Six hotel professionals came to reveal their development perspectives and priority territories. On this occasion, they pointed out the importance of listening, adaptability and pragmatism needed to accompany the hotel operator. The key is to establish proactive partnerships in order to evaluate the best profiles and the best owners in each market.
- What are your development opportunities and which territories are your priority?
Willemijn Geels, IHG: “At IHG, we have more than 5,000 hotels worldwide of which 700 are in Europe. We have several priority territories: England, which is our historical market, where we are very present and where we want to maintain a leading position by developing or adding new brands. We have Germany, which we started actively developing a few years ago. At first, it wasn't easy because you really had to find the right system to develop a market that is dominated by real estate groups or investors all looking to lease. But we are essentially a franchise-based model. I'd say 80% of our development is franchised. Today, we have found a model with franchise partners and we are beginning to see the fruits of this work with 70 hotels open and over 40 in the pipeline.”
- And France ?
W. Geels, IHG: "France is a very important market for us. There is enormous development potential for our brands. We're a bit of a challenger on this market. There are national champions that have been around for a long time. I think we have real added value to offer our franchisees with our brands. What interests us is not to go everywhere in France and it is not to grow at all costs. We are really looking for strategic locations in key cities, where we know we have added value and something to contribute. Development in France will focus on mid-range brands such as the Holiday family (Holiday Inn and Holiday Inn Express) and Hôtel Indigo. In luxury, we already have a fine InterContinental portfolio. We will reinforce luxury a bit, but our priority and growth potential is more in the mid-range and boutique hotels segments."
Hugo Rovira, NH Hotel Group: "In some European countries we have a strong presence. In Spain and Italy, we will have fairly selective growth. In contrast to other groups, we see a fantastic opportunity in France for about twenty hotels in key cities and, of course, with good locations. The aim is to complete development in major European capitals, but also in the countries where we are already present, such as Germany, the Netherlands and Belgium. But undoubtedly, France will be the focus of some of our efforts, in addition to everything we do with Latin America where we have a strong presence in some countries."
Christian Michel, Wyndham Hotel Group : "We have major markets like Germany and England. Then, we had strong growth in Turkey and Armenia where we are market leaders. We also have a development force in Russia that affects the countries of the former Soviet Union. As for France, this is a very important market. We are not very present, and we would like to be more so. Mainly in Paris and the main cities of France. We are present with Dolce, a brand positioned on the MICE market, and we are happy with the two establishments we have in France. We are looking for other opportunities. France has a strong appeal for the MICE segment. There is a strong internal demand for more destinations and more products."
- Please tell us about Vacalians and where you are developing?
Christophe Alaux, Vacalians : "Vacalians is a leader in camping in Europe. Camping today, with respect to a profession that you all know, is hospitality in the 60s and 70s. There are no major operators. There was no equivalent of a Carrefour, Leclerc or Accor that emerged and gradually consolidated the market. Each operator has, on average, less than 2-3% of the room stock. So, we have unlimited territory on consolidation. If you look at the service professions, be it banking, hotels, distribution or aviation in Europe, there are some sort of oligopolies. There are three to four operators with between 15 and 20 % share of the supply. This means we still a way to go before we reach the size of an Accor, a Carrefour, a BNP Paribas or an Air France/KLM. The good news is we're not competing with you. Our job is to consolidate the receiving markets, i.e. France, Italy, Spain, Croatia and Portugal - where customers go in the summer - and the ignition markets, i.e. the French, English, Dutch, German, Polish and Austrian markets. We are distributors and operators. We have a residence brand and a distribution brand and we want to develop on both."
- And in terms of European development?
G. Le Lay, Foncière des Murs: "We tried to develop our business model. On three points: diversification of operators - 17 partners and 24 brands - diversification of investment methods - lease, management and franchise - and geographical diversification. In four years, we have expanded from a portfolio that is 75-80% French to 45% in France, 25% in Germany and 16% in Spain. The rest is divided between Benelux and Portugal. 6 billion, including 5.5 billion in hotels. There is still room to accompany our existing partners as well as new partners."
- In other countries or where you are well established?
