19th International Hotel Investment Forum underway in Berlin

BERLIN, Germany – The first day of the 19th International Hotel Investment Forum (IHIF), was opened by Kerry Gumas, President and Chief Executive Officer, Questex, hosts of IHIF and Jonathan Worsley,

BERLIN, Germany – The first day of the 19th International Hotel Investment Forum (IHIF), was opened by Kerry Gumas, President and Chief Executive Officer, Questex, hosts of IHIF and Jonathan Worsley, Chairman, Bench Events. Gumas highlighted the multiple networking opportunities available at IHIF as well as the many deals that are often done during the event and the outstanding program content. Worsley bought to the audienceโ€™s attention the 500-mile journey taken by 11 cyclists who traveled from Amsterdam to Berlin raising money for Future Talent and the Anne Frank Trust.

Michael Hirst OBE, Consultant, CBRE Hotels hosted the opening session: Bewitched, Bothered and Bewildered: Threats, Challenges and Disruption facing our Industry and introduced David Rowan, Editor, Wired Magazine to the stage. Rowan pointed out the Acceleration of Innovation that we are currently experiencing and that the rate of change is only going to get faster in the future. He encouraged hoteliers to start making the hospitality experience they offer guests an immersive one and offered the following top 6 tips. Firstly, to embrace connectivity and offer free, high band width Wi-Fi throughout the hotel. This is especially important for younger consumers. Secondly, to simplify touchpoints and make every experience your guest has with the hotel, before, during and after their stay as streamlined as possible. Rowan mentioned the โ€œdesire pathโ€, which is the most direct and hassle free path that humans will take instinctively take and encouraged hotel owners and operators to consider this throughout their operational processes. He hinted at some organisations who were employing Chief Consumer Officers and how this may be a sensible move for most organisations. He stated the importance of interacting on the guestโ€™s terms, importantly using the social platforms that they use to interact and communicate. Fourthly, he mentioned the importance of networking and pointed to the relevance of the crowd. โ€œAt every level, the crowd is deciding what happens and you need to connect with the crowdโ€. His fifth tip was to radically personalise as consumer expect a level of service personal to them throughout their contact with a hotel. Finally, he urged hotels to tell a more authentic story through their marketing and sales activities. Asked whether hotel owners and operators should be afraid of technology he said no. โ€œA new technology will always come along and itโ€™s about how you react and adapt that is importantโ€. Rowan doesnโ€™t believe that new technology will reduce the demand for travel as โ€œbeing up close, feeling the pulse of the conversation and looking into peopleโ€™s eyes will always be importantโ€. Asked about the impact of automation on the sector, Rowan felt that parts of the service sector could be automated but โ€œthere would always be demand for highly trained humans who can make guests feel super specialโ€.

Rowan was then joined on stage by Vivek Badrinath, Deputy Chief Executive Officer, Marketing, Digital, Distribution and IT, AccorHotels who discussed the 5-year technical transformation plan AccorHotels are undergoing under his management. He mentioned the internal social network recently launched by the brand which 20,000 employees signed up for in 3 months.

Badrinath admitted there were challenges on getting amazing technical teams in house for hotels and therefore they had created strategic partnerships with several technology companies. Rowan noted that the word โ€œsharing economyโ€ is used very fluidly and companies such as BlaBlaCar and Airbnb are providing a benefit as they are challenging the norm. On the subject of loyalty programmes, Badrinath feels they are very important as customers enjoy recognition. He notes the Accor App helps customers achieve this recognition using a platform (an App), customers are used to interacting with. Rowan disagreed however and thinks โ€œmillennials are far more influenced by a story and peer recommendationsโ€. On a closing note, Rowan feels that the industry isnโ€™t doing enough about cyber security and it will the next major international issue that politicians are going to have to address.

