Increased travel demand has created more room in the European hotel industry, but hoteliers who want to come out on top should concentrate on guest behavior and not rely on focus groups.
LONDON—Hoteliers can succeed in any of Europe’s established markets if they possess a differentiated product that caters to new travel demand, said sources at Deloitte’s recent European Hotel Investment Conference.
Hans Meyer, co-founder and managing director of workspace-accommodations hybrid Zoku, said during the “State of the industry” panel that many brands today are interchangeable, but if a hotel is distinguishable, location becomes less relevant.
“The first Mama Shelter (by AccorHotels) in Paris is way off the grid, and I was willing to take a cab for half an hour to get there,” Meyer said. “In Amsterdam, successful hotels are on the fringe as the transport is so good.”
Demand for leisure, bleisure and extended-stay travel has gone a long way to allowing prime European markets to differentiate hotel design and offerings, but deft education and marketing are required to stand out in a very crowded market, panelists said.
“Customers do not always know what they want,” said Stephen McCall, COO of Europe at InterContinental Hotels Group. “Maybe they do on some unconscious level, and I put myself in that category, too. (Hoteliers) learn some stuff, but to translate that into a concept that works, that’s another thing.”
Coley Brenan, partner and head of Europe at KSL Capital Partners, said the hotel industry needs to continue to look at other industries for ways to differentiate.
“You can learn a lot from what is happening in retail in terms of space utilization,” Brenan said, “and also gain an understanding as to why certain industries are suffering.”
Meyer said his company is continuing to look at ways to maximize space.
“We have to use space more smartly,” he said. “Hotels can have occupancy of 90% but during the day it might be empty.”
Meyer added the industry needs to further remove the barriers between staff and guests, but communication is one of the biggest obstacles.
“In our staff, we are collecting people and IDs,” he said. “All these languages and cultures and experiences in the hotel industry, but no one interacted. The walls between employees and guests started to disappear. We’re selling emotion and the desire to connect, which is easier in an extended stay.”
McCall said calculated risk is the first step toward realizing differentiation.
Lack of focus
Panelists agreed that an appropriate level of caution is necessary when working with focus groups.
“Location, a good night’s sleep and a great welcome are at our core, but I am a bit of a suspect of marketing,” McCall said. “I sat in recently on a consumer focus group, and it was rather depressing.”
Brenan called focus groups “uninteresting and irrelevant,” and suggested it’s better for hoteliers to rely on their own judgment when interpreting guest behavior and trends.
“Study the data itself behind customer behavior, rather than asking the customers themselves,” he said. “Spend a lot of time watching. What are these guests really doing? And then to find ways to add what we’ve learned into our investments, and that for us has been around health and wellness and family relevance.”
The sea of brands guests can choose from also presents issues, panelists said.
“We’re wary of categories,” McCall said. “What is lifestyle, boutique? What’s the difference? It is not just a case of design. It starts from the edges, and as brands develop they take pieces of that edge.”
Brenan called on brands to maintain their “relevance to the modern consumer.” McCall said that chasing demand by following trends leads to trouble.
“Do not jump onto the first trend that comes out,” McCall said. “Yes, bring in guests via Kimpton and Even, and then they move to the mainstream brands. … Eighty percent of millennials would rather have an experience than an object, but that does not only apply to them. Everyone wants a good time. CitizenM was memorable to me because of an interaction I had with a barista. It would only be a few ultra-boutiques who’d get that, but technology has allowed us to have that across segments.
We know guests’ preferences, so we can create experiences. This would not be possible a few years ago.
“Like all brands, we’re getting there,” McCall added.
But Meyer warned against overusing or misusing the information you have about guests.
“If you know my favorite wine is a Chardonnay, and every time I get a Chardonnay, I will get bored,” Meyer said.
The panel agreed that hoteliers are still trying to figure out F&B.
“Rooms have morphed into more rooms per box but also more guest value, and this has to happen in F&B, rather than F&B being a loss leader,” Meyer said.
But there are still revenue-generating opportunities available.
“And this social concept has resulted in some companies saying they are willing to pay a premium on rooms,” Meyer said.
F&B continues to be a problem as it takes as much experimentation, data, research and soul as rooms, but the fact remains that the discipline lies outside hoteliers’ core competencies.
“F&B will not work if it is designed to cater to a high-volume breakfast operation,” McCall said. “They have to be commercially-viable entities of themselves. You need to have a restaurant mindset.”
Guests are more critical of food and beverage than they were in the past, Brenan said.
“Complexity in the new educated food consumer produces issues for traditional hotels,” he said. “You need imagination, and if you do not have that imagination, (F&B) will continue to be problematic.”