Summary from Day 1 of The 18th International Hotel Investment Forum
Next on stage in the Potsdam Ballroom was Riding the Investment Cycle hosted by Simon M Johnson, Specialist Markets, CBRE, in discussion with Andreas Loecher, Union Investment Real Estate, Puneet Chhatwal, Chief Executive Officer, Steigenberger Hotel Group, Federico J. González Tejera, Chief Executive Officer, NH Hotel Group and Dr. Edward O. Wojakovski, Chief Executive Officer, Tonstate. Johnson began the session by asking each of the participants "how's business"? Loecher responded by saying they were quite active with 12 hotels acquired over the last 2 years and he sees the current level of activity continuing as "8 out of 9 funds are interested in hotel real estate assets". Wojakovski response was slightly more guarded and he said "business is neither good nor bad, but challenging and unpredictable". Johnson asked the panel whether they were finding opportunities to buy to which Wojakovski responded that the current environment is both a good time to buy and also a good time to sell and this rarely happens in the hospitality industry. On the subject of branding the panel were largely in agreement that brands did add value to properties. Wojakovski stated that "a brand is a good instrument to fill a (bed)room particularly for what is a generic product". Johnson then asked the panel how they generated their business to which Chhatwal replied that "if used wisely, OTAs add considerable value to companies of our size", but that it remains "a challenge to get the cost of distribution under control". González said that the industry was "too obsessed with OTAs" and he preferred to view it as direct vs indirect business. From that perspective he was happy to announce that NH get more than 50% of business directly.
The first day concluded with the much anticipated panel Colliding Megatrends: Innovation, Disruption and Sharing – The Challenge of Change which was chaired by Michael Hirst, Consultant, CBRE Hotels. First to the stage was Leo Johnson, Partner, PwC; Author of Turnaround Challenge: Business and the City of the Future. Johnson focused on how we should use technology to create real connectedness and that this connection should be real and not virtual. He also highlighted the significant opportunity for the sector to provide local knowledge to guests. "local knowledge is really prized" and "there is huge economic potential in exploring ways in which to deliver this". He encouraged us all to "make the real more fun than the virtual". Dr. Graeme R. Codrington, International Director, TomorrowTodayGlobal followed with a look into the future. He began with the startling statistic that there are over 400,000 people in the world who are currently over 100 years old and this figure is only going to increase. Increased longevity is a considerable factor when looking at future proofing business as it not only impacts guests but also employees. He also noted that if you were born in the 1990s there is an 80% chance that you will live through three centuries.
Codrington talked at length about the availability of being connected and that, with the development of cheap smart phones and free Wi-Fi as standard, connectivity was not reserved for the rich but available to everyone. He believes we are entering a golden age of technology and we need to consider how we respond. Firstly to change the way we think and unlearn the existing beliefs that shape our system. Secondly to "sort out our technology" by which he pointed to the fact that approximately 70% of senior executives don't have personal social media accounts and this indicated a serious lack of engaging with technology. Thirdly he encouraged us all to experiment more and finally to deal with the limiting orthodoxies that we are surrounded by. Vivek Badrinath, Deputy Chief Executive Officer, Marketing, Digital, Distribution & IT for Accor talked to Michael Hirst about the digital changes the brand are embracing. Badrinath has a budget of $225m for investment in digital developments for Accor. Hirst asked whether Badrinath considered the sharing economy a friend or a foe? He replied "it is an inspiration and a flashlight on things that are changing". The final speaker in this session was Chip Conley, Head of Global Hospitality & Strategy, Airbnb. Conley owns 18 hotels but sees himself as a student rather than an hotelier or technologist. He says that Airbnb are focusing on localisation and experience and that he has tried to bring inconsistency to the company. Hirst asked whether Airbnb was a hospitality or technology company. Conley replied that he wanted to take the tech company that it originally was and turn it into a hospitality company. 20 million people used Airbnb during 2014 and Conley sees the company as facilitating travel, especially in the developing world where, for example, a hotel stay for a family of five would be unaffordable and impractical but staying together in an apartment makes travel and adventure accessible. He said that the empty nesters are their fastest growing segment as couples find themselves with two or three spare bedrooms and want to experience "kitchen table diplomacy". His philosophy is to "stay humble, stay curious and continue to learn". Hirst then brought the speakers back to the stage for a few concluding questions including the speakers key message to the hotel investment audience. Badrinath reassured them that Accor were embracing the coming digital changes and had $225m to invest in innovative technology. Conley asked the audience to consider whether they were transactional or legacy investors. On the future of the hotel industry, Johnson said "the small can become the massive small" and Codrington said that organisations needed both depth and breadth to be successful. He advised that a "mix and match of skills" was preferable and warned against boards of directors with 30 years' experience all in the same industry. Hirst concluded by asking them where they would like to be. Codrington replied that his ideal was a "personalised world with as much access and connection and disconnection as I want". On whether investing in hotels was a sound business decision, Conley said that "there is always going to be a place in the world for hotels. I would continue to invest in hotels but only those who are smart about investing in technology". Jonathan Worsley took to the stage to thank all the speakers and Michael Hirst for his in-depth preparation and excellent moderating and commented that he believed "the session was the best we've ever had".
A new report, launched today, by Grant Thornton finds that the hotel industry lags behind others in adopting technology to meet customer demand. It means hotels are now playing catch up, and must put mobile technology at the centre of their customer experience to compete in the 'sharing economy' where services such as AirBnB are challenging the traditional business model. However, Grant Thornton cautions against de-humanising the hotel experience, stressing the importance of balancing technology with the customer touch people still value. Hotels 2020: Welcoming tomorrow's guests can be downloaded from www.grantthornton.global/hotels.
InterContinental Hotels Group (IHG®) today announced the signing of three Holiday Inn® brand family hotels in Germany. IHG signed management agreements for Holiday Inn Express® Berlin – Alexanderplatz and Holiday Inn Express® Munich - City West with UBM, and a franchise agreement for Holiday Inn® Essen - City Rathaus with Tristar Management GmbH. IHG also opened Holiday Inn® Frankfurt - Alte Oper yesterday under a management agreement with UBM.
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