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Belief In The Big Picture

Brand Execs Cite Macroeconomic Growth As Positive Sign For Future Results

Wednesday, November 08, 2017
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The outlook for the lodging industry from a macroeconomic perspective, large brands’ efforts to differentiate through experiences and the impact of Airbnb were among some of the more noteworthy topics of discussion during “The View From The Top II” session at last week’s Lodging Conference.

Liam Brown, president, franchising, owner services and MxM select brands, North America, provided some cause for optimism. “We’ve had 3 percent GDP growth over the last quarter. GDP growth is strongly correlated to our business. The macro view from a world perspective is over a billion trips were taken last year,” he said.

As an example, Brown pointed to the opportunity created by the potential of millions of middle class Chinese consumers traveling to the U.S. as he gave his outlook. “It’s a tremendous opportunity for us in terms of international tourism and it’s a great export business. Demand continues to grow. Yes, we have our challenges in some markets, yes we have some oversupply in some markets, but from a macro view perspective there’s a very positive bend towards our business and a belief that the future will be good,” he maintained.

Kevin Frid, COO, North & Central America, AccorHotels, was equally bullish on hospitality. “We’re fortunate enough to be in a business with high demand. What other industry in the world do you know every year that the demand for your product is going to grow? My optimism is strong and it’s both on the development and the operational side. It’s a very busy world out there and there are a lot of challenges relative to brands, technology and everything else, but at the end of the day the macro demand for our product grows significantly every year by region, by country and globally,” he stated.

For his part, Greg Mount, President & CEO, RLH Corporation, offered some perspective on the company’s long-term strategy, as well as an indication of current market conditions. “We announced we’re selling all of our real estate a couple of weeks ago. For us it’s a pretty clear direction that we really want to focus on being asset light. We think it’s the right time. We think the market is good to very good and it’s the time to dispose of some of our assets,” he said.

Ken Greene, President, Americas, Carlson Rezidor Hotel Group, meanwhile, talked about the importance of differentiation within the company’s portfolio of brands and personalizing the experience for guests.

“From a branding perspective you really have to have great consistency within your brands and the segments that they sit in. I think you have to understand your customer and the demographics. You have Millennials coming in traveling and doing ‘Staycations’; you have to focus on that and plan for them. You have 75 million people coming from China right now— and that increases to 155 million in five years—we need to start having a plan to make those folks when they arrive feel very comfortable and that means having very direct campaigns focused on that specific segment. As you look at your demographics you really have to have a plan for each one,” he noted.

Mount reinforced the point and touted the importance of technology. “We focused on building our platform four years ago to really be relevant in what’s happening in the marketplace right now, I think what people have to remember is this year Millennials eclipsed the Boomers. That’s an important thing to understand. It’s also important to understand the dynamics of what’s happening in the digital marketing space and to remember that, while it’s kind of a dirty word to bring up, the OTAs do control 52 percent of the business that’s being booked in the U.S. You have to understand it, you have to leverage it and understand what the consumer is looking for, which ultimately is transparency,” he said.

Michael Medzigian, managing partner, Watermark Capital Partners, LLC, weighed in with the ownership perspective. “I do think this whole trend toward experiential travel—experiences versus ownership—is really important and it plays well to our industry over time,” he said.

Bhavesh Patel, Chairman, AAHOA, detailed how the company makes decisions in the wake of such brand proliferation. “One of the things that we look at as an owner is what’s going on in the market; is the market saturated? There are so many brands out there and there’s new brands popping up every day, so we have to do our due diligence and see what fits into that market. When these products don’t fit in we have to make sure we make the right decision,” he commented.

Medzigian also challenged some misconceptions about Airbnb while cautioning the industry. “I don’t buy the fact that people think Airbnb is more authentic than a hotel, why would that be? Why is staying in someone else’s house with no interaction more authentic than being in a hotel where we’ve got service providers and we can teach people about our neighborhoods and our communities. Is it going to be more profitable to spend money on that kind of communication and curating? I can’t tell you, but I think we have to do it or the trend is moving away from us and we’re going to lose those customers to the Airbnbs of the world,” he noted.
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