Why affordable luxury hotel brands are heading to Asia

Yotel and Citizen M might be better known in Europe and the United States but it won't be long before they become familiar brands in Asia.

August 17, 2017

These affordable luxury hotel brands are making headway in the region as they embark on a spate of new launches across many of its most popular destinations.

CitizenM, which blazed a trail in European cities for its trendy vibe at pocket-friendly room rates has welcomed its first guests in Taipei this month and is already expanding its footprint with outposts in Kuala Lumpur and Shanghai next year. Meanwhile Yotel, which defines modern luxury as having everything guests need at their fingertips, is focussing on Singapore. Its Orchard Road hotel will be launching in September and its first Asian airport hotel will open at the city state’s Changi in 2019.

Joining these sizeable players is Azerai, a new brand by legendary hotelier Adrian Zecha who’s behind the gilded Aman hotels. Azerai made his debut in Luang Prabang in Laos in May with rooms going for US$250 a night.

Sweet stay, better price tag

Affordable luxury hotels are increasingly common as the concept of luxury democratises. According to a report by Euromonitor, affordable luxury has emerged as a growing sector a result of the up-scaling of mass market accommodation options and the anti-premiumization of the traditional luxury market.

“The concept of luxury is changing, it’s no longer just razzle-dazzle extravagances for high net worth travelers such as room service from crisply dressed waiters or expensive spa treatments. The idea of luxury is more about well-designed rooms and unique experiences which allow time to relax yet also enable them to remain easily connected to the outside world,” observes Frank Sorgiovanni, Head of Research for Hotels and Hospitality at JLL Asia Pacific.

Since consumers are willing and able to spend on travel more frequently thanks to higher disposable income globally, there is a demand for properties that offer such luxuries at friendlier price points as seen in the success of these hotel brands such as 25 Hours and CitizenM.

“At the same time, travelers are becoming savvier in how they spend their money so any hotel that can offer all the creature comforts from orthopaedic mattresses to walk-in showers in a compact room at a substantially lower rate over a nearby upscale or luxury property is a tempting alternative,” adds Sorgiovanni.

Expanding East

Asia’s large travel market with a booming middle class and competitive low-cost airlines catering to them is naturally attractive as a region for affordable luxury brands to expand into.

It’s not just international brands targeting affordable luxury in Asia Pacific; home grown versions are also building a presence in this new space. Besides Azerai, there is Ovolo from Hong Hong, described as “luxury boutique” and Tribe from Australia which promises “an edited hotel experience” geared towards their target audience of tech-savvy travelers who want a slice of luxury without the big price tag.

“There is no shortage of accommodation options in Asia which offer great value, but hotel guest expectations in this region have also risen,” says Sorgiovanni. “It’s not enough to be reasonably priced. Well-traveled tourists who’ve been to Europe and the U.S. expect the same level of amenities and experiences as what they’ve had overseas.”