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09 Mar 2016
IHIF 2016 Day 1
The first day of the 19th International Hotel Investment Forum (IHIF), was opened by Kerry Gumas, President and Chief Executive Officer, Questex, hosts of IHIF and Jonathan Worsley, Chairman, Bench Events. Gumas highlighted the multiple networking opportunities available at IHIF as well as the many deals that are often done during the event and the outstanding programme content. Worsley bought to the audience’s attention the 500-mile journey taken by 11 cyclists who travelled from Amsterdam to Berlin raising money for Future Talent and the Anne Frank Trust.
Michael Hirst OBE, Consultant, CBRE Hotels hosted the opening session: Bewitched, Bothered and Bewildered: Threats, Challenges and Disruption facing our Industry and introduced David Rowan, Editor, Wired Magazine to the stage. Rowan pointed out the Acceleration of Innovation that we are currently experiencing and that the rate of change is only going to get faster in the future. He encouraged hoteliers to start making the hospitality experience they offer guests an immersive one and offered the following top 6 tips. Firstly, to embrace connectivity and offer free, high band width Wi-Fi throughout the hotel. This is especially important for younger consumers. Secondly, to simplify touchpoints and make every experience your guest has with the hotel, before, during and after their stay as streamlined as possible. Rowan mentioned the “desire path”, which is the most direct and hassle free path that humans will take instinctively take and encouraged hotel owners and operators to consider this throughout their operational processes. He hinted at some organisations who were employing Chief Consumer Officers and how this may be a sensible move for most organisations. He stated the importance of interacting on the guest’s terms, importantly using the social platforms that they use to interact and communicate. Fourthly, he mentioned the importance of networking and pointed to the relevance of the crowd. “At every level, the crowd is deciding what happens and you need to connect with the crowd”. His fifth tip was to radically personalise as consumer expect a level of service personal to them throughout their contact with a hotel. Finally, he urged hotels to tell a more authentic story through their marketing and sales activities. Asked whether hotel owners and operators should be afraid of technology he said no. “A new technology will always come along and it’s about how you react and adapt that is important”. Rowan doesn’t believe that new technology will reduce the demand for travel as “being up close, feeling the pulse of the conversation and looking into people’s eyes will always be important”. Asked about the impact of automation on the sector, Rowan felt that parts of the service sector could be automated but “there would always be demand for highly trained humans who can make guests feel super special”.
Rowan was then joined on stage by Vivek Badrinath, Deputy Chief Executive Officer, Marketing, Digital, Distribution and IT, AccorHotels who discussed the 5-year technical transformation plan AccorHotels are undergoing under his management. He mentioned the internal social network recently launched by the brand which 20,000 employees signed up for in 3 months.
Badrinath admitted there were challenges on getting amazing technical teams in house for hotels and therefore they had created strategic partnerships with several technology companies. Rowan noted that the word “sharing economy” is used very fluidly and companies such as BlaBlaCar and Airbnb are providing a benefit as they are challenging the norm. On the subject of loyalty programmes, Badrinath feels they are very important as customers enjoy recognition. He notes the Accor App helps customers achieve this recognition using a platform (an App), customers are used to interacting with. Rowan disagreed however and thinks “millennials are far more influenced by a story and peer recommendations”. On a closing note, Rowan feels that the industry isn’t doing enough about cyber security and it will the next major international issue that politicians are going to have to address.
The following session was dedicated to cyber security and Stewart Room, Partner and Global Head of Cyber Security and Data Protection, PwC Legal LLP presented the subject. Interestingly, the UK (plc), UK plc didn’t have a cyber security strategy until 2008 which highlights how it has only recently reached the agenda of governments. He announced that in the spring of 2018, the General Data Protection Regulator would come into effect which will force a change in the handling of personal data and Room believes will be “the most significant legal change in Europe”. He quoted an Apple spokesman who recently said “compromising the security of our personal information can ultimately put our personal safety at risk” and also the CEO of Talk Talk who recently said “being honest pays dividends. My fellow CEO’s are in danger of concluding the opposite. Don’t take this into the dark”. Room noted that only 6% of companies have a Chief Digital Officer and there is not generally a systemised approach to sharing information and he said “it is important to develop a narrative ahead of failure”. The concluding statement from the session was that it is important to recognise that you can’t just put new technologies in place without recognising the associated vulnerabilities.
Helen Loughborough, Vice President Global Safety, InterContinental Hotels Group then took to the stage to discuss global threats and how to keep guests and hotels safe and secure in turbulent times. She said hotels have to manage the balance between providing hospitality and providing security and that after cost, security was commonly known to be the most important aspect to guests. She warned that hotels could be viewed as convenient targets for terrorists and therefore that it was vital to have a comprehensive crisis management plan in place. This plan must cover prevention, preparation, response and recovery.
