“Adapting to Survive and Thrive" was a topic tackled by five industry CEOs on day two of the International Hotel Investment Forum (IHIF), who formed a consensus that the hotel industry still has legs as long as it’s willing to keep on walking.
Keith Barr, CEO/IHG, said the biggest issue facing the industry is not Airbnb or the threat of OTAs, but the need for new talent and a growing distrust of migrants and immigration globally. According to Barr, governments around the world continue to under-appreciate the impact of the tourism sector on the economy, particularly because hospitality is constantly creating jobs. And because so many of these jobs are entry-level, Barr added it is important to foster domestic talent to grow destinations from the inside out while maintaining strong relationships across borders.
“This is what I was thinking when [IHG] went to China in ,” he said. “At the time, one in 10 of our workers would have principally been ex-patriates. This past summer I was there with 500 people, and about 90 percent of them are Chinese.”
Concerns were also raised regarding the growing impact and importance of automation in hospitality. Thomas Willms, CEO/Deutsche Hospitality, said there remains a need for human interaction in hospitality, particularly in the luxury space, but conceded automation can be used to streamline back-of-house processes.
Share the Wealth
It wasn’t long until Airbnb was brought into the conversation. Kevin Mallory, global head/senior managing director at CBRE Hotels and panel moderator, questioned whether a potential future downturn is expected to give home-sharing companies a boost versus traditional hotels. Sonia Cheng, CEO/Rosewood Hotel Group, said her company’s product differentiates itself from traditional hotels and therefore is not concerned about a downturn.
David Kong, president/CEO of Best Western Hotels & Resorrsl, is untroubled for a different reason. To him, Airbnb has revolutionized its marketing message and not its product since home sharing has been around for many years. However, he did say the company has left an indelible mark on the industry.
“There is no question they have impacted our industry, significantly reduced occupancy and affected profitability in major cities,” Kong said.
In recent years, Airbnb has shown an interest in the business travel market with the introduction of Airbnb Plus, but Barr said it is unlikely to permeate deeply into the corporate-travel sphere.
“I was in a meeting and asked how many people used Airbnb, and a number of hands went up,” Barr said. “I asked how many used Airbnb for corporate travel and there were a few hands. Then one woman in the room asked how many women use Airbnb by themselves for business and leisure travel—not one hand. Brands have a duty to safety and security first, and Airbnb doesn’t deliver on that consistently. That’s why there is a portion of the population that won’t use it.”
Speak to Me
This emphasis on marketing was not lost on Federico González, president/CEO of Radisson Hotel Group, who said the current generation of millennial travelers has thrust marketing back into the limelight. He said it was important today to be on travelers’ minds before they come looking for business, which can be a challenge.
“You have to be in places where, from a return on investment or marketing point of view you might not see the return in a short period of time,” Gonzales said. “You have to invest more and more in defining the brand and executing the brand. And you cannot hide if you don’t deliver, they will tell the world.”
According to Cheng, non-traditional marketing methods are most likely to succeed today. She said word of mouth is more important than any other marketing tool, which is why social media has taken center stage in many companies’ marketing efforts. In fact, while many companies are focused on pleasing a few notable influencers to get the word out about their business, Cheng said she views all of Rosewood’s guests as influencers in their own way.
“Think of marketing differently,” Cheng said. “We are opening the Rosewood Hong Kong in a few weeks, so at the end of last year we created a teaser campaign. Normally we would do some ads, but instead we did an exclusive preview dinner event with 60 people. This created so much noise.”
Toward the end of the panel, the CEOs were asked about how the industry can evolve to solve labor shortages in the future, with Barr stating the hotel business is still too traditional when compared to other industries. He said due to a lack of diversity, particularly gender diversity, in the C-suite, there are several hurdles for hospitality to overcome before it becomes appealing again.
“[We] have to think about job sharing, flexibility with work schedules and [have] much more focus on diversity and inclusion because it does become an unattractive industry potentially for certain individuals because of the way the industry has historically worked,” Barr said. “We are losing out [on] some of the best talent out there to other industries because our industry hasn’t changed how we’re thinking about it. It’s something the industry has to take much more seriously.”