The following session was dedicated to cyber security and Stewart Room, Partner and Global Head of Cyber Security and Data Protection, PwC Legal LLP presented the subject. Interestingly, the UK (plc), UK plc didnโ€™t have a cyber security strategy until 2008 which highlights how it has only recently reached the agenda of governments. He announced that in the spring of 2018, the General Data Protection Regulator would come into effect which will force a change in the handling of personal data and Room believes will be โ€œthe most significant legal change in Europeโ€. He quoted an Apple spokesman who recently said โ€œcompromising the security of our personal information can ultimately put our personal safety at riskโ€ and also the CEO of Talk Talk who recently said โ€œbeing honest pays dividends. My fellow CEOโ€™s are in danger of concluding the opposite. Donโ€™t take this into the darkโ€. Room noted that only 6% of companies have a Chief Digital Officer and there is not generally a systemised approach to sharing information and he said โ€œit is important to develop a narrative ahead of failureโ€. The concluding statement from the session was that it is important to recognise that you canโ€™t just put new technologies in place without recognising the associated vulnerabilities.
Helen Loughborough, Vice President Global Safety, InterContinental Hotels Group then took to the stage to discuss global threats and how to keep guests and hotels safe and secure in turbulent times. She said hotels have to manage the balance between providing hospitality and providing security and that after cost, security was commonly known to be the most important aspect to guests. She warned that hotels could be viewed as convenient targets for terrorists and therefore that it was vital to have a comprehensive crisis management plan in place. This plan must cover prevention, preparation, response and recovery.

The following session entitled โ€œthe distribution challenge: impact on hotels strategyโ€ was chaired by Ufi Ibrahim, Chief Executive Officer, British Hospitality Association and welcomed Osama Hirzalla, Vice President Brand Marketing & eCommerce, Marriott International, Carl Oldsberg, Vice President International Operations, Choice Hotels, Cyril Ranque, President, Lodging Partner Service, the Expedia Group, Terri Scriven, Industry Head Hospitality, Google and Peter Verhoeven, Managing Director EMEA, Booking.com. Scriven opened the session by saying 37% of people now book their travel online and of this, 25% comes via an OTA and 12 direct. Google research shows that users use 28 different sites on average through their travel research. She also mentioned that people look at their phone 150 times a day on average and 40% of searches happen on a mobile device. Ranque highlighted that travel is an industry that grows faster than GDP but demand comes from multiple geographical areas so is complex to analyse. Added to that complexity is the fact that users often use multiple devices throughout their search process so multi-channel, multi-device and multi-geography all combine to make analysing and understanding consumer habits challenging. Verhoeven noted that consumers broadly fell into two categories; those that planned and booked a long time before travel and those that booked within 48 hours of travelling. Hirzalla stated that mobile is the fastest growing direct channel and โ€œinvesting in mobile is criticalโ€. Oldsberg said โ€œthe days of standing on a mountain top screaming the benefits of your brand are long gone and itโ€™s now about engaging with customers on their levelโ€. Hirzalla emphasised the importance of the channel mix and to encourage owners and operators to constantly ask โ€œwhich channel is most profitableโ€? Verhoeven pointed out that Booking.com need hotels to operate and Ranque said Expedia were moving towards being a service provider and not only a distributor. When questioned about the role of independent hoteliers, Scriven said she felt OTAs had helped independent hotels and encouraged hotels to ensure their natural/organic search optimisation is up to scratch. She also noted that hotels own a large amount of customer data which can be valuable in connecting with guests and personalising the service. Hirzalla worried that there was a knowledge gap amongst hotel staff in accurately analysing hotel data in order to analyse behaviour. When asked about future trends, Scriven feels the silos between the various departments in hotels need to be interlinked to avoid silos. Hirzallaโ€™s advise was to โ€œunderstand the channel mix and profitability by channel and to remember that the customer experience is paramountโ€. Oldsberg reminded owners and operators that they own the product and to โ€œfocus on the after arrival and before departure section of the experienceโ€. Ranque encouraged operators and owners to โ€œinvest in guest satisfaction and to pick your strongest battles and outsource the restโ€.

