On 28 and 29 September, leaders and investors from across the hotel industry gathered for this year’s Hotel Investment Conference Europe (Hot.E) at London’s Jumeirah Carlton Tower. With London topping recent polls as Europe’s most attractive hotel investment destination, it was a fitting locale for delegates from around the world to network, compare notes and discuss the state of play for opportunities in Europe.
Round we go
The highlight at Hot.E has always been its round-table discussion, ‘View from the boardroom – the CEO’s perspective’, and this year’s conference was no exception. Chaired by Christie + Co’s Chris Day, the panel started off by sharing insight into their current development plans and their preferred ownership structures, before delving into some of the challenges within today’s market.
Robert Warman, CEO of Langham Hospitality Group, raised the issue of the price of purchasing within a highly competitive market for real estate, where in recent years "values have been driven up, illogically at times", mainly by large players. Langham – which has a large portfolio in Asia and North America but currently, only one European hotel in operation, in London – would like to make a significant acquisition in the region, he said, when the right opportunity presents itself.
"We’d like to acquire a portfolio if possible," Warman said. "We are continuing in Europe to look for individual deals, and we’ll continue to invest."
With investment required for such a feat, the discussion soon turned to identifying and engaging investors. Puneet Chhatwal, CEO of Steigenberger Hotels and Resorts, said that matching the right investor to the right opportunity is vital, whether mid-market or luxury. Getting investors on board means demonstrating the value you can bring to their investment as well as your ‘sweet spot’ as an operator – what you can bring that others can’t. For Chhatwal, Steigenberger’s unique selling point is without doubt the German group’s ability to manage its properties to a high level.
"More or less everybody says the same thing when they go to conference. When they go to panels, they say, ‘We have the best brand, we deliver the best value’," Chhatwal said. "But I think the industry needs to learn one more thing that we have forgotten for a long time: it’s not just a loyalty programme, it’s not just the best distribution system; at the end of the day, we are serving a customer, and it’s mainly about managing the expectations or exceeding the expectations of the customer. That’s what counts."
In highlighting this, Chhatwal introduced another important topic: the degree to which quality of service is once again becoming the core concern for investors and customers.
Frank Fiskers, president and CEO of Scandic Hotels, agreed that, above and beyond marketing and the way a hotel defines its brand, the real-life guest experience has returned to centre stage.
"We have seen in the past few years that it is perhaps a little bit out of fashion to be a hotelier, right?" Fiskers said. "Because it should all be marketing and branding, and all in the top echelons of companies, but I think there has been a bit of a renaissance as to what we have to do to add value. In this transparent world, it is the branding and distribution that, ten years ago, was a huge thing, because otherwise how would you run a hotel?
"Today, every Tom, Dick and Harry can distribute himself. So I think there is now a different kind of value craze going forward, and we take pride in being a lease-model operator together with the owner, because if there is somebody who has the fuel for the fire and the hand on the boilerplate, it’s Scandic, due to the lease model."
Social climbers
One of the major developments placing customer experience back in the spotlight in recent years has, of course, been the growth of social media and the all-important customer review on OTAs such as TripAdvisor.
Gerald Lawless, president and group CEO of Jumeirah, revealed that for his organisation, social media has become far more important than traditional marketing methods. Engaging with TripAdvisor reviewers is a must at the general-manager level, he said. Meanwhile, social media has enabled the company to reach a much wider audience, he said, sharing an anecdote of a recent social media stunt.
"We got something like 17 million views on YouTube. It was just unbelievable for a small company like Jumeirah to see what kind of exposure you can get out there," he said.
Warman sees such developments as a very positive step. "Twenty years ago, a small company of 20 hotels couldn’t do that," he said. "The positive for our industry is going to be that we’re going to go back to being hotels again; we’re going to get away from marketing and finance. Really, what TripAdvisor’s been able to do is link up everywhere, and the consumer now has the ability to control what we do versus us controlling it.
"So you hear everybody’s back to talking about service now. Every brand has chipped in over the past five years saying ‘service’, and I have to believe that’s because of the ability for the consumer to communicate via social media."
This led the panel to consider whether social media is removing the power of brands. Fiskers pointed to its levelling effect, by which brands are now "created by customers". The competition within the industry – at all levels and sizes of company – will now be about creating exciting hotel experiences for people, he argued.
"Two weeks ago, I brought my management team for a week to New York, to Manhattan, and we toured 25 hotels," he said. "In advance of the trip, we talked to all our bloggers and designers, and who’s-who, and we went to see the 25 hottest hotels in New York. And a big eye-opener for me was that of the 25 hotels, not one of them came from the big brands. Not one. It was all more or less individuals with two or three-hotel portfolios."
This led Jumeirah’s Lawless to ask whether brands should "go anonymous" and present hotels that appear to be independent.
"I think they are," Fiskers replied. "If you see some of the big brands, with these new portfolio brands, they are trying to keep under the radar. I think that’s terribly interesting."
Through thick and thin
In the face of social media, the panellists also considered the effectiveness of loyalty programmes. Some questioned the extent to which a points programme would influence a customer’s choice, with Warman giving a poignant example.
"If you live in Newark, you fly United [Airlines]," Warman said. "If you move to Long Island, your points don’t keep you going back to Newark."
Chhatwal said the example was fantastic, but made the point that loyalty programmes "still work in the airline industry pretty well". Turning to the hotel industry specifically, he said that different brands and companies do benefit from loyalty programmes, but that guests and investors cannot be attracted by loyalty programmes alone.
Other panellists emphasised that the major benefits of loyalty programmes are less about the points-based incentives hotels can offer, and more about having the means of regular communication with guests and increased insight into their interests and behaviour. This allows the content and timing of messaging to be targeted in the most effective way.
As Day steered the discussion towards technology implementation within the hotel, the central theme of guest experience and control being in the hands of the customer once again came under the spotlight.
For Fiskers, guests probably want to deal with the "boring details" of booking and payment digitally, but he posited: "When you come to the hotel, do you want the robot to handle your suitcases or do you want a human being?"
"I want the choice," Lawless said, highlighting that these preferences are bound to differ between business and leisure customers, as well as individual tastes. He continued: "I think that hasn’t changed with or without technology, and I see nothing wrong with moving into a luxury corporate hotel and having the choice to be able to check in remotely, whatever way you want to do it and whatever way it will evolve over the future. And technology gives you that choice."
The 2016 Hot.E conference will be held 26-27 September at the Hilton London Bankside.
