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Brand executives chart 2013’s top challenges
January 2 2013

Brand executives highlighted the top challenges and opportunities for the year ahead.

Highlights
  • “Uncertainty” remains a continuing theme as the hotel industry enters 2013.
  • Distribution, commoditization and managing global expansion are top challenges for the year ahead.
  • The ability to drive rate represents a major opportunity for the next 12 months.

Editor’s note: This is the first in a three-part series examining the year ahead. Owners will share their perspective Thursday, followed by operators on Friday.

GLOBAL REPORT—Distribution, global expansion and commoditization rank among some of the biggest challenges facing global hotel brands during the year ahead, according to executives.

However, numerous opportunities also exist, such as increasing demand from international travelers as well as technological advances that allow guests to customize their stays. Add to that another year of strong industry fundamentals, and 2013 ultimately should unfold with the same positive momentum that carried the industry through the past 12 months, sources said.

HotelNewsNow.com asked executives of some of the top global hotel chains to share their thoughts on the year that was and the year ahead, and here’s what a few of them had to say. (Note: Responses presented in alphabetical order.)

 

 

Jim Amorosia
G6 Hospitality

 

Jim Amorosia, CEO, G6 Hospitality

HotelNewsNow.com: What is the biggest challenge facing brands during 2013?

Amorosia: Reinventing distribution. Continuing to expand distribution while managing the potential for cannibalization and fostering a direct relationship with guests. Brands across all chain scales will continue to face the challenge of optimizing their channels of distribution.
 
HotelNewsNow.com: What is the biggest opportunity facing brands during 2013?

Amorosia: Emerging technology. Advancements in technology will enable brands to reinvent how to engage with guests—from the initial stages of search all the way through the guest experience at property. Brands have a real opportunity to define and capitalize on engagement with their guests—and more importantly, to turn that engagement into revenue.
 
HotelNewsNow.com: What is the biggest unresolved issue facing the hotel industry as we head into the new year?

Amorosia: Pending legislation. The scale and potential impact of pending legislation is unclear at the moment. It is critical that brands continue to monitor the activities in Washington D.C., through their own efforts and engage with the industry’s associations to protect the many jobs and economic contributions that our industry helps to create.

 

 

Eric Danziger
Wyndham Hotel Group

 

Eric Danziger, president and CEO, Wyndham Hotel Group

HotelNewsNow.com: What is the biggest challenge facing brands during 2013?

Danziger: Helping franchisees understand the importance of third-party reviews will continue to be a focus next year. Service and product quality are no longer local or property-level issues—with social sites and ratings and review platforms, information is available to anyone who wants to know. This means that hotel owners need to know what’s being said about their properties, and they need to act fast. Maintaining product quality and delivering best-in-class customer service will continue to be paramount.

HotelNewsNow.com: What is the biggest opportunity facing brands during 2013?

Danziger: Year-over-year increases in occupancy will allow hotel owners to recapture rate. Those who manage the electronic distribution channels most effectively will gain share, presenting great opportunities for their business.

HotelNewsNow.com: What is the biggest unresolved issue facing the hotel industry in general as we head into the new year?

Danziger: The ability to secure new sources of financing for either significant capital improvements or new construction projects continues to be a challenge. We are seeing some progress thanks to improving performance, and we plan to work with an increased number of franchisees to fulfill property improvement plans that had previously been deferred due to the challenging economy, but the financial landscape is still challenging for many.

 

 

Thorsten Kirschke
Carlson Rezidor Hotel Group

 

Thorsten Kirschke, president, Americas, Carlson Rezidor Hotel Group

HotelNewsNow.com: What is the biggest challenge facing brands during 2013?

Kirschke: General uncertainty about the direction of the economy may stifle brands in 2013, particularly as it relates to the rebound of finance markets for construction loans. (There is also) additional uncertainty about regulation, banking reform and what companies and licensees will be facing in tax reform and recession.

Kirschke outlined the following challenges as well:
 
“Keeping up with bleeding-edge technologies in the guest experience to be high-tech while staying high touch.
 
“As renovation dollars increase and new brand launches span the globe, identifying ways to differentiate new and existing products while exploiting product value propositions will remain a challenge in 2013 and in years ahead.

“Deep-discount channels established themselves during the downturn. Brands will need to roll back their share to achieve rational rates that reflect demand.”

HotelNewsNow.com: What is the biggest opportunity facing brands during 2013?

Kirschke: Supply and demand is at an all-time positive position for new development, as supply has been slow to grow while demand has remained steady.
 
The exponential growth of loyalty programs poses tremendous opportunity in 2013 as both a marketing tool and touch point in the guest experience. Keeping up with changes in demography provides a unique opportunity to target a new generation of brand loyalists.
 
The prevalence of and reliance on burgeoning social media platforms results in tremendous opportunity to connect with guests in a new virtual space.

HotelNewsNow.com: What is the biggest unresolved issue facing the hotel industry as we head into the new year?

Kirschke: The volume of uncertainty surrounding new taxation, government regulation and the future implementation of recent health-care legislation are unresolved issues that will impact the hotel industry dramatically in the new year.

 

 

David Kong
Best Western International

 

David Kong, president and CEO, Best Western International

HotelNewsNow.com: What is the biggest challenge facing brands during 2013?