G. Le Lay, Foncière des Murs: "Our vocation is to be investors in the euro zone and therefore Continental Europe. We have a hole in the map and it's in Italy. We only have a partnership with MEININGER Milan, but this is the only asset we are developing. There is potential in Italy and we are continuing in Germany, France and Spain. Perhaps we will seek to diversify on other bases, but we are clearly focusing on Western Europe while considering our capacities to try to accompany development in Central and Eastern Europe."
- When you develop abroad, what do you identify in particular? What motivates you the most?
C. Michel, Wyndham Hotel Group: "The opportunity is to find the business model that matches what we do. In Turkey, there is only franchising. It is also the possibility of having a country that has strong internal development with franchisees that are responsive, proactive and recommend us. The key is to find local partners that will allow us to evaluate the right profiles and the right owners. We need partners and franchisees who are experienced people. Franchisees need to be treated carefully to ensure they are successful in what they do."
C. Alaux, Vacalians: "In our business, what is important is to help our partners. Whether they are franchisees, land investors or independent competitors, the important thing is that they understand: what the company is, how we want to do things, what our purpose is and that we share the same values. We are too small and too seasonal to be able to make up for an error in judgment. The other point is to deploy a business model that you master. We are not going to create specific business models for Spain, Portugal or Italy. We have been testing something for 15 years that works well and has very high margins. This is the model that we deploy with great budgetary and financial rigor and without testing abroad. Testing is done in France, on our bases and we deploy finished products abroad."
H. Rovira, NH Hotel Group : "I think it's important to keep the customer the focus of our attention. Considering the double faceted aspect of the supply market and the receiving market that we talked about earlier, we must ask ourselves where our customers are and where our customers are going. While many operators are moving towards the asset light model, we on the contrary, recognize that our strength is not franchising. We have a lot of owned and rented hotels. We feel very comfortable with this system. We want to know if our products or our brands can be well received on the market in question. On the French market, luxury and low-end products are well treated. We think there are excellent opportunities with the nhow and Energy Collection brands, except with our upper upscale products."
- You went from being developer to hotelier: can you tell us why? And what is your model today?
André Lacire, Alp: "Obviously, development is not so simple. Real estate is valued less than other activities and property costs are valued less. We also need to find the right investors and the right operator. It takes years to develop a hotel and the margins are quite small for the developers who do it, because the construction costs are quite high. The hotel business has all the advantages of accommodation and the office. I thought it would be nice to move to the other side and develop for me. With a partner I created a hotel operating company that works under franchise with hotel groups. You know there's a general rule of thumb in the hotel business? The first one who opens a hotel fails and the one who takes it over succeeds. We must be very careful and be attentive to the right location, the right product and the right operator. It's great to have a good franchisor. But it is important to have expectations from this franchisor because we pay high fees. Sometimes it's a little too complex. I think franchisors should simplify their process and, at the same time, the lives of franchisees."
- What do you expect from hotel operators?
A. Lacire, Alp: "We expect them to advise us on the right product and to accompany us in the process and development. We expect that the central reservation system will really be at our service: simple to access, easy and efficient. I understand the hotel business today with asset light, but it shouldn't be too light either. In reality, we can see that hotel groups have developed outside the reservation centers, by controlling their marketing themselves. We know very well that innovation never comes from the heart of the institution. It always comes from the margin. The proof is that powerful hotel groups buy new experiences that have been created by others. That's how innovation is done today: from the outside. Maybe I'm waiting for a little reactivity."
- Is this idea of distribution and services something you promote in your group?
C. Alaux, Vacalians: "When I am asked this question, I usually answer that I was in two companies before joining Vacalians: the Accor group and the Carrefour group. So, I know the ending. I remember in the 1990s and 2000s at Carrefour, when people said: Amazon is not serious. It's not retail, it's computer science. Then I remember when I entered this room in 2008, the general manager of InterContinental said: no, but Booking, we made a mistake because we considered that they were not rooms, they were IT. Then five years later, someone said: no, but Airbnb, we made a mistake because we didn't consider it to be rooms, it was IT. So, I explain to my teams that I know the end of the story. If we think that we are smarter than others, if we don't consider distribution to be as important as our own campsites, we will have no future. We do everything to avoid disruption. I am very proud to maintain a direct distribution rate above 60% and at least a third of the investment is in digital to absolutely avoid disruption. We develop franchising because we have that strength, otherwise in the long term, it won't be viable. We are developing strong brands to feed this promise of direct distribution because otherwise we will not have the means to strengthen the trademarks. For me it is a priority, an obsession, to maintain the strength of the brands and the strength of distribution."
