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Analysis

#GLF18 | Hospitality Leaders, strategic forum

Analysis and perspectives by Peter Kerkar, Chief Executive, Cox & Kings, Georges Sampeur, Chairman of the Executive Management Board, B&B Hôtels, Karin Sheppard, head of Europe, IHG and Thomas Willms, CEO, Deutsche Hospitality

What are your short-term prospects?

Karin Sheppard : "The outlook is positive. Despite financial crisis and events that occurred in Europe, activity bounced back quickly. We have a strong outlook. There is a continued desire to invest and there are increasing numbers of customers, from Asia and beyond."

Thomas Willms : "We are still in a blessed industry. The budget for 2018 is underway, and our development plans should work. Customers in Amsterdam, Berlin, Hamburg, Egypt and Spain are on a rebound. Chinese customers are coming back. We are planning another very good year and expect 2019 to be good as well."

Olivier Chavy : "Demand is strong in Germany, Holland, Ireland, as well as Egypt, Tunisia, Marocco, and Asia, especially in Thailand; Switzerland is rather flat."

Perter Kerkar : "We are seeing 17/18% growth for coming years, it is our second year of double-digit growth. It is very exciting to develop hostels like Meininger that experience strong growth on all the markets with a 95% OR. We are using indicators such as m² yield and it is growing.  Revenues per bed have doubled in the last 4 years."

Goerges Sampeur : "As others have said, this a blessed industry. The democratization of transportation in our economic niche is a fine opportunity. We meet customer needs. Our development is exponential, we will open 50 more properties this year."

What are the threats and black swans?

Georges Sampeur : "Terrorism at destinations. The industry itself, we are potentially our worst enemy. It is time to put the human being back at the center of our business in terms of both customers and staff who welcome them. There is a real risk of trivializing brands. It is important to nourish collaborators and valorize them. Trademarks are at risk of being weakened, brands must not be developed for the investor but rather for the end customer."

Olivier Chavy : "Political instability and volatility are a big threat for us. We have a lot of properties in the Middle East which is an unstable area."

Thomas Willms : "Terrorism is a constant threat. Upcoming exchanges between China and USA may affect the business travel. Big data is also an issue, we have this it with Facebook; we need new data regulation. Our daily business is disrupted."

Karin Sheppard : "Demand continues to be strong. We will need a lot of talented people to run our hotels. 25 million people employed in Europe in the hotel industry where there is high turnover. We must make the accommodations industry sexy for employees and value career development. We have to take into account millennials’ expectations."

Peter Kerkar : "Political threats must be taken into account. Underlying trend technology and talent management are central. We didn’t react to aggregators and that was a mistake. We have to take the bull by the horns and confront it to reverse that trend. Google and Amazon are going to kill OTA. We must transform the way we see distribution."

What will accommodations employees look like? what will their skills be?

Karin Sheppard : "The core issue is the ability to connect with guests. We need to find people that have the ability to connect. We must revolutionize the interface presented to employees, look for personality before skills. People must embody the brand."

Olivier Chavy : "We just opened a property in Tunis. Our employees do 2 month shifts in all the jobs related to both front and back office. We are currently testing this new method and initial returns are very positive. We know that millennials get bored very quickly. It is a very satisfying experience and guest feedback is very good."

Thomas Willms : "30 years ago grandeur was impressive, today, the most important is marketing and digital. We have to build a sexy and cool industry. Jaz in the City is our response to attract different styles and employees, and it is good to have new people."

Peter Kerkar : "We have to think about relevance. Too many times hoteliers have tried to make their staff work fit specific roles. We broke the mold; nobody holds a specific position in our hostels. Hostels are a place where people want to come interact and have a great time. Enjoy a full experience. This requires a very high level of skills."

Georges Sampeur : "On the economy segment, we do not have many employees in the hotels. We are developing an entrepreneurial culture within hotels. All that is digital should give us more time for the guest and result in personnel who are 100% at the ready for guests."

What are the next changes, big things that will disrupt the industry?

Karin Sheppard : "We have been rethinking the use of space whether it is for the audience or investment. We now propose multipurpose spaces. They generate revenues, as people spend more time in the public spaces."

Olivier Chavy : "We are entering a new business model, capital light, where franchisees want to pay for performance. There are new management agreement models, hoteliers want to pay fees on upper lines rather than bottom lines. Continuing with the current model is increasingly difficult."

Peter Kerkar : "We already have the lease model, which is the new trend where we take the risk.  We compete as an investment class."

Thomas Willms : "Mobility will change our lives. Uber, Google cars, car rental companies, airlines…. will change our way of doing business. They will all play an important role."

Georges Sampeur : "It is important to take into consideration the technological environment to improve performances. We must not forget that the best assets are brands. Airbnb must inspire us because the platform meets customer needs, they successfully dematerialized what offers no added value. All too often the first contact with the hotel continues to be when guests are asked for their credit card and documents. This is not the best way to start."

What do you think about technology?

Karin Sheppard : " is clearly an opportunity. We have the possibility to develop new platforms for reservations and a new management system. We must use technology to enhance the guest experience and to help employees. Technology can offer so many things, it allows us to catch people anytime during travel, even anticipate their needs."

Thomas Willms : "We are thinking on a global scale. We offer Alipay and an Alexa voice service and this is just the beginning."

Olivier Chavy : "We have transferred our PMS to the cloud and are doing the same with our CRM. It is really amazing to see how important it is for predictive behavior. It is a great tool for personalization. However, we must be careful because many things are possible with algorithms."

Peter Kerkar : "We see ourselves as gateways to local products; each property has an inhouse app, to book restaurants, museum tickets…. Whether it’s for families or millennials, we always wonder how can we enhance their travel experience. Spending outside the property is equally important to us."

What are your priorities?

Georges Sampeur : "Develop, grow as fast as possible, in as many countries as possible. Give our brand value. Win the challenges on new territories. Find good locations and manage our properties as best we can."

Karin Sheppard : "Growth of the business, especially on the luxury market. We want to develop our InterContinental brand. For instance, 130 million Euros were invested to renovate Paris Le Grand. We expect to grow from our current 6 hotels to 40 in a rather short amount of time.
Kimpton will open in Paris in 2019 and we have great opportunities to continue developing. We are also preparing a conversion brand for high quality hotels that may not fit with our current brands. Of course, as a major worldwide franchisor, Holiday Inn and Holiday Inn Express are great brands to develop."

Thomas Willms : “We created Deutsche Hospitality one and a half years ago to have an umbrella brand and define the brands very concretely. We also created a new brand for conversion: Maxx by Steigenberger. We are going to focus on franchise and soft brands. We may be missing a budget brand but that is not on the agenda today. We have to work on digital; for instance, we don’t have a global loyalty system. We have to concentrate on our culture in order to find the talents of tomorrow.”

Olivier Chavy : “Growing and developing of course, keeping strong relationships with our owners. But one of our main priorities is culture and finding talents. Implementing culture of performance, talent retention and attracting new talent. We have created a millennium X/Y committee. We are focusing a lot on people now."

Peter Kerkar : “Last year we had 16 properties, this year we have 20, next year we will have 36 properties, so talent is key. We need to keep the enthusiasm we have created to replicate the experiences we deliver to our guests. We are trying to synergize our multiple experiences outside hotels. We have always thought outside the box during our development, so we understand the challenges of new technologies."

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