The presentation of the IHIF Lifetime Achievement Award followed and was presented to Dieter Mรผller, Founder and CEO, Motel One by Willy Weiland, Managing Director, Solutions dot WG Hospitality Advisory Alliance GmbH. On receiving the award Mรผller said that โ€œthe hotel industry has never stopped fascinating meโ€. The success of Motel One has largely been down to the quality of location of the budget hotels. The company have 24 hotels in the pipeline (7,700 rooms) which will take the total to 75 hotels (21,600 rooms).

Then the IHIF Young Leader award, in conjunction with the International Society of Hospitality Consultants (ISHC) was presented to Ben Justus, the founder of EGBOK. EGBOK is a charitable non-profit that enables underprivileged young adults in Cambodia to be self-supporting by providing education, training and employment opportunities in the hospitality industry and utilizing a comprehensive approach with an emphasis on life skills.

The final session of the first day was the CEO panel, โ€œripped from the headlinesโ€ hosted by Nick van Marken, Global Head โ€“ Hospitality, Deloitte LLP who was in discussion with Geoff Ballotti, President & CEO, Wyndham Hotel Group, Chris Nassetta, President & CEO, Hilton Worldwide, Wolfgang M. Neumann, President & CEO, The Rezidor Hotel Group, Richard Solomons, Chief Executive Officer, InterContinental Hotels Group and Federico J. Gonzalez Tejera, Chief Executive Officer, NH Hotel Group. van Marken opened the session saying there had been $85bn of global transactions in 2015. On China, Solomons said the economy was slowing, not declining and all the growth drivers are still there so he remains positive. On Africa, Neumann said it was a โ€œcontinent of opportunitiesโ€ where 50% of the population are under 30 years old and he is โ€œconfident they can make positive inroadsโ€. Ballotti believes that growth will be more on the rate side than occupancy and Wyndham opened 65,000 new rooms in 2015. Nassetta feels that Europe is extraordinary strong and will be a close second to Asia Pac in 2016 as they have one hotel a week opening in Europe this year. On the Brexit, Solomons is relatively indifferent as IHG operate in 100 countries. On Donald Trump, Nassetta joked that the โ€œupside is they have been dying to have a hotelier as a Presidentโ€ฆโ€ฆ!โ€

van Marken pressed the issue of further consolidation and in response Nassetta said โ€œthey (Hilton) still have lots of running spaceโ€ and believes the latter stages of the investment cycle are where you traditionally see M&A activity. Solomons said that โ€œconsolidation in the last 10 years has been organic and believes that whilst scale matters, being big for the sake of it is unnecessary. Neumann feels hotels have to be able to engage with customers directly and historically they havenโ€™t been good enough at telling interesting stories. โ€œWe need to be able to communicate that direct booking offers the best value and this is a re-education programmeโ€. When discussing loyalty programmes, Nassetta feels they have historically preferred frequent travellers and they need to appeal, and reward, loyalty for all travellers. Solomons make the point that, when thinking about differentiating factors with the new players in the market, hotels should consider their legacy. He pointed out that IHG are going to be 70 this year and they are going to build an engaging story around this legacy to take to the market. Tejera dispelled the myth of the sharing economy and instead called it the โ€œselling economyโ€. Ballotti pointed out that companies like Airbnb have โ€œbeen around since Mary and Joseph checked into the Innโ€ and this was nothing new. Nassetta encouraged hotels to remember the business they are in, โ€œthe business of hospitalityโ€ and sees Airbnb and similar as lodging, not hospitality. Neumann was slightly more cautious and felt the industry should learn from the effect Uber has had on the taxi industry. When discussing technology, Ballotti said the cloud was โ€œthe biggest trend at the momentโ€. The panel seemed to share the view that they were not software specialists and that outsourcing this to expert partnering companies was a sensible path to take.