- What do you expect from hotel operators?
G. Le Lay, Foncière des Murs: "We see the relationship with the hotel operator as a partnership. What does partnership mean? The idea is to have a critical size with each of the operators, meaning to be able to accompany them in their development, their work project and their reallocation strategy. We want to work on flexibility. With each of our partners, we make a call every two weeks and we say to ourselves: what do you think of this deal? Once you've spent time negotiating a lease or a franchise, the idea is to capitalize on it and be able to accompany them everywhere."
W. Geels, IHG: "For us too, it is very important and very interesting to have this type of partnership. We are mostly franchise, but that doesn't mean we don't do something else. In the mid-range, we have more franchising. On luxury hotels, we tend toward management contracts. We want to keep a very flexible approach and once again, I think there is no contract that is valid or adapted for all investors. It's really something that's up for discussion and negotiation. Once you find the right operating mode you can duplicate it. We get feedback from our investors. They tell us what is right and what is wrong. They make us progress and consider new concepts or new brands. We will soon launch a new brand involving rebranding in May/June. This is really the result of what our investors have told us: you have a very clear, well identified brand portfolio, but there is something missing between Holiday Inn and Crowne Plaza that is more flexible and less standardized. We've taken it into account and we will launch this new brand soon."
H. Rovira, NH Hotel Group: "It is important to be pragmatic. We know that franchising is not our strong point, but our portfolio is fairly well balanced between the other three solutions. It is necessary to know how to bring the brand and the right product for each site. What is lucky about France is that we have everything to do. Unlike other groups, we have a very close relationship with owners. We try to understand the local aspect of things. There are many global things, but there are some gastronomy concepts where we don't have a solution for everything. We want to offer catering spaces for the properties and the customers and we try to find the right concept for each location, instead of standardising.”
C. Michel, Wyndham Hotel Group: “I think it is necessary to listen to the franchisees and the market. The qualities of standards are important but it is also necessary to adapt to each market, particularly in catering.”
- Are you reassured by all that? By this accompaniment that is everyone’s will?
A. Lacire, Alp: “They have plenty of good intentions. But to close, if there are any local elected officials here, I would like to call out to them to free up the means to develop hotels. There is really a need for serious development in our country. It is a political choice. A hotel strengthens the city’s appeal and creates jobs. There is great wealth and I think representatives can pay some attention to that.”
- If you were to develop the ideal hotel, which would it be and where?
W. Geels, IHG: “I think it would be a Holiday Inn Express because this investment model works and and is controlled in terms of both development and operational costs. Where? Probably in the Seychelles.”
C. Alaux, Vacalians: “My thinking is that camps are mass market products. A campground often means 20-30 hectares and 2,000-3,000 people. They are big leisure factories. I think there is a market for boutique camping. In Spain there are ephemeral rooms set in nature. Upscale is not necessary because it is important to remain in the market, but with something that is more in keeping with nature, outdoors, something that is neither camping nor a hotel.”
C. Michel, Wyndham Hotel Group: “I would build a small hotel on a magnificent island in Greece. I think I would close it in the winter to travel and think up new concepts, to reposition and revitalize myself, and invent new ideas for the next season.”
G. Le Lay, Foncière des Murs: "I will be pretty down to earth. A beautiful concept on the Champs-Elysées.”
A. Lacire, Alp: “It might not be the ideal hotel, but I think what Serge Trigano hass done with Mama Shelter is interesting. What we are doing with Moxy is in the same line of thought. It is to create a hotel that captures external traffic flow in addition to guests. We create a working space, leisure space, a destination to sleep in, but that’s not all. It is truly a place for living.”
H. Rovira, NH Hotel Group: "In the same way someone previously said the ideal employee does not exist, I think the ideal hotel does not exist. What I like to do with each product and each project is to try to understand: what we can do to make this product unique and different. For me, each product is an ideal hotel.”
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