Interview with Federico González-Tejera, CEO at Radisson Hotel Group. A discussion with Vanguélis Panayotis, CEO MKG Consulting.
What is your feedback with your partners and investors and perhaps one or two emblematic openings that you could make in the last two months?
You have financing, ownership and operational concerns.
If this flexibility is not achieved, it's obvious that the project collapses, but I think what we are seeing however is in many projects and I must say that last year we had a phenomenal year, we signed more than 40 hotels. It was one of the best years we've had.
If you look at some of the signatures and some of the openings or renovations that we've done, we're now opening the Radisson Collection hotel which is doing very well, we're opening a new one in Madrid, we've signed and reopened one in Lyon, we're opening right now, yesterday we had the opening of our Radisson Collection in Shanghai, the first Radisson collection in China.
All these projects have this kind of combination, it's a good commercial project but in fact all three parties (that I mentioned before) have to sit down and say "Ok, how do we handle this? If we are all in the same context or in the same framework".
I think what's essential in all these projects is that all parties look ahead to the next 15/20 years. Maybe I need help because I may have committed to getting something or paying for something in this year. We can't pay because there is no business. Can we balance the fees? They can potentially recover the value of the investment over the next 15/20 years. When the business case is done right, and you see everything we bring to the party or the financing or the owner.
Can you tell us what the differences are between the countries in our region, because we often see where we are in our country, but the overall picture is not always the same if we compare Asia, Europe and even the inside of Europe is different. What is the feedback from the Radisson network?
As you have mentioned, everything changes, and changes faster than we ever thought they would change. Even the evolution of the different regions has been very different, it looks like already 2020 is very far away even if there is only one month.
And it’s possible because we were all looking towards 21 very quick. If you look through regions and you summarize more or less 2020, definitely Europe is the continent that has suffered the most, nearly every month in and in month out, Europe has done well below any regions of the world.
After Europe, we have had the US but actually I think the US has performed much better than many of the countries in Europe. Then you have China that recovered very quickly and is doing very well and the rest of Asia that is in between I would say Europe and the US.
That’s more or less the overall picture.
It's mainly because we're going through a mobility crisis that the industry is being hit so hard. When mobility is back, and we saw it from time-to-time last year when the lock was opened together so that people could move around, the decompression of demand is pretty fast
Unlike the previous crisis, this is really a crisis of confidence in the sense that I don't trust, because I'm not sure whether I'm going to get sick or not. The second is that if I do get sick, I don't know if I will get a place in the hospital or not. And the third is that I don't know if having a place in the hospital will allow me to survive or not. There are three levels of uncertainty, if you like, that overlap each other.
There is less mobility, you're right, but unfortunately so far, we haven't been able to act as a society at the different levels.
I think that hospitality is one of the bases of human activity, it does not only concern tourists but also companies and there are so many things that we lack.
Do you think there is a need for consolidation in the future or probably what we have seen over the last five years?
When we look at the business plan and formulate our plan for the next five years, we ask ourselves what are the greatest opportunities we have?
With the assets we have, the brands, the teams, we're putting in place new systems, we're putting in place all the brand reformulation with all these investments: what's the best way to grow?
What we see in the case of Radisson is that there is still a huge opportunity to grow significantly by either taking over hotels that are on the market, independent hotels or hotels that are under other flags, or new hotels that are emerging.
Have you changed your approach to business? Would we have the same requirements in terms of travelers? Would people change the way they consume hospitality services in general?
It did not change the core of the strategy. When we made the five-year plan and reviewed the 25 key initiatives underpinning it, we talked about asset repositioning, the renovation of the new brand segmentation, price and revenue management tools, new loyalty, new weapon. All these tools that were a key element of the strategy investments are the same.
In our digital plan, we had included online check-in, online check-in, self-registration, self-registration, the WhatsApp communication system, a much more integrated communication system that was planned for the next three years.
This has meant that we have tried to accelerate to have in 12 months what we expect to have in three years, because the materialization of the operations has to take place.
Obviously, when you have a managed property or you have over a thousand hotels around the world, you have to secure, and we have deployed and defined very clear standards of operations. Now, experience can't have just one formulation, think of breakfast when we used to have a buffet and then when the crisis came, we said we would move to an individual breakfast. Now you need an individual breakfast, a buffet, a kitchen, a chef, because almost all consumers come with different priorities or with a different mindset. If you only offer an individual breakfast, some will say, "Where is my buffet?
You have to be able, in some way, and that's what we try to do, to integrate into your business model different performances of different activities and the experience of the recording, the experience of the food, the experience of the room so that you can always achieve your level of satisfaction. This means higher costs, but you also need to find ways to optimize other aspects of the hotel to ensure that the Europeans are always at the level we want them to be.
Do you think there is still room to improve this productivity gain while maintaining and enhancing the experience?
The only point will be very segmented. When you look at the population, the level of adoption of new technologies is very different. We have to keep almost the whole system in parallel. Personally, when I go to the hotel, I like live check-in, I like to feel the person in front of me and I like to do the check-out, my wife doesn't like it, she prefers not to waste time doing the check-out.
But if I go to see my children, they'll say, "Why are you waiting for the check-in? I have already done the check-in with my phone. I think we need to allow all consumers and different segments at different levels of technology adoption while being respectful and allowing everyone to do it. It's not the same as checking in on a plane as it is in a hotel.
In the same way that I check in at a machine when I fly, I personally enjoy the human touch when I check in at a hotel.
The difference is that today we have to integrate all these things into our hotel operations while finding a way for the hotel not to suffer from its profitability, which means investing in our reservation system, in our reservation management systems and in solutions that allow these actions to take place efficiently.
Did you learn anything about yourself during this specific period?
Honesty pays and transparency always helps.
From the beginning, we have been extremely honest about the situation we were in with everyone. Everyone knew it was painful on different levels. Everyone knew what the different sacrifices and efforts the company made at all levels were.
We did it in a very transparent way and with a lot of honesty. We tried to create a corporate discourse that in the end would alienate people.
We are more than a hundred thousand people, some of them have been sick, some have unfortunately died, some or many of them have suffered major salary cuts or have been or are still in the food laws (partial unemployment?).
We have tried to be good people.
When do you think business will somehow return to normal?
I think the way it looks; it's going to be completely related to the vaccination. The only country in the world that has succeeded without vaccination is Australia, as you saw this weekend at the tennis tournament with the people around. It's going to be completely related to vaccination and when you look at these situations, it seems that towards the end of the second quarter we're talking more about April May June where we could have a reasonable level of vaccination. It will depend on a lot of countries. The second part of the year will return to "normal".
What the crisis has taught us is that beyond the year, the two years and the five years are now the month and the quarter. I think the first quarter is over, everyone is looking at the second quarter and, as I said, the vaccination seems to indicate that it's more towards the end of the second quarter that people will again have the confidence to say "OK, I've got the vaccination, I can travel again".