During the past two years, the hospitality sector has been more focused on survival than seeking new opportunities. But as the threat of the pandemic recedes and the world returns to normal, the sector is getting back to what it does best – innovation. Pent-up demand among travellers, along with a growing appetite for adventure and new experiences, is presenting hotel operators with the chance to reimagine the experiences they offer and to consider how the priorities of today’s guests have evolved. At the International Hospitality Investment Forum (IHIF) in Berlin in May, industry leaders gathered with more than 2,400 delegates to look at how the sector can adapt, embrace new opportunities, innovate, improve profitability and take meaningful action on key issues such as sustainability and staffing. Informed by the abrupt shock of the Covid-19 pandemic, the industry is ready to move forward with fresh perspectives and a renewed sense of dynamism.
A greener future
The event began with an address by Questex CEO Paul Miller and Alexi Khajavi, president of travel and hospitality. Both remarked on the impact of the pandemic, noting that it had given the industry the time and space to take a step back, and examine new business models and new guest experiences while looking deeply into what today’s travellers want from a hotel. Day one focused on the core themes of people, planet and profit. A host of dynamic sessions for forward-thinking investors, owners and developers highlighted the importance of sustainability in any future business model. Not only is the environment becoming more important from a moral perspective, but it is also a key factor in the minds of many guests.
Several sessions focused on the fact that environmental, social and governance (ESG) priorities are now at the heart of every decision made across the industry, whether from the perspective of operators or investors. For instance, Miguel Casas of Stoneweg Hospitality and Adrian Flueck of Invesco Real Estate, noted that ESG was already integrated into their companies’ investment strategies.
Similarly, Gilles Clavié, CEO of AccorInvest, described ESG as the ‘growth engine’ for hotel owners and operators. This echoed the words of Ufi Ibrahim, CEO at the Energy & Environment Alliance, who noted that she engaged investors in her sustainable mission before anyone else to “create a pyramid effect”. She further emphasised that now is the time for the industry to take meaningful action on sustainability. “The industry has been damaged by greenwashing, so don’t promote something unless it is genuinely making a difference,” she said.
Authenticity is key, given there is growing interest in sustainable travel among guests, as Finnbar Cornwall of Google pointed out. He noted that, in the past year, there had seen a 4,500% increase in the number of searches asking, “what can I do about climate change?”, with searches looking for businesses running more sustainably up by 2,500%. So strong is this trend, that Accor CEO Sebastien Bazin remarked: “What people want to know is what are you doing for children and the planet? Go for planet-friendly decisions.”
Innovation is the key to recovery
Inevitably, the theme of the pandemic ran deep, but the key finding was that the industry has become more resilient, more collaborative, more creative and more visionary thanks to the experience of the past two years. In the first discussion called ‘CBRE Capital Talks: Hotel Capital Markets Update’, chaired by Kenneth Hatton of CBRE, major investors identified opportunities the pandemic had unearthed, notably the increase in the availability of office and retail stock. With more varied real estate available, there is great potential for innovation. This was a theme in many of the event’s sessions, notably in ‘Adjacent Spaces’, the think-tank for hospitality’s innovators and game-changers held alongside IHIF, where Stephen McCall, CEO of Edyn, remarked that the pandemic had spurred on operators to be more disruptive.
Natalia Kolotneva, from La Salle Investment Management, picked up on the same theme in the ‘Investing in Hybrid Hospitality’ session, urging operators to “be proud of the products you are developing and develop products people want to use. Be more nimble, more creative, more forward-looking”.
In creating the right experience for today’s travellers, flexibility emerged as a core theme. For instance, Sharan Pasricha of Ennismore commented that the experience of the pandemic over the past two years had led them to reassess how they operated and what guests would be offered. “We became more flexible because that’s what customers wanted,” he said. “You can now check into the Hoxton at midnight and check out at 11:59pm the next day.”
The benefits of flexibility are sufficient motivation to reassess the experience and services that hotels offer. On the other hand, the perils of inflexibility provide just as much impetus for change. In the session ‘The People Issue: Addressing the Talent Shortage’, panellists voiced widespread concerns, noting that inflexibility is a major barrier to staff recruitment and retention. In short, attendees concurred that the industry’s approach to recruitment must be bolder and, rather than relying on prescriptive job descriptions, it would be better to tailor the role to the person. Flexibility must be applied to both the design of the guest experience and to the hiring and management of staff.
“People want flexibility and a hybrid version of the life they had before the pandemic,” said Nick Jones, CEO and founder of Soho House Group, in his concluding keynote speech. “We have to offer that. There is no cookie cutter. Every time we open a house we start again with a blank sheet of paper, we look at how we can make things better for the customer. It’s the most important thing to get right. This is why hospitality has to innovate, to continue to improve and grow.”
An industry on the rise
Technology will be a key part not only of any innovation strategy, but also any drive for efficiency, which is vital in a market running on thin margins. New systems that can streamline operations and allow staff to focus on guests were a hot topic at the event.
In another tech-focused session, Rami Zeidan of Lifehouse noted his use of technology to improve recruitment and training to help mitigate high staff turnover levels and reduce costs. Elsewhere, Neil Kirk of L&R Hotels emphasised that his company had focused on IT solutions and digitalisation to improve profitability with online check-ins and improvements to back-office inventory.
Driving efficiency through technology may not prevent prices from rising in the search for profitability, particularly as food and energy prices continue to rise. Many sessions focused on driving profitability and CGA revealed its survey of hospitality operators had found 83% of venues are concerned about food and beverage costs and are looking to raise menu prices by 8% on average. Panellists, including Rob Hornman of Flemings Hotels Group and Niels Schroeder of Fairmas, highlighted the challenges of rising costs, especially as “customers are not willing to pay more”. They concluded that prices would need to rise, even with cost savings, and that customers should be encouraged to understand why. Kirk of L+R Hotels suggested drilling down to the big KPIs to examine what is driving them, such as true net ADR, as well as focusing more on distribution. “The true net ADR is something we all need to work harder on,” he said. “Net ADR is the one we all have to get better at.”
During the two-day event, which delivered more than 50 hours of content from 200 speakers, many valuable insights were given in the three core areas of people, planet and profit. Questex’s Khajavi remarked: “We are thrilled to be back in Berlin for such a cerebral global event. IHIF 2022 is a unique platform for staging announcements and launches, brokering partnerships and networking across the hospitality spectrum as well as challenging and inspiring stronger thinking.”
What emerged from the event was the industry’s willingness to adapt and innovate to not only survive, but to thrive in the post-pandemic world.
