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ASCOTT International is aiming for a bigger slice of the European leisure travel pie, as corporate business shrinks amid the weak global economy.
Business travellers account for 60 per cent of Ascott's European customer base, so the company has been hurt as firms slashed travel budgets.
'In the first quarter we did feel the pinch,' said Tan Choon Kwang, senior vice-president for operations in Europe.
Corporate demand is almost 10 per cent lower year-on-year, he said. In general, rates held up 'quite well' in Q1 but occupancy levels were down 6-7 per cent year-on-year.
To offset the drop in business traffic, Ascott hopes to attract leisure travellers, especially as Europeans drop long-haul vacations in favour of intra-regional travel.
As part of its 25th anniversary celebrations, Ascott has been rolling out promotions and rewards that include free stays and discounted rates.
The swine flu outbreak has had no 'immediate impact' on business and has not led to any cancellations, Mr Tan said. Staff have been advised on precautionary measures and efforts are being made to ensure even higher cleaning standards.
In 2008, Ascott's European operations brought in revenue of 143 million euros (S$280.94 million), 69 per cent of which came from France. The average occupancy rate in Europe was 77 per cent, and the average length of stay was six nights.
The group has three brands - Ascott, Somerset and Citadines - with over 180 properties in the Asia-Pacific, Europe and the Gulf region. Most of its European residences are under the Citadines brand.
'The Citadines model is very cost-efficient,' said Mr Tan. 'As we transplant it to the Asia-Pacific, the profit margins are even better because labour costs are lower than in Europe.'
At the same time, the group remains keen on building up its brands in European markets where it is under-represented.
'The UK has a lot more potential outside London. And in Europe, there are a few other key countries,' Mr Tan said, pointing to Spain, Switzerland and Italy.
'We are lacking a presence in North America. If there is an opportunity, the group will look into it,' he added.
The Ascott Group is a wholly owned subsidiary of CapitaLand.
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