David Kong: As we move into 2013, ensuring brand relevance in the Internet world is the biggest challenge facing hotel brands. Travelers today have so many choices when booking a hotel. When someone is looking to book a room using an online travel agency, they see a list of hotels with corresponding prices. The distribution channels are training consumers to shop for price as the most important factor in making a choice—not what amenities the hotel has to offer or what the brand brings to the table.

Brands are important because they instill confidence and convey value, which is not necessarily about price. Brands will need to work harder to stay relevant, stand out to the consumer and stay top of mind as a preferred choice.

HotelNewsNow.com: What is the biggest opportunity facing brands during 2013?

Kong: A big reason (revenue per available room) declined so dramatically in this recession compared to previous ones was the tremendous supply and demand imbalance; the increase in available hotel rooms far outstripped the growth in hotel rooms booked. This imbalance has capped our occupancy growth and inhibited (average daily rate) to rise.

Brands can also work together to increase demand. An obvious opportunity is to grow the number of international travelers into this country. Growing international business is a win-win proposition because with this strategy you grow the size of the pie and drive better occupancy and rates for all brands.

HotelNewsNow.com: What is the biggest unresolved issue facing the hotel industry as we head into the new year?

Kong: The escalating cost of distribution driven by an ever-increasing number of travel intermediaries is the biggest challenge facing the industry. This is a huge problem as hoteliers see a bigger mix of business driven by traditional and emerging OTAs as well as OTAs changing their business models. The latest trend of a large flat commission rate and having hotels absorb the room tax, credit-card processing cost and charge backs, etc. is most disconcerting.

Furthermore, there is a growing number of intermediaries that are charging commissions for business that has traditionally gone to the hotels directly (e.g., group bookings). Until we overcome the dependency on intermediaries through dramatically increasing demand or dramatically reducing supply, there does not seem to be an end to the escalation of distribution costs. Because the industry is so fragmented, it is difficult to instill discipline to not be reliant on these intermediaries.

 

 

Chris Nassetta
Hilton Worldwide

 

Chris Nassetta, president and CEO, Hilton Worldwide

HotelNewsNow.com: What is the biggest challenge facing brands during 2013?

Chris Nassetta: Our brands are developing their global footprints at an incredible pace. We currently have plans to open more than 960 hotels and nearly 170,000 rooms—the largest pipeline of rooms in the industry and in our history. However, this rapid growth also presents a challenge when staffing our properties, particularly in countries where the hospitality industry is not yet as established and where experienced talent is more limited, such as China.

To help address this issue, we are partnering with a wide variety of organizations and academic institutions to train current and potential team members around the world so that we can continue to provide guests with the exceptional service they’ve come to expect from us.
 
HotelNewsNow.com: What is the biggest opportunity facing brands during 2013?

Nassetta: Technology is advancing quickly, which presents a number of exciting opportunities to provide our guests with more customization and control over their experiences at our properties. For example, we are developing more ways that guests can use their mobile devices to enhance their stays with us, such as our new Conrad Concierge application. These new tools will touch many aspects of our guest experience, everything from check-in and departure to food and beverage.

HotelNewsNow.com: What is the biggest unresolved issue facing the hotel industry as we head into the new year?

Nassetta: While the fundamentals for the overall hospitality business are solid and the industry is moving in a positive direction, some continuing pockets of uncertainty and instability around the world will need to be addressed, including Europe. Additionally, our industry must continue to make progress on travel visa reform. By working with government leaders, we have the opportunity to generate economic activity and new jobs in many of the top travel destinations around the world, including the United States and the United Kingdom. If countries improve their processes for travel visas, they will capture a greater market share of tourists from fast-growing economies such as China and Brazil, who are now traveling in record numbers.

COMMENTS   Show All
Hotel Watcher
1/11/2013 10:49:00 PM
It's nice to see leaders of major companies answer these types of questions. It would have been great to have 10 or 20 more. Keep up the good work.
Kevin Murphy
1/4/2013 8:44:00 PM
Major international brands with large development pipelines need to do more now to seriously influence education authorities along with owners on the efficiency of financially supporting both wider and deeper technical and operational skills often in new training facilities for the vast number of new personnel needed to maintain quality standards as those same brands expand their’ flagging’, across the world but particularly in developing economies. A new paradigm of understanding needs to emerge where both operators and owners pledge more to ensure guests will be well served to provide the profits both hope to carve out, and governments hope to benefit by way of taxes and industry growth. It can no longer be as easily sustainable that operators promise to provide those standards of management while struggling to create the new workforces necessary by anything other than poaching from competitors. In most instances where investors will argue this is what the operator should be guaranteeing, destination governments likely need to change or grow their own plans to ensure such workforces will be created to ensure their own development goals are realistically serving the empowerment and upward mobility of their own local citizenry. Already we see over-promising in many destinations and overstretched management resulting in slipping standards in areas particularly in Asia once touted as the world’s best in service. Some hold the view that today’s major brand operators are often now long on promises but short on delivery due this shortage of qualified personnel for the competitive pace of growth they have all been quick to encourage and many hotel schools strive to be so elitist that the numbers graduating do little to relieve the problem. It is time to welcome a wider debate on future best solutions that places responsibility on all parties inclined to benefit.
Anonymous
1/4/2013 12:42:00 PM
GIVE US BENEFITS
K.V.Simon.
1/2/2013 9:59:00 PM
If hospitality brands globally are to seize opportunities and equip themselves to face the challenges successfully,then Talent Farming,Co- creation and development of hospitality operational professionals and such other initiatives must become an integral part of brand strategy so as to ensure sustained creative and innovative intellectual capital availability.
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