Hotel investment the ticket to Asia

Claims of efficiency of showerheads were inaccurate. Photo / Herald on Sunday

The Marriott group will open 60 new hotels in China by the end of this year.

The Intercontinental Hotel Group, operator of brands such as the Crowne Plaza and Holiday Inn, also plans to build 127 new hotels in China in the next five years.

It is this kind of phenomenal investment growth in the region that Kiwi bathroom-fittings maker Methven hopes to translate into improvements to its own bottom line.

The publicly listed maker of high-end tapware and showers is working hard to develop the international hotel refit market, targeting it as an area that could potentially become one of the biggest components of its business.

Like other companies associated with the property sector, Methven has suffered since the global financial crisis. Profits for the year to March were down 22 per cent to $7.8 million.

Its United Kingdom business remains depressed and, last year, it was forced to pull back from the United States market.

The company had identified hotels as a growth area but that had been ramped up in the past 18 months, said Methven Australia chief executive Matthew Crichton.

Crichton is spearheading the company's push into the hotel retrofit and refurbishment trade. He has set up a five-person sales team in Asia and has four people in Australia and two in Europe.

In the past two years, it has focused on achieving what is known as "brand standard" for the hotel groups. "That's the minimum ticket to the ground to even approach the hotel owners," Crichton said.

It has brand standard for the Accor group in Australia and is well down the track to gaining it with IHG and Hilton in the UK and Europe.

Although the company acknowledged that the hotel plan was a long-term strategy, results were starting to show.

It completed a retrofit of the 300-room Crowne Plaza Beijing last year and was working with some of the hotel owner's 17 other properties around the city, Crichton said.

It is in the throes of finishing the Shanghai Intercontinental at the World Expo site and has a number of projects in the pipeline in Hong Kong. It has also refurbished the Hilton in Antwerp and has a couple of other major European hotel jobs pending.

Because of its unique products, Methven was targeting the so-called retrofit market, as well as refurbishment projects, Crichton said.

Earlier this year, it acquired the exclusive licence for a pressure-balancing technology called Jemflo. Pressure balancing means hotel guests do not experience fluctuations in shower temperature and pressure at peak times.

Combined with its water and energy-conserving Satinjet showers, that meant Methven could offer hotels cost savings as well as a superior product.

Hoteliers were, therefore, more inclined to retrofit rather than wait until the property was due for a refurbishment, Crichton said.

It could take 12 to 18 months to get a project to the installation stage. First, Methven provides an engineering assessment, looking at the property's potential for water and energy savings. Then its sales staff works with architects, designers and hotel general managers.

It was much further down the line with the hotel strategy in Australia, where it had 30 per cent of the shower market.

"The challenge has been operating in markets where we don't have that pedigree."

Empty energy saving promises

Methven is due to be sentenced in the Waitakere District Court next month after admitting it misled consumers over the water and energy-saving abilities of its Satinjet showerheads.

The prosecution arose after a competitor complained to the Commerce Commission about Methven's advertisements for Satinjet.

Methven had claimed that a Satinjet head used up to 55 per cent less water and 45 per cent less energy.

However, this was only true if the household was connected to mains water pressure that delivered a flow of 20 litres per minute.

Only about 7 per cent of New Zealand homes have a water-flow rate of more than 18 litres per minute.

Methven said it was surprised the Commerce Commission had taken the matter that far as it had changed the wording of its advertising.