As Thucydides said, "History repeats itself". As much as ever, it is impossible to create a brand and develop its renown or relaunch a product that has got old without investing. Likewise, value cannot be created without renown, without a brand and without a product.
As a result, distribution is lost to the benefit of digital newcomers, which nonetheless benefit from having developed the hotel supply and making it more accessible.
We have also lost a share of our clientele to the benefit of the sharing economy, because hotels have become too expensive and unsuitable for hosting certain categories of tourists.
Welcome to the 21st century
New products are flourishing and this is only a beginning. One must be capable of adapting, following trends, and even get ahead of them. It is all the more flagrant when you look at the valorisation of certain companies. Those that invest in the future, even if they continue losing money, are over-priced. Inversely, those that continue to belong to the old economy are underpriced. The financial world believes in those who place their money on the future, but I think they also underestimate the true value of existing hotels and their ability to bounce back.
A fabulous recent example is citizenM. With only 11 properties in Europe, Asia and the United States and valorisation estimated at 2 billion dollars with the recent arrival of a Singaporean investor. Other young hospitality brands such as Motel One (nearly 20,000 rooms in Europe) and Mama Shelter (10 properties in Europe) are also promising.
Today, a brand, a concept, an idea are all golden provided there is enough audacity, creativity and perseverance to make it live. Soon, 3D printers will begin full speed production to build more coherent properties that combine co-working, co-living, services, relaxation spaces, hotels, etc…
The Indian start-up Oyo is a fine example of such exponential acceleration. The group went from 52,000 rooms in operation on January 1, 2018 to more than 458,000 rooms on January 1, 2019. The model is simple, it starts with a need and satisfies it.
When chains were on the rise in Europe, hotel groups mastered management, development, distribution and especially construction technologies. Today this is no longer true, and even less so with facial recognition, robotisation and e-payment.
The arrival of chain hotels allowed the independent hotel sector to rise out of obsolescence to offer independent hotels that are professional, secure and valorised.
Today as well, we are faced with two major competing models. A model based on the supply policy, that innovates, takes risks while developing new concepts, hybrids or not that rely on co-working, co-living, in short: mixed-use. Faced with all these new brands are the "old models" based on demand, which are by far the most important.
The new models are born out of a liberal vision of investment at a significant risk for major investments. On the other side, properties that operate on the demand model take a more conservative outlook illustrated by the current hotel ranking. After the different crises, a good number of them were unable to invest sufficiently in the CAPEX in order to modernise.
Clearly the two models will co-exist for some time, and so much the better as each one feeds the other and a virtuous circle is falling into place in which new concepts push old ones to reinvent themselves and progress. However, this virtuous circle is fragile. It is necessary for the deciders and politicians to be aware that Europe needs this formidable industry that is tourism. This means providing the tools to allow hospitality entrepreneurs to invest and modernise.
In 1996 around 524 million tourists traveled worldwide. In 2018 that figure was 1.4 billion. Europe remains the most visited destination worldwide and by far; moreover it is in Europe that tourism was invented.
Europe is the leading destination worldwide. I am certain that our lag time will be made up for in the near future by businesses, whether they focus on supply or demand.
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