LONDON—Recession resilience as opposed to recession proof is the buzz term at the World Budget and Economy Hotel Congress taking place in London.
The general consensus is that whilst increasingly difficult times are ahead, the budget and economy sector is well placed to ride it out and even expand, as long as clever strategies and strong brand awareness are cultivated.
Duncan Berry, COO of Choice Hotels Europe, opened the first session called “Tough Times, Unique Opportunities” with an exploration into what opportunities might exist for the budget sector in such a financially stringent period. Berry cited the generation of new types of client as key for the continued growth of the sector.
Travel agents, more widely available booking sites, business travelers trading down and a greater emphasis on achieving high customer satisfaction would be increased areas of focus, according to Berry. Maximising brand awareness and brand loyalty is important now so when the economy does eventually improve this client base does not return to the three- and four-star end of the market was suggested as the way to pave the road to longevity.
Paul Flaum, CEO of Whitbread, in his address to the delegates highlighted Whitbread’s Premier Inn brand and its relatively good performance figures with more than 55 new hotels opened in the last year in the U.K. and the refurbishment of many other properties. He said the company was looking back to the last recession to try to learn from any past mistakes and future-proof the brand for the long-term.
Capitalizing on emerging markets has also been a key theme for most hoteliers present, with Russia, in particular regional Russia, being targeted by brands. (Read HotelNewsNow.com’s special report of the BRICs markets.)
Patrick Fitzgibbon, senior VP at Hilton Hotels Corporation, said the company is aiming to expand its midscale Hampton brand in the U.K. this year.
Lawrence Alexander, CEO of Easyhotel.com and a panelist on tailoring a business model to beat the recession, said his company’s strategy includes expansion closer to home with markets in the U.K. and Western Europe that already are comfortable with the brand and have reacted positively to existing properties. Like Easyhotel.com, Yotel is keen to expand airport presence, said CEO Gerard Greene.
Recent economic conditions in the U.K., such as the downturn in the property market, were thought to be leading to a certain amount of land piling in anticipation of expansion. However Andrew Shaw, head of development for Accor in the U.K. and Ireland, pointed to something of a stand-off occurring between buyers and sellers—meaning that bargains with land purchases are more difficult to come by than previously was hoped. With a comparatively weakened pound investors from overseas were thought to be in a better position for land piling and for taking advantage of any distressed asset sales.
With access to credit still causing a major concern, delegates were keen to hear what Tim Helliwell, head of hotel finance for Barclays and Peter Ascomb, his counterpart at RBS, had to say about future lending. Criteria would seem to be somewhat stricter than it had been last year, with less emphasis on loan-to-value ratio. However for the right business with a proven track record and which takes into account market changes, the bankers seemed to agree that finance would be made more available for future lending.
At the end of Day 1 of the conference, hoteliers representing smaller brands, such as Enrique Sarasola from Spanish brand Room Mate Hotels and Peter Haaber from Scandinavia-born Zleep Hotels, said bank capital is still hard to come by for those not in an established chain.