Siah Hwee Ang on the Government's bid to use foreign investors to plug NZ's hotel shortage, and claims those doing business with China should expect to be hacked online

Siah Hwee Ang on the Government's bid to use foreign investors to plug NZ's hotel shortage, and claims those doing business with China should expect to be hacked online

By Jenée Tibshraeny

Not only do we not have enough hotels, but their quality is lagging behind international standards, says an expert in Asia/New Zealand relations.

The BNZ Chair in Business in Asia at Victoria University, Siah Hwee Ang, warns Asian tourists are struggling to find accommodation that meets the scale and luxury they’re used to. Our four and five star hotels are simply not comparable to four or five star hotels in Asia.

“I know quite a lot of people from China and they come and tell me, ‘Look, your hotels are not that great’,” Ang says.

He maintains the Asian investors who respond to the Government’s invitation for more foreign investment into New Zealand’s hotel sector will help raise the bar, as they’ll have a better understanding of the market the hotels will be targeted towards.

“We have to be customer orientated," Ang says.

He makes these comments further to New Zealand Trade and Enterprise (NZTE) commissioned research released earlier in the week revealing 26 additional hotels, above and beyond what is currently planned, will be needed to meet expected tourism demand in our major tourist centres over the next 10 years.

The research, which focusses on Auckland, Rotorua, Wellington, Christchurch and Queenstown, shows the shortfall in new hotel rooms is expected to be up to 4,526 by 2025.

Economic Development Minister Steven Joyce says the research is part of the Government’s ‘Project Palace’ initiative, aimed at accelerating new private investment into our hotel infrastructure.

“The Project Palace work will help match-make investors with opportunities, and reduce the time taken to fill information gaps that can slow down investment,” Joyce says.

Why didn't they foresee this?

Ang’s confident there’s appetite among Asian investors to spur development in New Zealand.

Judging by the number of Asian-owned souvenir stores in the areas popular among tourists, he says we could be in for an influx of Asian hotel investors if given the opportunity.

Nonetheless, Ang criticises the Government for not foreseeing the extent to which the demand for tourist accommodation has ramped up in recent years.

He says the Government isn’t taking a “business savvy” approach and hasn’t put enough emphasis on forecasting and is now scrambling.

While he sees the need for foreign investment in the sector, he maintains New Zealand developers have the resources to plug some of the shortage.

“Some parts of me tells me that it’s tough, but some parts of me tells me that it’s possible.”

Ang is sceptical of what exactly the Government means by its bid to accelerate the building of hotels, and whether this means hotel investors may be prioritised by the Overseas Investment Office for example.

“We don’t know what the definition of 'fast-track' is,” he says.

“We are talking about the process of building hotels. It’s not some e-commerce trade where you can click a button and maybe one less procedure is 15 minutes faster. This won’t go any faster - the building process takes a long time.”

He says the criteria around any fast-tracking needs to be standardised and address issues around the staffing and infrastructure to support the hotels.  

“You do need the infrastructure which includes trying to manage those hotels and servicing those hotel… Do we have enough people in the hospitality industry? Maybe the answer is ‘no’ and we have to bring in people from outside.”

Are we being spied on?

Ang admits it’s possible Chinese firms are conducting cyber espionage on New Zealand firms they have business interests in, but doubts there’s enough at stake for New Zealand to be a real target.

Speaking at our first Cyber Security Summit in Auckland earlier this month, the senior vice president for the US-based Center for Strategic and International Studies, Jim Lewis, warned cyber attacks were a standard part of doing business with China.

“They want what would give them a competitive advantage in any deal they’re in,” he said.

Lewis cited an Australian company in talks on a deal with Chinese interests who said there had been 200 efforts to break into its IT systems to get data that would have been useful during those negotiations.

The chief strategist at the security firm FireEye, Richard Bejtlich, agreed this was a problem, saying he’d dealt with some companies who had physical offices in China that knew they were under surveillance and sometimes they were even approached by the government with that surveillance in hand.

Responding to a question over the extent to which New Zealand firms are under this sort of microscope, Ang says:

“It depends on whether our companies are doing things that are sensitive. So if you’re trying to work with a Chinese company and so happens that the Chinese company is dealing with you in sensitive materials, they will want to check on you a lot more.”

He says New Zealand firms dealing with the Chinese Government may be more susceptible to hacking.

“You might be checked and that’ll be quite normal.”

Yet overall Ang doesn’t see this as a problem here.

Importantly, he points out cyber espionage isn’t unique to the Chinese, with other countries doing the same thing depending on what’s at stake.

He points out Indonesia’s considering following China in having its own internet through which you can’t access the likes of Facebook, Gmail and Twitter.

Ang maintains other large Asian countries may follow suit, opting to address the issue of cyber security systematically by blocking international sites altogether. He believes this will ultimately result in a drop in the level of spying, as it will become harder to do so. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Well as a Government initiative, it does sound very smoke and mirrors to try and distract us from much bigger issues like how much control the Overseas investors currently have over the Auckland residential property market which in reality seems to be in the region of 39%.

If our Government really wants to help NZ, then the best approach would be to fully channel Overseas Investors in to new building programs like this and remove them from hoovering up our residential property. That would allow the property market and particularly Auckland to balance itself. As we all remember how the housing market drastically halted for a few months once the IRD requirements came in to force last October.

As for the hotel investment, Siah Hwee Ang did make a very good and revealing comment “Why is the money not being kept in the country? He says “That's because the Investors are coming from Asia and then the money just tends to go back to Asia”. And he also points out that this also happens to the other tourist orientated business such as our souvenir shops.

So bit of a boomerang economy for NZ but perhaps we can pick up some bread crumbs?

I'd suppose in communist countries you'd expect government to do all the forecasting of hotel demand. Fortunately we live in NZ where it is the free market that builds these things. Not the governments job at all.

Maori should own all the tourist shops.

I own a motel. The reason why there are not enough hotels now is that only 3 years ago we were experiencing low occupancy years for the several years. Yes now occupancy rates are much better but it takes time to be confident it isn't just a short-time improvement (with occupancy rates falling again by the time a new hotel is built). I used to be an Architect (yes) and I can assure you it takes even more time to find land, get funding, design a new hotel, get it consented by the council which will likely require several resource consents and getting it built. We are still at least 2 years away from having new hotels ! (and who can confidently predict what tourism will be like in 2- 5 years ?)