At the recently concluded International Hotel Investment Forum (IHIF) held in Berlin, the “CEO Debate” panel underscored the need for hoteliers to remain agile, flexible and responsive to changing guest needs. The CEO panel included Puneet Chhatwal of Deutsche Hospitality; David Kong of Best Western Hotels & Resorts; Stefan Leser of Jumeirah Group; Simon Naudi of Corinthia Hotels; and Pierre-Frédéric Roulot of Louvre Hotels Group. All five of these hotel groups have existing and planned hotels in Africa. According to W Hospitality Group’s 2016 Hotel Pipeline Report, these five groups have 34 hotels with 4,157 rooms being planned or under construction in various African countries over the next few years. Louvre Hotels Group has the most aggressive Africa growth plans, with 16 hotels, 1,296 rooms in 11 countries planned (although none had moved beyond the planning phase, when the survey was taken).
During the panel, the CEOs discussed some of the issues facing the hotel industry today, the demand trends that are impacting the industry, and how they expect the hotel industry will respond to these trends. In his round-up of the panel discussions, Terence Baker at Hotel News Now wrote that the CEOs “stressed the importance of differentiation, quality and talent to the modern hotel.” In addition, expanding on loyalty programs and creating unique food & beverage outlets will help to differentiate the hotel product and ensure competitiveness within the industry and against the online travel agencies (OTAs) and other disruptors.
The hotel companies have been resolute in their fight to regain market share lost to OTAs, with initiatives such as introducing lower hotel booking rates exclusive to loyalty program members, Hilton’s “Stop Clicking Around” ad campaign and Marriott’s “It Pays to Book Direct” campaign. These initiatives have achieved mixed results – for one Hilton has seen an increase in hotel bookings made directly through the company’s booking channels and has increased its loyalty member enrollment, but the OTAs still outspend the hotel companies in marketing and distribution efforts. According to Cloudbeds, hotels typically spend 6-9% of their revenues on sales and marketing efforts, while the OTAs allocate 35-40%.
However, hotels are beginning to realize the mutually-beneficial advantage in working with the OTAs, and the opportunities to gain market share by focusing on differentiating in other areas. As David Kong, President and CEO of Best Western stressed, “New thinking is critical. Company culture is critical.” Hoteliers are beginning to see the opportunity in creating experiences for their customers that go beyond the hotel room, as these are the ways to ensure guest loyalty, with or without a loyalty program. Hotel guests are increasingly valuing experiences over objects. Beyond the hotel’s ability to market and provide a room to guests is the ability to play a more integrative role in the hotel guest experience, that goes beyond the walls of the hotel.
Deloitte’s innovation arm, Doblin, discusses what the hotels can offer to meet changing guest needs in this article. Hotels can be more active in curating experiences for their guests, matchmaking guests with other travelers who have common interests, bringing in the outside community into the hotel experience, creating new spaces that are more communal and flexible in meeting guest needs, and choreographing the entire travel value chain to offer guests a more seamless travel experience. Above all, Deloitte notes that what the consumers value the most, and perhaps what sets the hotel apart from disruptors, is still the human touch. The talent employed by hotels play an important role in providing positively impactful hotel service, elevating the guest experience and increasing loyalty. The hotel’s key arsenal in maintaining a competitive advantage is in the people it hires to service its guests. In the African context, this is especially important. The talent hired to work in these hotels need to be well trained, they should also represent the local community at all levels of management. Hoteliers are recognizing the importance of investing in education and in the transfer of knowledge and skills. As discussed in this article by Adrian Leuenberger, the importance of hospitality to job creation and social mobility will also be enhanced by investments in education and skill training.
In terms of the food & beverage outlets in a hotel, the panel agreed that they are a great way to differentiate and increase the quality of the hotel. Pierre-Frédéric Roulot said, “F&B was another golden way in which to differentiate the overall property product.” The panel agreed that hoteliers have to be more daring in adopting new culinary trends at their hotels.
For Africa, these global trends will also impact the local hotel markets. When developing hotels, it is important to define the target markets for these hotels – whether young or old, foreign or local, business or leisure, it is clear that digitization has a strong impact on hotel demand trends in Africa as well. Mobile technology, globalization, younger demographics, aspirational lifestyles, increasingly sophisticated tastes and higher expectations all play a role in determining demand trends in Africa. Hotel developers and operators need to pay increased attention to who is constituting the demand markets for their hotels, what these markets want to see in the hotels (attention on design, culinary offerings), and the talent that is hired to work in these hotels.