Providing memorable experiences was viewed as being key to creating true customer loyalty, attendees at the International Hotel Investment Forum in Berlin heard.
As the number of loyalty programmes and brands proliferated, standing out from the crowd was still seen as a key to sticking in the mind of the guest.
Commenting on whether having a large portfolio of brands helped drive repeat bookings, Amar Lalvani, CEO & managing partner, Standard International, said: “The number of brands may be dilutive, repeat bookings are driven by a good experience on the property, you’re only as good as the last time they stayed there.” Lalvani felt that this was a competitive advantage not only when competing with the global operators, but also with the sharing economy, adding: “The hotel companies were dismissive of Airbnb, but the customer wants it and that’s what will win in the end. But what we can do is bring people together for common experiences and Airbnb can’t – they don’t have our public spaces. We think a lot about how the next generation of travellers travel and it will be a different way. The young people in our office think of alternative accommodations first. To compete you have to provide experiences.”
Lindsey Ueberroth, CEO, Preferred Hotels & Resorts, added: “We need to remove the world loyalty, now it’s about lifestyle, about providing experiences and how do you pull that into the programme. Travel is about more than than time on property.”
With LVMH’s purchase of Belmond still fresh in the mind of many delegates, Cody Bradshaw, managing director and head of international hotels, Starwood Capital, said: “It’s a chief marketing operator’s dream to take the brands which LVMH has and the retail outlets that it has and combine it with the hotels and the experiences. You have a real opportunity to own the consumer. I liked it from the marketing aspect.” And for the properties within the portfolio, Bradshaw added: “There are plenty of buyers for the real estate.”
Looking for expertise outside the sector was a theme of the conference. Discussing the new Accor loyalty programme All, Sébastien Bazin, chairman and CEO, Accor, said he had purposely hired 90% of the team from outside the hospitality background to provide insight, experience and a different way of thinking, adding “you have to be daring, you have to be audacious, you have to learn from other industries”.
There were also lessons in marketing to be taken from outside the sector, with Federico González, president & CEO, Radisson Hotel Group, commenting: “In many other industries involving consumer goods, they pay a lot of attention to how the brands resonate with consumers. The moment a consumer sees you think about them, their thoughts and experience, you have their loyalty.”
Marloes Knippenberg, CEO, Kerten Hospitality, predicted that “retail will meet hospitality on the ground floor”, with hotels using their lobby spaces more effectively, adding coworking or more effective social spaces, rather than somewhere people “just sit on chairs all day”. Not only would these be more interesting, they would also be revenue generating.
Central to delivering the experiences wanted by guests were staff. InterContinental Hotels Group CEO Keith Barr pointed to one in 10 jobs globally being created in the hospitality sector yet
“governments globally fail to understand the importance of the industry in terms of job creation. We
are seeing more populist governments which will continue to put pressure on the industry. We need
to continue to communicate to governments as an industry.”
Barr said that the group was looking adopting machine learning for their workforce and that “there are a lot of functions of the industry that are very manual/back office pieces where it can be used to be more efficient. I’m not convinced about using to enhance the customer experience. It won’t ever replace the human interactions.”
Kike Sarasola, president & founder, Room Mate Group, agreed, commenting that the company would never get rid of checkin staff, “we still have an industry where we can see our client, touch them and I don’t want to lose that physical interaction”.
HA Perspective [by Katherine Doggrell]: The issues on the high street have given some in the hotel sector something of a cold chill, as they realise that having a cookie-cutter approach to their product may, in fact, have alienated the customer rather than made them loyal. Happily, the sector has been given a chance to right past wrongs, as the hotel experience can never be replaced by Amazon, no matter how much video conferencing gets done out there.
But the high street has much to teach. Effective marketing, experience, service. None of these things can be replaced with a fancy logo if you want to bring a customer back through the door a second time and tastes and demands are constantly evolving. Even LVMH, Hotel Analyst understands, was looking at a new hotel brand which would be a little more lifestyle and a little more affordable. Such a short time in the sector, but it has caught the branding bug already.
Central to the marvellous, memorable experience which the guest will be having in your hotels are the people who work there. Something that the disruptors have taught but which hasn’t fully set in yet is that service is now very different. The consumer is very self-=sufficient, thanks to the computer in their pocket, so the service they want must be something they can’t achieve themselves. So far so fun if you run the Standard group of hotels, which have public spaces at the very epicentre of hip. But at any point of the spectrum hotels cab provide an experience which is unique, even if it’s just information about a great local bar.
