Optimism about the near-term fortunes of the hotel world are not limited to the United States, according to sentiments shared on November 7-8 in London at Deloitte’s 29th annual, invitation-only investment conference.
Andreas Scriven, head of Hospitality and Leisure, Deloitte, opened the event by saying half of his colleagues think the UK is at the peak of the hotel investment cycle, while Spain, Italy and Germany are in an upturn. Brexit concerns are lower on the agenda than terrorism and lack of economic growth, he added, while the hotel industry’s value is expected to increase 12% to US$554 billion in 2018.
What follows is a recap by HOTELS contributor Pippa Isbell of comments made by speakers at the Deloitte event:
Hot quotes
“When brands are similar, they can only compete on location and price – if they have a particular concept (such as Zoku) people will travel to it – as seen with Shoreditch House.” – Hans Meyer, co-founder and MD, Zoku
“Don’t narrow (your offering) down to what you think people want; offer the opportunity for them to widen out their experience.” – Christopher Norton, CEO, Equinox Hotels
“Drip, Drip, Boom’” describes the fact that people don’t see the need for something, so they do nothing, then it hits them.” – Jonathan Witter, chief customer officer, Hilton
“Hospitality has never owned the customer. You have to go back to basics and stimulate customer not once but over and over.” – Carmen Hui, commercial director, owner partnerships, Booking.com
Economic outlook
Roger Bootle, one of London’s best-known economists, Capital Economics
- The world economy is recovering and he is optimistic
- U.S. and U.K. remain robust
- China, Russia and Brazil stabilized
- Eurozone expected to show good growth this year and next
- Why? Oil prices lower, gradual recovery from the financial crisis and fiscal austerity coming to an end (less so in the U.K.)
- U.S. set for continued decent growth “in spite of Trump”
- U.K. GDP has actually been fine since Brexit, despite the weakening of the pound (which he considers to be a good thing), but inflation has squeezed real earnings and spending power. This will continue for a few months more after which consumer spending should rise, despite lack of confidence in the economic outlook,
- Believes a ‘no deal Brexit’ will be ok if it happens as exports to the EU are only 12% of U.K. GDP
- The prospect of a Labour government is a much more concerning factor
- He expects interest rates to increase in the U.S. and U.K. significantly (to circa 3%) in 2018-2019
Robin Rossman, STR, on performance trends
- Apart from North Africa, Europe has the highest 2017 RevPAR growth
- 2017 record occupancy levels are 10% higher than a decade ago (June-September, especially)
- No impact on RevPAR in major cities after the terror attacks. Nice and Tunisia have recovered; Istanbul, Brussels and Paris are taking longer
- European tourism has strong long-term structural growth drivers, but supply growth is muted in certain gateway cities
State of the industry panel: Coley Brennan, KSL Capital Partners; Stephen McCall, IHG; Hans Meyer, Zoku
- The panelists agreed guests don’t know what they really want, so don’t ask them; look at overall trends and extrapolate
- Zoku (a disruptive extended-stay concept) put together a group of 150 potential customers and rather than asking about their travel experiences they asked what they miss when they’re on the road. The answer was home and people, hense their focus on connecting people and ideas.
- Zoku wants to use hotel spaces in a smarter way. Most hotel customers are out all day so they offer membership, which brings people in to use their space during the day to work, create a buzz and spend money.
- KSL believes in studying the data behind consumer behavior, rather than asking. They spend a lot of time watching and observing actual guests.
- Key trends are still health, wellness and family travel.
Revolutionizing hospitality panel: Christian Giraud, AccorHotels; Florian Kollenz, 25Hours Hotels (acquired by Accor); Charlie MacGregor, The Student Hotel Group; Christopher Norton, Equinox Hotels
- Lifestyle hotels are currently 1% of industry, 10% of pipeline
- Accor has a disruptor and growth department with 15 people dedicated to innovation. They are looking for 30% extra revenue from things they don’t know yet. They have 10 more people in an actual innovation lab focused on new concepts and services around hospitality, living, working, health and wellbeing. Accor aims to be the leader in co-working.
- Accor is developing an AI voice, which interacts with Amazon’s Echo, etc.
- Equinox believes the new luxury environment is no longer about butlers and white gloves, but about digital.
Opportunities though technology panel: Cody Bradshaw, Starwood Capital Group; Geraldine Caplin, Hilton; Ruairidh Roberts, Google; Richard Robinson, Cambridge Analytica
- Cambridge Analytica: take the data you have, enrich it with third-party information to offer a personalized service that nobody really doing yet
- Google: has two levels, intentional collection of data and customer insights and unintentional (i.e., from the single login to 7 platforms), which collects a phenomenal amount of unused data. In theory, it could collect data on customer movements to tell the hotel industry where to build next and what types of hotels are needed. The automotive industry is asking these types of questions; hospitality not yet. Netflix also produces content based on customer preferences and ambient data.