growth opportunities in Bangkok, where the group has yet to have a Capri flag, although it already has a Fraser Suites and two Modena properties.

In Kuala Lumpur, there is a Fraser Place and Fraser Residences. However, the group is adding another Fraser Residences in Putrajaya in 2020. It already has a Capri property in Kuala Lumpur but will open a second one in Bukit Bintang. In Iskandar Malaysia, Fraser Place Puteri Harbour will open in 1Q2019, while the Capri property at Johor Bahru near the Customs, Immigration & Quarantine checkpoint will open at year-end. “In Iskandar, I will only look at two locations — Puteri Harbour because of its proximity to the marina and ferry terminal, and Johor Bahru, near the CIQ, where the new Rail Transit system terminus is going to be located,” says Choe.

In Vietnam, there will be a Fraser Residence opening in Hanoi next year in addition to an existing Fraser Suites. In Ho Chi Minh City, Capri already has a presence. “We’re growing the Capri footprint very quickly, especially in Southeast Asia,” Choe notes.

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