Brand CEOs tackle labor, automation, distribution
Brand CEOs tackle labor, automation, distribution
07 MARCH 2019 9:07 AM

CEOs from IHG, Best Western, Radisson Hotel Group, Deutsche Hospitality and Rosewood Hotel Group discussed the issues of the day on a main-stage panel at IHIF.

BERLIN—CEOs of several leading hotel brand companies took the stage at the International Hotel Investment Forum to weigh in on buzzworthy issues, including labor, automation and technology, consumer preferences and customer acquisition.

During the “Adapting to survive and thrive” panel, speakers shared insights on where these issues stand globally, but also particularly in Europe.

Labor and employment
A universal issue for hoteliers, labor challenges can be particularly fragmented across Europe due to the region’s geography of varied governments and local economies, speakers said.

“Some governments fail to understand the importance of hospitality and tourism,” said InterContinental Hotels Group CEO Keith Barr. Tourism “is huge in terms of job creation … but you’re seeing governments who don’t understand the value of tourism having more populist views and not wanting to have the migration of people. That will continue to put pressure on the industry,” he said.

Thomas Willms, CEO of Deutsche Hospitality, said Europe is in the midst of “talent wars.”

He referenced Germany’s high employment numbers (Deutsche’s portfolio is largely in Germany), saying “it sounds good for the economy and consumer spending, but it creates a shortfall in the labor market.”

His company looks to countries such as Greece and Italy as sources of “great talent,” he said.

“We hire people in these countries and get them in language classes, bring them to German apprenticeships and put them in school,” he said. “Keeping them in the industry is important and in our company even better.”

He said Deutsche also works with refugee organizations to recruit hotel-level employees.

Several speakers said it’s critical to spread the word to all types of people that the hospitality industry is strong for career-building.

Federico González, president and CEO of Radisson Hotel Group, said he encourages people interested in any sort of industry where they would aspire to management to work in a hotel.

“One of the best jobs today for someone who wants to be a manager is to be a GM in a hotel,” he said. “We need to have maximum presence in universities and vocational programs as well.”

Barr supported that statement, and added that the onus is on management in hospitality companies to ensure diversity is seen in the workplace, since that will result in stronger companies.

“The industry has to change its view about how we work; it’s very traditional now compared to others,” he said. “Look at the lack of gender diversity in senior management. We need much more focus on diversity inclusion. We’re losing out on some of the best talent out there to other industries because we haven’t changed.”

As technology adoption matures in the hotel industry, companies are gaining visibility into areas in which it can be effective, speakers said. Many are in the process of exploring automation while balancing it with human touch—a critical component of all hospitality, speakers said.

Barr and González said their companies primarily use automation for back-of-house functions. IHG employs automation technology now for its travel agency commission process, which Barr said has delivered higher satisfaction to the travel agents the company works with.

González echoed the idea that automation can increase efficiency.

“You can use it to do staff planning, or planning of meetings and events,” he said. “That can significantly reduce costs and allow us to spend the money somewhere else.”

Still, he said, “if we lose the human interaction in this business, what are we doing?”

Barr said he is lukewarm about adopting automation for customer experience, which he doesn’t consider necessary.

“Everybody talked about how video conferencing would be the death of the hotel industry 15 years ago, and we’re doing it every day now and still opening more hotels than ever,” he said.

Channel management and acquisition costs
David Kong, president and CEO of Best Western Hotels & Resorts, said technology is a benefit when it helps properties manage the onslaught of distribution channels today.

“Every year there are more distributors connecting to our industry. You need your product on shelves, and there’s no end to it,” he said. “You have to think about yield management. How do you yield-manage so many different channels with so many rate goals?”

“You have to look at the history of pace, the dynamic bookings and the rate paid to all those,” he said. With tools that consolidate rate codes, it becomes easier for properties to assign inventory and set rate, he said.

Barr said IHG is “taking more out of the (hands of) properties and doing more centralized rate management for hotels,” largely varied by segment.

He said hoteliers would do well to learn from the airline industry and its dynamic pricing.

“Our whole industry has to move to more machine-learning-driven, but we haven’t raised our game to the same level the airlines have,” he said. “Their model is more robust, and we have to move that way.”

Consumer behaviors
All the panelists agreed that successful business comes down to guest satisfaction and building loyalty—an increasingly tough metric to manage in an era driven by guests who want experiences as well as transparency.

Sonia Cheng, CEO of Rosewood Hotel Group, said this is particularly important for her company, which is built on providing luxury experiences with a sense of place.

Guests today “are looking for nontraditional marketing,” she said. “Millennials will decide where they go because of influencers, but there’s so many of those, and you don’t know who to trust anymore.”

Creating a great product and boosting word-of-mouth recommendations is one tactic Rosewood uses, she said.

“To attract millennials to stay with your brand and make it resonate, focus on creating the product and experience they’re looking for,” she said. “Millennials want exclusive access. They want to feel privileged, and at the end of the day it’s the experience they have in the hotel. What are they and their friends looking at? That’s more powerful than any ads or social influencer posts.”

González said it can be tough to inspire loyalty among younger travelers because they know more and expect more now out of travel even at a young age.

“This generation shows us the importance of marketing,” he said. “They have more; they know the world is big. It’s important to be with these people even before they come (to the hotel). We need to invest more in defining and executing the brand. With this generation, you can’t hide if you don’t deliver. They will tell the world, and the moment this consumer thinks you’re thinking about them, their loyalty and brand recognition is huge.”

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