I was a teenager through the 1960's - it seemed to a growing boy a wonderfully exciting time in which innovation after innovation changed the way we lived. First Gagarin astonished the world by flying into space, and then much later I stayed up all night to watch the first man step onto the moon live on TV. Telstar brought inter-continental communications into a new era and the first heart transplant was performed. It seemed as if our preconceptions were being continually challenged. Someone, somewhere was investing in R&D and some it was resulting in a change of the way we live our lives. There was a lot else going on - the laser was invented, the first ATMs were installed, the handheld calculator was developed. The contraceptive pill had been in used in the '50s but its acceptance really took off in the 60's.

In recent years, the Internet, the mobile phone and green energy have been individually and collectively, even more transformational to both businesses and to life.

So not surprisingly, in a recent meeting with the CEO of a global luxury hotel operator, our conversation turned to research and development (R&D) in the hotel industry. Client confidentiality prevents me from sharing the contents of the discussion of course, but over the following few days I reflected on our discussion as I have experienced it in my life.

Ashamed

As a prior CFO of the EMEA divisions of two major hotel groups, I am ashamed to say that R&D did not feature in our monthly reporting packages that went off to headquarters. I fear that nothing much has changed in the intervening years.

Certainly there was innovation happening - here and there – but the business was not focused on it in the way I imagine a software house or a pharmaceutical company would be. David Michels, ex-CEO of Hilton International, famously said that the last time there was an innovative action in this industry was when an unknown housekeeper folded the toilet tissue to form an arrowhead! Indeed, a Uniform System of Accounts for hotels doesn't even have a cost category for R&D.

That says it all really!

Incremental and step change

Nevertheless, change does take place in the industry and I need just look back over the past 40 years or so to realise that hotels and the guest experience are today very different to how they were. No doubt incremental change will ensure that the industry continues to evolve.

In my own world, I think my team and I were innovators when we introduced what is now known as RGI (Revenue Generation Index) into our budgeting processes in the mid 1980's. In doing this we really challenged hotel management for the first time to look beyond the four walls of the hotel when setting prices and managing the sales and marketing teams. A quarter of century on and most hotels have people, processes and technologies in place to ensure that minute-by-minute, management teams are acutely aware of the competitive world they trade in.

Occasionally there are step changes - the industry was one of the first to embrace the e-world although it very nearly lost the plot as new entrants stole large chunks of the value chain.

And later in my role as a Visiting Fellow at Oxford School of Hospitality, I was pleased to bring together a group of forward-minded CFOs. Together they formed the initial nucleus of the industry-led effort that seeks to move beyond the limited formats of the Uniform System of Accounts and towards customer and departmental profitability. So it's good to see that has now seen the light of day as a Recommended Practice Guide through the efforts of Peter Harris and Vera Krakhmal (www.baha-uk.org).

"Large corporations welcome innovation and individualism in the same way dinosaurs welcome meteors" - Dilbert

Hotel Solutions is now eight years old and being part of it, one sometimes forgets that when it launched, the idea of a virtual networked business completely challenged the status quo. Perhaps this is no longer the case. There are others who operate successful traditional brick-and-mortar consultancies. But what we have proved over the years is that our clients value the benefits that our knowledge and experience bring, along with the innovative working structure that we brought to market.

And we continue to push the boundaries of our approach. We embrace innovation and change. For example, last year we used Crowd Sourcing as a new tool that has increasing relevance in our online world. We are using social media for campaigning. And recently a team led by Katrina Craig designed and delivered a completely new innovative evidence- based approach to feasibility studies leveraging an analysis of highly relevant demographic data.

I know we will continue to both embrace innovation in our own services, as well be a client advocate for innovation through a properly financed R&D effort.

Hotel Solutions Partnership offers specialist hotel consultancy services to hotel owners, operators, brands, developers, lenders and investors around the World. Hotel Solutions Partnership is a hand-picked network of experts. Between us, we have expertise in more than 75 disciplines, covering all the elements involved in running a successful hotel or hospitality business in today's globally competitive and evolving environment. Click here to learn more.

Ian Graham
+44 (1752) 873198
The Hotel Solutions Partnership