08 Mar 2017
Day 2 Summary from IHIF
The second day of the International Hotel Investment Forum (IHIF) started with a warm welcome from Kerry Gumas, President and Chief Executive Officer, Questex LLC who then made a generous donation of $30,000 to Ecole Hôtelière de Lausanne. The cheque was presented to Remi Walbaum, Chief Innovation and Valorisation Officer at Ecole Hôtelière de Lausanne.
Gumas then introduced Sébastien Bazin, Chairman and CEO, AccorHotels, to the stage to talk about what the next hotel group models are in his opinion. Bazin opened his presentation stating “AccorHotels has never, ever been stronger” and also announced that the business would be adopting an asset light structure. He was quick to say that Airbnb, Booking.com, Expedia, etc are the companies this the hotel industry need to watch. “they are very good and what they are doing is legitimate.” He said “every time they grow, they take something away from me. They also bring me something, they bring me traffic.”.
He said that historically AccorHotels has been very asset heavy and very labour intensive. He is proud of the 240,000 employees across 95 countries and their commitment to the brand. However he pointed out that none of the successful digital players are asset heavy or labour intensive and the goal for AccorHotels is to have the same level of interaction with their guests as the digital brands do, typically 3 or 4 times a day. He said “whatever we do, we need to be customer-centric; stop looking at yourselves and look at your clients. Stop imposing your brand, your promise, your intent. Listen to what they want and react”.
He said that hotels were still a viable business but unlikely will grow more than 10% per annum. That is in comparison to the 10/15/20/40% rates of growth that Expedia, Booking.com, Uber and the other digital brands are experiencing. He feels “we need to tap in to what they do, we need to adapt”. He pointed out that “AccorHotels have never been stronger in development they have one new hotel opening every 36 hours, around the world.”
The next session focused on the Evolution of the OTAs and David Scowsill, President & CEO, World Travel & Tourism Council interviewed Dara Khosrowshahi, CEO, The Expedia Group. Scowsill asked Khosrowshahi about the level of commission currently charged by Expedia and the other OTAs. Khosrowshahi said Expedia has been “bringing commissions down over a long period of time and we now need to pass these savings on to customers, shareholders and partners”. He highlighted the trend of de-bundling and gave airlines as an example of how they now charge for each element; seat, food, luggage, etc and said that this is the way the hotel operators should choose to steer their businesses. He felt the internet was mainly responsible for tearing apart pricing into its components and creating the popular bundle pricing models we are seeing today.
Asked about Google and their moves into the tourism space he said “Google is a marketing platform and a very important strategic partner for us” but decline to comment any further. He did state that “the market is consolidating, the amount of technology you need to invest is this business is getting higher and higher”. He thinks that alternative lodging is going to be a very important – reference the 2015 purchase of HomeAway by Expedia for $3.9m – and a powerful factor for the future of our business. He feels we are at the start of a new wave of travel growth and the alternative lodging sector is “currently where eBay was 5 years ago” but through combining technology with distribution, this could be a real opportunity for brands and owners.
He feels Airbnb is “both a threat and an opportunity, anytime new supply is introduced new supply, it’s a threat to pricing and the opportunity is that it will introduce new travellers.”
Scowsill said that “China will dominate the future of the travel industry for all of us” and Khosrowshahi agreed saying Expedia were “focusing on the outbound Chinese travel market.” When asked about President Trump Khosrowshahi said “the fact that the ban is not based on fact is what worries me the most”. Khosrowshahi concluded by saying “travel is a force for good and brings people together.”
The next session was Re-thinking Strategies for Maximum Opportunities hosted by Mark Finney, Head of Hotels & Resorts in conversation with John Brennan, CEO, Amaris Hospitality, Jean-Philippe Chomette, Founder and Chief Executive Officer, Algonquin, Andreas Löcher, Head of Division Investment Management Hotel, Union Investment Real Estate and Camil Yazbeck, Partner, Investment Director – Hospitality, Patron Capital Advisers LLP. Yazbeck said: “we look at hotels where there is opportunity for a growth model, like the Generator Hostel model. We liked the model, bought it, and improved it”. He said they only hold assets generally for 3-5 years and do all the asset management in-house.
