At a time when all the indicators are red in the real estate sector (interest rates, real estate development, rising construction costs), what about the hospitality sector? 31 years ago, Hospitality ON was the first medium to publish a worldwide ranking of hotel chains and groups. This year, it is once again an opportunity to take stock of the progress made by the chains and to analyse the dynamics influencing the development of branded hotels.
For the past ten years or so, a common refrain has been heard in developed urban markets. Some investors are questioning the need to have a brand name to maximise the performance of their establishment. Some of the pillars of value creation, such as distribution and operational know-how, have been undermined. What, then, is the situation for the development of chains in this context?
After Covid, it's clear that the tide has turned. The situation has proved so complex that, in markets with a high proportion of independents and a preponderance of leisure and resorts, the move to chains is growing. The recent alliances between IHG and Iberostar, and between Hyatt and Apple Leisure Group, attest to the attractiveness of this segment.
Rather than opposing points of view and asking whether we are for or against signs, the question would surely be: when is a brand relevant? For owner-managers, the equation is simple: the relevance of a brand is equal to its value creation, minus its cost.
The added value provided by brands must be enriched. The boundaries of brand standards are shifting. Just as products were standardised during the sector's first industrialisation phase, so now it is a question of industrialising local and individualised experience markers. In this new cycle, it's worth remembering that transformation can only take place where there is the human capacity to carry it out. Without an effective crew, the ship risks running aground.
It's up to the networks to provide the answers to these transformations. How can productivity be made compatible with CSR requirements? Owners have not yet acquired this know-how and are waiting for support from the chains. In order to address the new pillars of value creation for customers, they need support and guidance.
Customers expect renewal, and it is complex to change the course of entire historic networks. The easiest way to do this is to create brands that will fuel the experience and redefine new codes. There is no need to pit traditional brands against others that are considered more 'desirable', embodied by lifestyle brands. These brands continue to deliver value and have enabled the industry to establish its credentials. They have not been left behind in the wake of Covid, where people have naturally turned to brands identified as having solid value. Now it's up to the new generation to revitalise these brands so that they better meet consumer expectations. As with any couple, when everyday life becomes tiring, there needs to be a shared desire to re-enchant, without calling the relationship into question.
Until the 2010s, the market was thought to be stuck with the major operators. However, with the arrival of Chinese operators, Oyo, other digital natives and lifestyle operators, we have seen that the market is perhaps more open than we thought. In the end, there is no longer an established situation: B&B HOTELS is launching in the USA and the UK, and Europe's number 1 Accor has repositioned itself in the upmarket in just a few years. Everything remains open.
The sector has certainly taken the first step in the development of resorts within hotel groups. Many of them are now positioning themselves in this area. Since Henry Ford and his Ford T, available in a single colour, the car industry has come of age with cross-overs, saloons, city cars, SUVs... Our hospitality industry is experiencing this transformation with a growing depth of range. We are moving from an era of "one product for all" to one of "many products for everyone".
Listed companies are creating value by developing their product offering. If we compare the trajectory of automotive products, we can see the potential for the sector. But we must be careful not to create brands that respond primarily to the needs of investors rather than those of customers.
Development is the thermometer of the sector's health and attractiveness; of the world's top 10, the top 8 are continuing to develop their portfolio.
The last 50 years have seen the advent of industrialisation in this sector. The next 50 are still to be invented, because everything is still open. Whatever happens, demand for travel and commercial accommodation will always be high. Who will meet it, and how? Are we at the dawn of a new deal in hotel development? Established codes are being redefined. Franchise versus management, luxury versus commodity hotels - the boundaries are blurring. These are just some of the issues we will be discussing at the Hospitality Operator Forum and the Hospitality Asset Forum.