Hotel leaders reveal management strategies
 
Hotel leaders reveal management strategies
07 MAY 2013 9:56 AM

Global hotel leaders revealed their basic management strategies, the crucial owner-operator relationship and how to get the right talent on board during AHIC.

DUBAI—The heads of global hotel players revealed their basic management strategies, their opinions on the ever more crucial owner-operator relationship and how to get the right talent on board during the Arabian Hotel Investment Conference in Dubai, United Arab Emirates.

“We have to decentralize and engage with our owners on the regional level; it is important to be close to them,” said Wolfgang M. Neumann, president and CEO of Rezidor Hotel Group. “The relationship model has been evolving. Expectations are slightly higher today, but this isn’t a threat to us. It is our role to optimize owner’s investment. All of us have different operating models, and we just need to stick to them.
 
“Our whole organization interacts with the owners,” he continued. “We have multiple touch points from management over sales and marketing to operation. We are owners ourselves so our knowledge can contribute to the relationship.”

Fairmont Hotels & Resorts is further globalizing and plans to double its Raffles brand over the next few years. The target markets are mainly in the Middle East but also Asia, in particular China.

“We’re taking our brands into the emerging markets of India and Africa as well, but this is not to say we’re not looking for some opportunities in Europe, as well,” said Jennifer Fox, president of the company.

“Our strategy is to develop long-term relationships with owners as an expert management company in the luxury segment. This is where loyal customers want to spend their time and money,” she added. 

For William E. Heinecke, chairman and CEO of Anantara/Minor International PCL, attracting guests is about differentiation.

With a portfolio of 10,500 rooms, the company plans to grow 20% to 25% per year by focusing on its home market in Asia and increasingly in Australia and Africa, as well as the Middle East. The company’s next property, an Anantara Doha, will open in the region next year.

“The advantage we have with Anantara over the competition is that we are a smaller company and it is easier to offer the different experience people are looking for than with a large brand,” Heinecke said.

In terms of enjoying a fruitful relationship with owners, he said it’s about knowing them well enough. “The Middle East is an important market for us. We have to stay in touch and visit regularly. With passion you can achieve the maximum returns,” he said.

A local focus
Although the group has core standards guests can expect in its hotels, adapting to the surroundings plays a major role.

“We’re more sensitive to this part of the world, focusing only on Asia, Africa and the Middle East, so we don’t get confused by the different European and U.S. standards,” Heinecke said. “It gives us a competitive advantage. Our hotels are adapted to the local culture and location. When you wake up in one of our hotels, you know where you are.”

For Wyndham Hotel Group, it’s a little bit more complicated, considering it has 15 brands on board and they all have to be placed carefully in the right markets, according to the group’s President and CEO Eric Danziger.

How a brand is developed locally matters in relationships, he said.

“The hotel business is about listening to the owners,” Danziger said. “I hate brand standards; I do get them, but they don’t all need to be the same, meaning hotel standards created in a corporate office may not be as best adapted to the local needs for an owner relationship to work. We have a genuine concern for what works for an individual property.”

Owning or managing a hotel and maintaining a brand image is a personal strategy, especially when one plans to have 550,000 rooms in a global portfolio, which is Accor’s plan within three years.

“Our strategy depends on where the hotel is located,” said Yann Caillere, newly appointed CEO of Accor. “The same brand doesn’t react to the same in different cities, so we keep the spirit of the brand but adapt and guarantee the return will be there.”

“The economy segment is a very domestic market. You simply can’t deal with an Ibis in China the same than with one in Spain,” he added. “The guest expectations are different. What has to stay standardized is the square meters per room for an economy brand to be successful.”

Asset-light strategy
Accor still owns 20% of its current hotel portfolio, primarily in Europe, while the larger remaining chunk is a 50-50 mix between operating and franchising models.

“Everybody is talking about how the asset-light strategy has changed compared to previous years. What happened around six to seven years ago was a battle to win against the competition,” Caillere said.

“The battle required a big investment into distribution, so you couldn’t do both, invest in the hotel and distribution,” he continued. “However, we want to keep being the leaders of the game in the economy and budget segments in strategic cities where we prefer to own hotels.”

Being a hotel owner comes with the advantage of speaking the owner’s language when agreeing to a management contract for non-owned hotels.

“For example, our Ibis brand, as owners we know what needs to be done in terms of refurbishing and the costs involved, we want to make sure that when we talk to owners so we know what to do,” Caillere said.

Future outlook
But never mind whether owned or managed, the starting point is always the guest, according to Caillere. “Guests don’t come into the reception and ask who manages the hotel,” he said.

The question is where will guests come through the doors in the foreseeable future?

Accor has divided the world into zones. In terms of emerging markets the focus is on
Latin America, Asia/Pacific and MEA. The group has opened 38,000 rooms last year, 72% of that in the Middle East & Africa.

“The DNA of Accor is segmentation and we believe the true opportunity lies in the midscale segment,” Caillere adds.

The Rezidor group has a strong presence in emerging Russia and the Commonwealth of Independent States, as well as 50 hotels in Africa, and 30 in the Middle East, with 15 more in the pipeline.

“The Middle East is a critical territory for us and Africa has enormous growth potential. In general, we’re very excited about the potential of our mid-market brand Park Inn by Radisson positioned to attract the younger generation,” Neumann said.

Danziger said Asia (particularly China), the Middle East and Latin America are the markets to be in. “We plan to introduce more of our brand into the Middle East and see some opportunities in Africa, such as Ethiopia,” he said.

Human resources
Expanding is all well and good, but hotels don’t run without people. Currently there is an inadequate workforce, so to double hotel portfolios human resources needs to be looked at first, Danziger said.

“The hospitality business can be the largest employer if we work hard to get it right,” he said. “People want to work for someone they like and offers a career path, but the most important part is for us to create an exciting industry, as the best of class does not perceive the hospitality as a place to work in.”

Fox said the biggest challenge is to get the right talent in the right places.

“We have exported talent from the U.S. to Asia, but then they don’t know the local peculiarities, so we are growing our focus on recruitment,” she said. “We look to local universities and grow our own talent. We need passionate people who fit well into our culture. The talent forms the basis of our organization. We hire for talent and give them the skills.”

Accor runs its own academy. “We manage 75 of the hotels in our portfolio. In Latin America, we’ve been voted the best employer in Brazil, and we have proposed to create an academy to the Ministry of Tourism in Saudi Arabia,” Caillere said.

Rezidor has opted for a traveling business school, visiting the group’s hotels globally.

“We need to develop local talents irrespective of government quotas,” Neumann said.

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