The sector complains about government not understanding it and not giving it the respect which it deserves. That is true too of the working public. Sell potential staff of the experience of working in a hotel and all that longed-for-loyalty will drop into place.
Additional comment [by Andrew Sangster]: Out of all the global hotel brand companies it is Accor that seems to have embraced what the growth of the experience economy means for its business. Maybe it is because all its main markets are in fragmented territories where brands have a minority of the available hotel rooms. In contrast, Accor’s global major rivals which are all North American (with the exception of Jin Jiang) have their biggest market in the US which is dominated by brands.
Accor is thus more exposed to the power of Online Travel Agents and the subsequent rise of aggregators like Airbnb who are focused on supply (whereas the first wave of OTAs were focused on demand).
Even with this added motivation, Accor deserves huge credit for taking on the challenge of reinventing itself. And make no mistake, the new Accor is not just a marketing exercise: it is entirely reimagining what a hotel brand and operating company should do.
Operating is a key word here and a point of distinction with the rival global brand majors which are far more focused on franchising than managing.
Accor is merging its reservation system with the loyalty club. It is slightly odd to see Accor make such as song and dance about its new loyalty scheme – Accor Live Limitless – given that it is so weak compared to its rivals.
CEO Sebastien Bazin said during the Berlin press conference that Accor had just 30% of its bookings coming through the loyalty scheme. Marriott has 60% and Hilton 50%, he estimated. Even after Accor hits its target of 40%, it will still be in last place when compared to its rivals.
Putting aside criticism of the loyalty scheme, the concept of augmented hospitality looks a sensible development – adding together hotel services with Accor’s disparate array of (mostly digital) additional services like John Paul and One Fine Stay and the offer from loyalty scheme partners like Qantas and Europcar. But it does not look like a game changer.
The thing which really matters is how much better Accor is becoming at developing and reinventing its brands to have real meaning for its customers.
My fear is that Accor may be swayed into thinking it can handle the retailing of these new products itself. It cannot and it will never be as effective as the dedicated digital players which have huge resources to spend on technology and marketing.
A key marker of how well Accor has adjusted to the new world of hotel room retailing is whether it will allow guests who book via non-Accor channels to obtain the benefits of the loyalty scheme. If Accor wants to live up to its own rhetoric of switching from being “product centric” to “customer centric” then it will not give those guests who book via an OTA the equivalent of a punishment beating by denying them the loyalty scheme benefits.
This is a tough call to make but it matters. If the loyalty scheme is open to everyone no matter where they book then Accor has truly broken free of its roots and now sees itself as a brand company first and foremost, whose job is to create the best accommodation experiences whichever way they are bought.
The launch of Accor Live Limitless (I bet you’d already forgotten that’s what it stood for) officially takes place towards the end of this year. There’s plenty of refining to be done between now and then. It is going to be hard to keep focused on customers when there will constant temptation to cut corners to keep the corporate machine sated. The new look Accor, for example, is not planning to increase fees but it will start charging a percentage on f&b revenues – this move is unlikely to be warmly welcomed by owners.
If Accor does wimp out on this reinvention (and to be clear, I’m not suggesting it will), there are new brand companies waiting in the wings to step into its shoes. Among the most interesting at Berlin was SACO, the Serviced Apartment Company, which is now under the leadership of self-described corporate refugee Stephen McCall. Previously McCall was COO Europe at IHG, a post he left in early 2018.
“I had a creeping sense of unease about the big global brands. It was an increasingly difficult conversation with owners,” said McCall, at his Berlin press conference. His problems were around the growing distribution costs, increases in labour costs and the “interventions made by brands that required investment by owners but were hard to make given the cost pressures”.
He asserted that the big global hospitality platforms were in long-term decline. While I would disagree with this, he makes valid criticisms of the approach of many of them.
SACO has ambitious plans to grow fourfold with its focus on bringing lifestyle-type hotel concepts to the extended stay segment. It believes, rightly I think, that we are seeing massive convergence across hospitality concepts.
With Gross Operating Profit conversion hitting as high as 70% against the usually sub-40% on offer with the big hotel brands, SACO has a proposition that is going to interest owners.
Image: Cody Bradshaw