OSLO, Norway — Hotel company chief commercial officers across Europe have used the past two years to analyze their brands, focusing on how to attract locals and put in place strategies for welcoming back events and corporate business.
Speaking at the recent Hospitality Sales & Marketing Association International Europe event, Amanda Elder, chief commercial officer and board member at Kempinski Hotels, said one thing that has become apparent is hoteliers have overlooked that many of their most loyal customers live within a few kilometers of their hotels.
“We were so busy considering international borders and even domestic borders that we were not necessarily talking to [these guests], packaging for them, messaging to them and their needs,” she said. “How can we use our spaces best, repurpose them if [hotels] simply are not going to have that occupancy that we had seen in the past? How can we use spaces for corporate travel in a very different way?”
Paul Proctor, vice president, commercial, Europe, at IHG Hotels & Resorts, said it's critical to understand how the process of booking hotels has changed for customers.
“There is this absolute craze around contactless, but actually underpinning that is the need for personalization, so that they buy the product they want, as opposed to having an off-the-shelf product,” he said.
He added environmental consciousness is playing a major role in guest purchasing patterns.
“Customers are now thinking about that individual product but also the effect, particularly in the carbon agenda," he said. "From a corporate point of view, we are seeing supply-chain pressure because of carbon targets set by the end user."
One change he has noticed is that some companies no longer have travel budgets but carbon ones. If an employee runs out of his or her annual carbon allowance, then he or she no longer can travel for the remainder of that year.
Hoteliers must take notice of this trend, Proctor said, adding he expects that it will continue and grow.
“Hotels have a role there in how those allowances would be measured, reported and fed into hotel systems," he said.
Jonathon Liu, director of revenue and marketing strategy at GLH Hotels, said the race to streamline hotel processes and reduce paperwork continues, which in turn gives the industry even more of a people-to-people focus.
“To make sure that those moments we spend with the customer face to face, they are adding to the experience … creating memories that people will fall back in love with, as we have all missed travel, and some of us are really keen to get out there and have those experiences again,” he said.
Flex Time
Getting the right guests at the right price with the right experience will require flexibility from hoteliers, panelists said.
“Consumers have been educated now around flexibility, and I can’t see that going all the way back,” Proctor said.
“What I would be curious to see, though, is the relationship between loyalty and flexibility. I could envisage a world where, as I became a more loyal member … my flexibility improves,” he said.
Elder said the joke in her office is that orange is not the new black; flexibility is.
“We do have to be very careful now as yield management really does need to come back, so maybe if you want that flexibility the guest will pay that extra rate,” she said.
GLH’s Liu said his focus is to keep booking flexibility solely in direct booking channels, while sticking to the rules in third-party distribution channels.
Proctor said he also expects a conversation around corporate rates.
“The days of static rates are going, [considering] what has happened over the past two years, particularly with rate being rolled over,” he said.
Brand Stand
Chief commercial officers and their teams have been wary of brand standards over the past two years, keeping in mind that individual owners have suffered differently.
Liu said his firm has taken the time to consolidate brands, while also launching one — Clermont.
“[That is] an upper-upscale brand, and we are in the process now of going through all of our assets, improving, refurbishing and bringing a lot of those into that Clermont brand,” he said, adding the process of consolidation will present guests with a much clearer impression of the portfolio.
Clarity is very much on Elder’s mind.
“To get that consistency, to ensure we have those efficiencies, we somehow have to really almost talk to 80 individual owners and to ensure they are all on board with the brand standards, the brand journey,” she said, referring to Kempinski’s approximate hotel count.
She said the quality index of the company's hotel portfolio is important, but the idea of quality is evolving, too.
“What is a luxury brand now, and what will it be in five years’ time?” she said.
She added guests’ interpretation of what constitutes luxury might be less complicated than it was, but it now definitely includes the idea of sustainability.
Proctor said a more effective way to manage portfolios is to distinguish the levers that drive a particular type of hotel, as opposed to those that drive a brand.
“That is dependent on location of property, [but] the behavior of a property irrelevant of brand scale are quite similar, so how can you apply those when you are running at scale?” he said, adding that IHG now has 760 hotels in Europe, with another 150 in the pipeline.
Happy Returns
Corporate, social and work events in hotels are not new to most hoteliers, but the rebound of that demand will be a jolt to the industry, however much it is welcomed.
Elder said the industry cannot wait much longer for that business segment, and if there are hiccups, they will not derive from hoteliers.
“We’re ready to go, go, go. I do not feel there is this concern about meetings, it is just the protocols ahead of it,” which will be driven by event organizers, she said.
She added one Kempinski partner in the U.S. has just signed a million-dollar group booking in Muscat, Oman.
Panelists said they do not think events pricing will change structurally, but will continue to be determined by what demand exists.
Proctor said that as many companies continue to offer remote-working flexibility, he believes there will be more events and meetings in hotels purely because there will be less connections made in workplaces and offices.
“We’ve had no [fourth-quarter] Christmas parties for two years. Companies will have to do something to say thank you,” he said. “Once we pass Easter, we will start to see a serious shift in this segment."
Liu said new hires who have only worked remotely need some level of in-person engagement.
“There are new people in teams who have never met their colleagues. Also, social. It used to be that weddings were on weekends, but now they are being booked, too, midweek. People need to get those bookings in,” he added.