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More Of The Same

Brand Leaders Remain Generally Bullish On Outlook For The Rest Of ‘17

Monday, June 12, 2017
Dennis Nessler
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A handful of brand leaders expressed a general sense of optimism for the short-term future of the industry last week at the NYU Conference while addressing a number of key topics such as investing in technology, brand saturation as well as the spa and wellness movement.

Participating in a session entitled “The Leaders’ Forum,” the executives were asked what they’re seeing in terms of performance in comparison to last year.

Allen Smith, President and CEO, Four Seasons Hotels & Resorts, commented.
“I would say so far this year we’ve been encouraged by results that are slightly better than we would have expected. I would say it’s more of the same, although it’s better than last year frankly,” he said.

According to James Riley, Group Chief Executive, Mandarin Oriental Hotel Group, “We’re a little bit better than last year but we keep having events that come out of right field. Actually they’re no longer right field, they’re predictable in a sense in that it’s just a question of where they occur and those are the challenges property by property,” he said.

James Murren, Chairman and CEO, MGM Resorts, noted, “We’re having a terrific year in Las Vegas. Our RevPAR will be up 5 percent. I predict RevPAR will be up in the mid-single digits for the next few years.” Murren did, however, add that he is concerned about a potential “travel ban” while emphasizing how important travel and tourism is to the U.S. economy.

David Kong, President and CEO, Best Western Hotels & Resorts, added, “I think as long as the stock market continues to do well, we will continue to do well.”

Meanwhile, Eric Danziger, CEO, Trump Hotels—whose company launched its third brand, a three-star, limited-service flag called America Idea Hotels, the day prior to the discussion—was asked about brand saturation.

“The company did that because two years ago we were a one-brand company; it was Trump and that’s all there was. We chose to say we’re really in the hotel business and if we’re in the hotel business we should have product lines that address different customers. There are plenty of people who desire different levels of product,” he said.

He further addressed the issue in the context of Marriott International’s acquisition of Starwood and subsequent lineup of brands. “I do think 30 brands is a lot. The thing I would never want to do is cannibalize from each other; that’s not helpful. We’re going to continue, all of us, to find the right product. I think the most important thing is the product should evolve. You have to look at it with a fresh set of eyes and say ‘what’s next?’ You need to stay tuned to what the customer is telling you that they want,” he said.

The brand leaders were later asked by moderator Adam Weissenberg of Deloitte how they go about making technology investments.

According to Smith, “We’ve got to be very discriminating; we lack the scale the big players have in terms of their capacity to invest in technology. So ours have to be very strategically applied to those things that have the highest impact…Much of that [currently] is focused on guest recognition and how our guests engage with us increasingly in a mobile kind of world,” he said.

Riley commented, “one of my key messages to the team is we don’t need to be a leader in technology, we’ve got be very alert to the opportunities it provides. We want to be able to use technology to support the delivery of the guest experience through personal entry and interaction with staff.”

Murren pointed out his company takes a somewhat different approach. “In many of these instances with the larger resorts like Bellagio, Aria or MGM, we actually work with the technology companies and allow them to beta test stuff. We are bleeding edge sometimes; we do invest money. I’d say our batting average is maybe not quite .300. But what comes out of that—whether it’s virtual reality or other customer interaction—we can incubate some of those ideas and then try to deploy them into our resort experience,” he said.

Kong noted the company has recently shifted its focus. “We’re saying let’s rethink how people would use their phone. It’s not about the app, it’s about the messaging capability of their phone. We’re testing the OSA platform and how we can build better communication and relationship with the guest,” he said.

Kong also offered some insight on what he thinks is next. “Amazon Elixir to me is the future. Right now people are its instant messaging, but in the future it’s going to be artificial intelligence and voice command,” he noted.

The continued evolution of the health and wellness trend was also a point of emphasis, particularly with some of the luxury companies, and the possibility of potentially extending beyond hotels.

Smith underscored the point. “The spa and wellness dimension is an important one. The manner in which it’s integrated with everything from nutrition to fitness to the other [aspects] of wellness continues to grow. We don’t have any plans to brand any hospitals, but I do think that we’ll see this continued kind of enrichment to the experience.”

He continued, “We have some of the owners we’re working with who are exploring developing spas that go much more towards the medical side than what it is today and we’ll see how it goes. That’s not our core competency, but that’s not to say our menus couldn’t be part of that sort of experience. If we begin to move in that direction then we would start partnering with people who are the best in the world at delivering that type of program and I can see that happening with some of our resorts,” he said.

Riley added, “I would be very cautious to any hospitality expert in getting involved at all on the medical side, however much you claim to have expertise in wellness. I think it’s a different sort of wellness in that respect. Likewise for the wellness side for the hospitals and the like actually being able to reach a sensible accommodation so they can continue to provide that with hospitality. But I think we will see it, I’ve seen number of approaches and individuals looking to have hospitality provided adjacent to hospitals,” he said.
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Dennis Nessler    Dennis Nessler
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