Industry Update
Opinion Article14 April 2017

Is the hotel industry downsizing?

By Georges Panayotis, President & Founder of MKG Group & Hospitality ON

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The world of hospitality is sinking its roots into a thousand-year-old history that is its strength, but it also hampers its transformation when it is unable to shake its habits to change dimensions. The last major "hospitality revolution" dates back to the arrival of chains and hotel brands that upset individual hotel operations with great operational rigor. For half a century, hotel groups have improved their tools and practices to benefit from opportunities on the market, sometimes even leading to shortage, while living comfortably on a market in perpetual expansion.


It is no surprise that the new digital revolution caught most by surprise. While they strove to improve the functioning of the combustion motor, the electric motor made its appearance, changing the codes, behavior and the modus operandi. The shock was harsh; it was experienced by some like an earthquake. The first tremors brought on by OTAs were followed by the aftershocks of the sharing economy and all those start-ups that reinvented the many facets of the trade.

Now it is The Day After, and the hospitality economy needs to be revived on new foundations. It is time to abandon diesel to and fossil fuel in order to find other, efficient and renewable sources and head back into the movement. The automobile industry was not eliminated from one day to the next, although it was aware it was behind. It developed hybrid models to meet expectations and relaunch production. The same is true for hospitality which could adopt the innovations of new players and prepare for the new practices of the sharing economy. But it is also absolutely necessary to undergo self-examination. As is often the case, it is wise to go back to basics, to lighten accumulated weights to be more reactive, flexible and agile.

The automobile industry could not avoid trimming employees, making clear cuts in staff to strengthen R&D, develop new models, and strengthen communications and marketing. The same approach is necessary for our industry, which has increased its staff over the years, lowering its profitability.

Hotel industry leaders have a double challenge to face, redefining relations with their closest partners, including franchisees that are waiting for a new tailored approach that is more personalized and adapted, and capable of accompanying them without overloading operating costs; and re-enchant their clientele with offers and accommodations experiences that give new meaning to hospitality, while successfully achieving a quality-price ration.

Each property is in and of itself a "servuction unit" that produces experience and memories. When digital tools are used right can help them refresh their individual profitability that has sunk from overload, and the inclusion of useless services.

Getting back to basics means keeping strategic functions and defining the route, while being able to delegate follow-through to partners that are technologically better armed. The digital economy makes it possible to abolish distances and shorten decision-making circuits. It is time to reset perimeters and seek the right balance between the legitimacy of the job and operational efficiency.


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