IF there is one thing the pandemic has done, it’s forced global companies to retreat to local and regional frontiers and Paris-based D-EDGE Hospitality Solutions is certainly looking at the Asia Pacific region in a new light, given the slow recovery of the market.
Catching up with its CEO, Pierre Charles Grob, over lunch in Paris at The Sinner, described as “an unusual luxury hotel”, it is clear that over the last months of Covid episode the technology provider for hotels has fared better in Europe than in Asia Pacific. Indeed, the company moved into new, expanded offices in October and its team will grow from 330 to 500 by year-end, including the 80 who will join them handling the Accor CRS: TARS reservations system, recently acquired by D-EDGE.
“We had a super good summer in Europe, and from September to end of November we saw corporate and unmanaged business holding up well,” said Grob.
As we spoke, early news of the Omicron variant was spooking the markets and at the time of the interview (November 30), Grob said there had been no cancellations other than to Austria but there had been a slowdown in booking creation. “At least we are not seeing a full collapse, I see that governments are more alarmed than the general public,” he noted.
Certainly, there seemed to be no thinning of crowds on the streets of Paris, despite warnings from government that the country was headed for another surge in infections.
In Asia Pacific, only Taiwan and Australia provided regular sustenance for the business as all markets, even those with domestic potential, struggled with endless local restrictions and lockdowns. Japan, a major market for D–EDGE, was severly hit by the near-total collapse of inbound traffic to the destination.
Grob, who’s planning a trip to Asia next January, confessed he was disappointed by the slow recovery in the region. “I am surprised – I thought Asia would have taken the lead and handled the crisis in a different way. This is a region known for its flexibility and dynamism, and willingness to test and learn, compared to Europe, which is more traditional, but clearly the pandemic threw up new challenges for the region.”
The uncertainty and fluidity of the global situation is thus prompting D-EDGE to accelerate on Europe, while consolidating its presence in APAC (D-EDGE serves already 4,000 hotels in this region). “We are still a big believer in the potential of Asia Pacific, hence we maintained our teams and presence, while other competitors have focused more on the USA. We have prepared carefully for the rebound, and some strategic negotiations with Asia chains are underway, announcements to come,” said Grob.
Another factor driving localisation and regionalisation is also the implications of government regulations such as those around data protection. “We know how to handle this, we understand all the rules around hiring and taxation on the continent, and that is definitely helping us to address the fragmented Asian market,” said Grob.
He believes that increased government regulations around taxation, data protection and hiring practices will make it a challenge for global technology companies to operate within the local nuances of each and every market, the winner will be the company that knows how to handle it.
This would mean really prioritising those markets in which it feels it has a chance to not only compete but also operate efficiently and effectively with the right teams.
Running a more regional business will also mean more decentralisation – allowing local teams the empowerment and flexibility to operate, he said. Critical is the “responsibility to answer local needs. If we can’t do that, then we should shut down,” he said.
For example, in China and India, “we will make sure our technology is available to hotels outside targeting the Chinese traveller. We won’t compete in mainland with local companies but we need to connect to them, such as Shiji, for example”.
He said the pandemic “helped everyone to focus on their core competencies” and to pick their battles more carefully.
“Take Expedia and Booking.com as examples – they defined their key focus as building a super consumer experience. Expedia letting go of Egencia, that’s an example of them focusing on what they do best – leisure vs unmanaged business travel. All this has given a lot more space for others to focus on their key area of expertise.”
And while there was a shift towards more direct distribution for hotels during the pandemic, Grob believes that’s a mere pause. “As soon as the rebound happens, we will be back to the same patterns.”
What he’s excited about is seeing new startups working on connectivity issues. “The industry needs more connectivity than ever before. Connectivity is key – the ability to connect with parties with different competencies and locations.
“People have realised they can’t build everything themselves, so we will see companies try new concepts in distribution, and D-EDGE needs to be standing by them to give them access to a large portfolio of hotels”
And whether that’s through e-commerce marketplaces or companies such as Shopback which recently held a Travel Sale, Grob said hoteliers have new opportunities to test and learn.
Another lesson he’s taken from the pandemic is you need to focus on people. “It sounds obvious but if you have the right people, you can face any crisis.”
And its move to new office premises may go against the trend of remote work but Grob said, “People want to come to the office, as long as it’s in a good location and it’s a great environment to work in.” Flexibility is also part of the new work with staff required to come in only two days a week.
“At the end of the day, the pandemic reminded us of the basics of running a business – you make money, you pay employees, and you have to have cash on the side for unexpected things,” he said.
Featured image: The Sinner, Paris: Hotels in Europe have fared better than those in Asia Pacific over the second half of the year.