MANCHESTER, England — Leaders of major hotel brands speaking at the Annual Hotel Conference said that as the fundamentals of the hotel industry are normalizing, hotel owners and operators are applying lessons learned during the COVID-19 pandemic to strategies to drive demand to their properties and gain market share for the brands.
Speaking at a panel titled “Succeeding When Nothing Is Normal” at the Annual Hotel Conference, Marriott International's Phil Andreopoulos said he learned during the pandemic to continually tweak delivery and operations. At Marriott, he is chief operating officer of owner and franchise services for Europe, the Middle East and Africa, as well as chief operating officer for sub-Saharan Africa and Protea, a South Africa-based hotel company Marriott acquired in 2014.
“Our adaptability was our resilience, and we’ve always challenged the status quo. If you do that in the good times, it is so much easier to do so in a downturn. We were forced to do it, and now we know how to do it,” he said.
“I have been in this industry for 30 years, and the COVID-19 era showed me I had not seen everything in that period — notably, that we were closing hotels that had been trading exceptionally well,” said Hugh Taylor, CEO of hotel-management and advisory firm Michels & Taylor. “It was also the best time to see how good your teams are."
Marloes Knippenberg, CEO of Kerten Hospitality, said during the recent years of turbulence, owner needs grew closer to the products her company was providing.
“We sell lifestyle and mixed-use [developments]. Soft use was tough to sell before the pandemic, but owners have become more aware of the need for diversification and to look at assets in a different way,” she said.
One thing that has not changed is that guests will vote with their spending, panelists said. The role of the hotelier being to gauge trends and to provide them at the right price point.
“You cannot impose things on guests anymore," said Dimitris Manikis, president and managing director for Europe, the Middle East and Africa at Wyndham Hotels & Resorts. "‘My way or the highway’ does not work anymore, but Marloes [Knippenberg] can be more flexible than I can, someone who lives by the [stock exchange-listed] quarter.
“Ultimately, [hotels] exist because someone wanted the product we provide at any point in time, and so there should be no surprise that this requires adaptability,” he said.
Customer Preferences
Andreopoulos said the industry has adapted pricing and offerings to trends including day-of-week demand patterns.
For example, the occurrence of compression nights — when hotel occupancy exceeds 90% — is more evenly divided throughout the week as a result of weekend leisure demand and business travel demand intermingling on the shoulder days, which are traditionally Thursdays and Sundays.
Changing travel patterns have also led to increased guest interest in extended-stay hotels, Andreopoulos said.
“In the U.S., it is rare to find an extended-stay hotel that is not branded, so there definitely is an opportunity in Europe, where I think a couple of brands will emerge to capture that space. I hope one of those is a Marriott brand.
“Also raising excitement is the all-inclusive space. This niche has had bad connotations in Europe, but in the high end of the segments, there is another opportunity,” he said.
Knippenberg said Kerten Hospitality's mixed-use development has been a marriage of short- and long-stay hotels.
“During COVID-19, we looked at every step of the customer journey for the products we provide through a creative path so that we could scale, and we branded that process for staff,” she said.
“One simple idea is to map the businesses around your hotel, a great way of providing value. It is not difficult, and you can make revenue from that. Do what people would do at home, to order food and other spend. Own, do not coordinate.”
Taylor said too often hotels overcomplicate things for guests.
“I often find it impossible to locate menus in rooms. They are either hidden on TVs, in apps or in QR codes. There are things that should be marketed better. Do not hide any service that you provide,” he said. “One real challenge is to respond to customer perspectives, and if we analyzed what they wanted, we’d all change how we provide it.”
Growth Spurts
Europe’s hotel industry is ripe for growth, panelists said.
Manikis pointed to Wyndham’s recent acquisition of the Vienna House brand, with its 40 hotels and approximately 8,000 rooms.
“Of our 23 brands, we’ve acquired 19 … but what we acquire does not have to be a hotel chain,” he said.
Andreopoulos said the large hotel chains are sitting on a large pile of capital.
“A year ago, I would not have thought the brands would be sitting on almost $8 billion in cash,” he said, adding Marriott’s priorities would most likely be to give shareholders back some of that via dividends or shares, to increase staff development and training, and in the expansion of its extended-stay offerings.
Executives predicted that hotel average daily rate likely will flatten out over the next 12 months.
“We’ve had significant ADR growth, and I’d be amazed if that is reversed, but you have to provide guest satisfaction that warrants those price increases. If service is good, the product matters less,” Taylor said.
Knippenberg said most hoteliers talk about product, not lifestyle.
“Lifestyle is like Lego. You’re adapting product to boxes and maximizing revenue per available square meter in a way that provides value. We’ve done this and seen two-times [competitive set] numbers,” she said. “Adapting lifestyle is less risky if no one else is doing it."