A view from the top

Taking place at the Biltmore Hotel in Mayfair, the 34th Deloitte European Hospitality Industry Conference saw insiders take a deeper look at the state of the industry. While current global issues are having significant impacts on the hotel industry, it’s not all doom and gloom as speakers highlighted opportunities to improve.

‘The View from the Top’, a panel moderated by Andreas Scriven, lead partner, hospitality & leisure at Deloitte and consisting of Federico J. González, CEO at Radisson Hotel Group, Liia Nõu, CEO at Pandox, Krysto Nikolic, senior managing director and global head of real estate at ICG, and Puneet Chhatwal, managing director & CEO of The Indian Hotels Company Limited and CEO of Taj Hotels, spoke about the challenges facing the sector.

Solutions to uncertainty

Scriven began by asking how each panellist navigates constant disruption and stays focused on the future. As he broached the topic first, González laughingly admitted that, in these uncertain times, he almost missed “the certainty of Covid” as you knew “what is and what isn’t”.

However, his outlook for the future remained positive, in part due to the five-year plan the hotel signed in 2018 that González claimed gave them an edge in the pandemic that followed. “We redefined our brands and we took a decision to step change the revenue management system,” said González.

““We try to work with our management teams and our portfolio companies to implement longer-needed business plans and try very hard not to be swayed by the noise around short-term geopolitical movements,” added Nikolic. He emphasised focusing on clear goals, rather than on short-term noise, to find the sweet spot.

Turning to the future, Scriven looked to Pandox and its position in the coming six to 12 months. Nõu expressed the importance of internal-based contract leases with strong operators to the company. “This is a really important part of our DNA,” she stressed. “This crisis, with the pandemic and everything else, it has taught us it is so important to be agile and keep up with the conversation.”

For Chhatwal, he admitted to being in a better position in India, with a reported 6.8% growth trade and a 10% increase in luxury and 146% on ADR. “This pandemic gave a once in a lifetime opportunity to actually put all the costs under a magnifying glass and I think the sector has become far more efficient than it ever was and it also taught us a lesson,” Chhatwal explained. “I learned that, as I look at Pandox and I look at us, because more than 50% of our portfolio is all leased, that the operating leverage in an upswing helps you drive performance, which is not possible in an asset-like form.”

González admitted he felt very comfortable development-wise: “It will be an advantage for us, we took the decision to have one brand – the brand has a very clear selling line, a very clear offering, experience and definition.”

A company’s most important asset

The pandemic has had a lasting and notable effect on the industry and working habits, which have not all been easy especially for hospitality. Taking from lessons learned throughout the pandemic, González emphasised the importance of a five-year plan while giving the company the ability to adapt. “One of the things we learned through the pandemic was the increased need for communication much more often and much more honest and direct communication with all our employees.”

“We come at it with a slightly different perspective to the operators,” added Nikolic, “Our business is about backing and empowering talent to implement a business plan for a really long time and so the destructive action is being overly responsive to short-term movements in the market and panicking […] As soon as they feel the panic, that’s what disrupts – we think – performance.”

For Chhatwal, this can be summed in three points: innovation for not just hotels and brands, but also restaurants and spas; the acceleration of digitalisation; and lastly, finding and retaining talent, as he lamented how much had been lost to other industries over the past few years.

When on the topic of working environments, Nõu and her team have an obvious look in as a small team in the Nordic region and Brussels. Nõu explained the benefits of such a set up. “It is an agile, fast-moving professional team and works as a team, but everyone has a big mandate and individual freedom,” she said. “We spend too much time at work, so instead of taking work home you take home to work, we love having dogs in the office, children in the office and you can make it work.”

An oath for growth

As Scriven moved the panel on to the industry’s potential for growth, he raised the ongoing argument around fragmentation and need for consolidation in the industry compared with others and asked Chhatwal how he saw space for market brands and Taj evolving over the next five years.

“I think our current portfolio of Taj is almost 85% Indian sub-continent based, so we have room for growth and we put that on hold for the last several of years as we wanted regain our possession as India’s number one hospitality group, which we achieved,” explained Chhatwal. “So, it is time for selected growth.”

On a wider perspective, Nikolic observed that consolidation is a common theme playing out quickly. “Think about the challenges that the industry is going to face over the next two years – one is attracting capital and the second is attracting talent. And bigger businesses are just better at attracting both capital and talent. So, and this is true beyond the hotel sector in other sub-section of hospitality, we’re seeing a lot of consolidation in order to achieve scale that makes these business strategically relevant.”

“I think first the opportunity, … [is] really leveraging to technology to compare management systems with second operation system, to leverage the hotel sections and tools to enable the different drivers,” added González. When asked about their opinion on the addition of EU regulations on EU, Nõu stated that she believes this should be a consumer-driven initiative that all links together, while Chhatwal makes his position clear. “We think [if we are] not adopting ESG then we’re not doing something right – it is part of the DNA that the found [of IHCL].”

González agreed, as he added: “none of the people who are signing this paper will be alive, or at least active in 2050.” As a testament to the group’s commitment to ESG, Radisson has established its initiative Hotel Sustainability Basics, committed to protecting the planet as a collective of hotel groups, associations and destinations. As the panel came to a close, there was no doubt that each panellist brought a valuable perspective on the industry and the road ahead. While the past few years weighs on many in the hotel industry, the consensus is certainly to remain positive as they claim constant opportunity for growth in the future ahead.