When asked about asset management on their assets, Chomette answered “it’s the performance and health of the asset that dictates how much asset management is required.”
Finney asked the panel about OTAs and their attitudes towards them. Brennan said they were the “frenemy” and said “we need to optimise the performance of the brands and assets in the context of OTAs”. Chomette made the point that “OTAs are part of life now and we have learned how to live with them.” He also said that people seem to have forgotten that before OTAs there were tour operators who were taking 15-20% commission.
Raj Chandnani, Vice President, Strategy, WATG, Wimberly Interiors gave the next lightning talk on the subject of design and staying ahead of the curve in a fast-moving world. He said “memories are formed from individual moments” and it was vital to understand:
Who is the customer?
Why are they coming?
What are they willing to pay for?
Where are they coming from?
Chandnani mentioned the first “Instagram hotel” in Sydney, Australia as a new model of experiential accommodation and warned that “cookie cutter design solutions are no longer acceptable.” He said consumers wanted “bespoke design that truly differentiate” and that “design elements need to be intuitive”. His final thought was that the industry needs to “reconnect hospitality with humanity.”
The next session was the presentation of the IHIF Young Leader Award to Eva Bachmann, Director of Acquisitions and Strategy at MEININGER Hotels. David Neff, Chairman of The International Society of Hospitality Consultants (ISHC) presented award. In her acceptance speech, Eva said she was “privileged to be recognised for my contributions to an industry which I am truly passionate about”.
The final plenary session of Day 2 was the CEO Debate: Striving in a Changing Market. Moderated by Russell Kett, Chairman, HVS London Office in discussion with Puneet Chhatwal, CEO, Deutsche Hospitality, David Kong, President & CEO, Best Western Hotels & Resorts, Stefan Leser, Group Chief Executive Officer, Jumeriah Group, Simon Naudi, CEO, Corinthia Hotels and Pierre-Frédéric Roulot, CEo, Louvre Hotels Group, CEO Jin Jiang Europe. Kett asked about the effect of Brexit and the volitility across Europe on their respective businesses. Kong replied that “it is important to focus on the brand building of your business in times like this; focus on what you can control and influence”. Leser said that their development plans for the future included “investing heavily in our products to keep the assets current” and Jumeirah would be developing further in China. Naudi’s goals for this year for Corinthia involve “continuing to put a focus on quality, not forgetting we are hoteliers and we need to give good service to our customers.” Roulot will be investing in the growing market across Asia whilst working on the loyalty of the customer to the brand.
Kong wants to establish the best loyalty programme in the industry for Best Western as this is “our best defence against the OTAs” as he feels that “in 20 years, hotel loyalty programmes will be as relevant as they are today.”
Naudi said that Corinthia have joined the Global Hotel Alliance comprising around 600 hotels. This was a good solution for Corinthia as “we share technology and cross reference but maintain our own identity”.
Another question was how the brands really differentiate? Naudi said that because they were “owners, investors and developers they look at the industry differently” and carefully consider the type of talent they attract who can think on all three levels. Roulot was cautious that “sometimes when you are big, you destroy the value of a business” and Chhatwal encouraged us to “stay true to your DNA”
Looking at how best to innovate Naudi said they were currently recruiting for a newly created role of Director of Innovation at Corinthia and also mentioned the success of moving the florist at their London hotel, traditionally located in the basement, to the foyer. Leser said the environment in Dubai was generally conducive to innovation but said he faced the challenge of how to remove the hierarchy traditional found in hotel companies that would lead to empowerment of staff, thus enabling innovation. Kong echoed this when he asked how to “evolve the culture of a company in order that it embraces innovation. “Many companies have great ideas but the culture needs to enable the innovation”.
The final question Kett asked his panel was on the subject of F&B in hotels and how to drive revenue through it. The responses from the panel were mixed; Kong said it was “very difficult, particularly in the US, due to the high level of good competition” whereas Chhatwal said “I see F&B as the biggest upside for us” and Roulot concluded by saying that “a restaurant is an opportunity to differentiate the hotel.”
A wide variety of breakout sessions ran across the afternoon concluding with a Gala Networking Reception at the Hotel InterContinental Berlin.
The third day final day of the event starts at 9.00am CET tomorrow, Weds 8th March.