The following session entitled “the distribution challenge: impact on hotels strategy” was chaired by Ufi Ibrahim, Chief Executive Officer, British Hospitality Association and welcomed Osama Hirzalla, Vice President Brand Marketing & eCommerce, Marriott International, Carl Oldsberg, Vice President International Operations, Choice Hotels, Cyril Ranque, President, Lodging Partner Service, the Expedia Group, Terri Scriven, Industry Head Hospitality, Google and Peter Verhoeven, Managing Director EMEA, Booking.com. Scriven opened the session by saying 37% of people now book their travel online and of this, 25% comes via an OTA and 12 direct. Google research shows that users use 28 different sites on average through their travel research. She also mentioned that people look at their phone 150 times a day on average and 40% of searches happen on a mobile device. Ranque highlighted that travel is an industry that grows faster than GDP but demand comes from multiple geographical areas so is complex to analyse. Added to that complexity is the fact that users often use multiple devices throughout their search process so multi-channel, multi-device and multi-geography all combine to make analysing and understanding consumer habits challenging. Verhoeven noted that consumers broadly fell into two categories; those that planned and booked a long time before travel and those that booked within 48 hours of travelling. Hirzalla stated that mobile is the fastest growing direct channel and “investing in mobile is critical”. Oldsberg said “the days of standing on a mountain top screaming the benefits of your brand are long gone and it’s now about engaging with customers on their level”. Hirzalla emphasised the importance of the channel mix and to encourage owners and operators to constantly ask “which channel is most profitable”? Verhoeven pointed out that Booking.com need hotels to operate and Ranque said Expedia were moving towards being a service provider and not only a distributor. When questioned about the role of independent hoteliers, Scriven said she felt OTAs had helped independent hotels and encouraged hotels to ensure their natural/organic search optimisation is up to scratch. She also noted that hotels own a large amount of customer data which can be valuable in connecting with guests and personalising the service. Hirzalla worried that there was a knowledge gap amongst hotel staff in accurately analysing hotel data in order to analyse behaviour. When asked about future trends, Scriven feels the silos between the various departments in hotels need to be interlinked to avoid silos. Hirzalla’s advise was to “understand the channel mix and profitability by channel and to remember that the customer experience is paramount”. Oldsberg reminded owners and operators that they own the product and to “focus on the after arrival and before departure section of the experience”. Ranque encouraged operators and owners to “invest in guest satisfaction and to pick your strongest battles and outsource the rest”.
The presentation of the IHIF Lifetime Achievement Award followed and was presented to Dieter Müller, Founder and CEO, Motel One by Willy Weiland, Managing Director, Solutions dot WG Hospitality Advisory Alliance GmbH. On receiving the award Müller said that “the hotel industry has never stopped fascinating me”. The success of Motel One has largely been down to the quality of location of the budget hotels. The company have 24 hotels in the pipeline (7,700 rooms) which will take the total to 75 hotels (21,600 rooms).
Then the IHIF Young Leader award, in conjunction with the International Society of Hospitality Consultants (ISHC) was presented to Ben Justus, the founder of EGBOK. EGBOK is a charitable non-profit that enables underprivileged young adults in Cambodia to be self-supporting by providing education, training and employment opportunities in the hospitality industry and utilizing a comprehensive approach with an emphasis on life skills.
The final session of the first day was the CEO panel, “ripped from the headlines” hosted by Nick van Marken, Global Head – Hospitality, Deloitte LLP who was in discussion with Geoff Ballotti, President & CEO, Wyndham Hotel Group, Chris Nassetta, President & CEO, Hilton Worldwide, Wolfgang M. Neumann, President & CEO, The Rezidor Hotel Group, Richard Solomons, Chief Executive Officer, InterContinental Hotels Group and Federico J. Gonzalez Tejera, Chief Executive Officer, NH Hotel Group. van Marken opened the session saying there had been $85bn of global transactions in 2015. On China, Solomons said the economy was slowing, not declining and all the growth drivers are still there so he remains positive. On Africa, Neumann said it was a “continent of opportunities” where 50% of the population are under 30 years old and he is “confident they can make positive inroads”. Ballotti believes that growth will be more on the rate side than occupancy and Wyndham opened 65,000 new rooms in 2015. Nassetta feels that Europe is extraordinary strong and will be a close second to Asia Pac in 2016 as they have one hotel a week opening in Europe this year. On the Brexit, Solomons is relatively indifferent as IHG operate in 100 countries. On Donald Trump, Nassetta joked that the “upside is they have been dying to have a hotelier as a President……!”
van Marken pressed the issue of further consolidation and in response Nassetta said “they (Hilton) still have lots of running space” and believes the latter stages of the investment cycle are where you traditionally see M&A activity. Solomons said that “consolidation in the last 10 years has been organic and believes that whilst scale matters, being big for the sake of it is unnecessary. Neumann feels hotels have to be able to engage with customers directly and historically they haven’t been good enough at telling interesting stories. “We need to be able to communicate that direct booking offers the best value and this is a re-education programme”. When discussing loyalty programmes, Nassetta feels they have historically preferred frequent travellers and they need to appeal, and reward, loyalty for all travellers. Solomons make the point that, when thinking about differentiating factors with the new players in the market, hotels should consider their legacy. He pointed out that IHG are going to be 70 this year and they are going to build an engaging story around this legacy to take to the market. Tejera dispelled the myth of the sharing economy and instead called it the “selling economy”. Ballotti pointed out that companies like Airbnb have “been around since Mary and Joseph checked into the Inn” and this was nothing new. Nassetta encouraged hotels to remember the business they are in, “the business of hospitality” and sees Airbnb and similar as lodging, not hospitality. Neumann was slightly more cautious and felt the industry should learn from the effect Uber has had on the taxi industry. When discussing technology, Ballotti said the cloud was “the biggest trend at the moment”. The panel seemed to share the view that they were not software specialists and that outsourcing this to expert partnering companies was a sensible path to take.