DAY 2

The second day of IHIF was opened by Alexi Khajavi, Senior Vice President, Questex with the news that Rezidor Hotel Group have purchased 41% Prizehotel for ยฃ14.7m. Khajavi also thanked Steigenberger Hotel Group for their hospitality at the opening night reception last night and showed a film with highlights of the evening. Khajavi then welcomed Roger Bootle, Chairman, Capital Economics to the stage to provide the global economic outlook. Bootle said of the Chinese economy that a big drop happened at the end of 2014 and since then the economy has been stabilizing. โ€œThe evidence is that the Chinese economy has stabilized and the markets have got themselves worked up unnecessarilyโ€. He said the Renminbi weakened against the dollar but so has almost every other global currency so this was no necessarily of significance. He pointed out that less than 1% of UK GDP is accounted for by exports to China so there isnโ€™t an overreliance on this area. He then looked at oil prizes and said there is โ€œno immediate reason at the moment why oil prices have to rise” and he feels it can be true that both high and low oil prices can cause problems to the global economy but that โ€œlower oil prices are a good think for the world economyโ€. When talking about the US market, Bootle said that โ€œat various points in the last few months, various markets have worried that the US market is in trouble. I think this is wrong and the US market is very resilientโ€. However, turning to the Eurozone outlook, Bootle was less optimistic, โ€œI donโ€™t think itโ€™s that goodโ€. He says Ireland saw a pretty dramatic recovery and is therefore โ€œpretty optimistic that Ireland is going to be ok, itโ€™s economy is open to two strong economies, the UK and the USA. Italy, Portugal, Spain and Greece though have a pretty grim outlook and Germany exports 2% of GDP to China so is pretty exposed to the Chinese economy.

Finally, turning to the Brexit, Bootle said โ€œthere is a serious, serious chance that we will leaveโ€ and the matter should be taken seriously. He feels the EU referendum is going to be a close vote and the economists donโ€™t know the consequences of either outcome. He feels that โ€œthe idea the banks are going to shut down their operations in London is wholly unrealisticโ€ and that the โ€œsingle biggest uncertainty is what the consequences will be for the EU?โ€. His final point was that โ€œthere is a significant possibility that over the next few years the EU will unravelโ€.

The first annual HAMA Europe Asset Management Achievement Award was then presented to London & Regional for their work on the InterContinental Hotel, Dublin. The award was collected by Henri Wilmes, VP Acquisitions Hotels on behalf of London & Regional. The award is co-sponsored by HAMA Europe and Questex Hospitality Group and recognizes exemplary work in asset management initiatives for the hospitality industry.

Following this session, a cheque was presented to Ecole Hoteliere de Lausanne by Questex for their continued support to the school.

The next session looked at the relationship between investors and analysts and was moderated by Edward Wojakovski, Chief Executive Officer, Tonstate who was joined by Russell Kett, Chairman, HVS โ€“ London office, Robin Rossmann, Managing Director, STR Global and Andreas Scriven, International Managing Director and Head of Consultancy, Christie + Co. The opening discussion focused on the role of analysts and their ability to predict activity. The consensus from all three panelists was that an understanding of historically trends, coupled with comprehensive data analysis leads to a sensible forecast of future trends. Each panelists then gave a presentation which is available from their respective PR/Marketing departments.

The final plenary session of the day was The rise of Asian investors moderated by Jileen Loo, Director, Head of Asia Desk, International Capital Markets, CBRE EMEA Hotels who was joined by Roc Huang, Board Director, Executive Deputy General Manager, HK CTS Hotels Co. Ltd, Pierre-Frรฉdรฉric Roulot, Chairman & CEO, Louvre Hotels Group, Sanjay Singh, Managing Director, FICO Corporation, and Teddy Zhang, Managing Director, The Thayer Group; Chief Advisor, Phoenix Global Investment. Singh started the session by emphasizing how important it is to know your client when doing business across Asia. Roulot highlighted how much improved development in China and the flow of Chinese tourists into European Louvre hotels has been since the deal completed with Jin Jiang. When asked about Brexit, Zhang said that he felt the European market had peaked but there was an importance to โ€œbuild a global platform where you can provide value to customersโ€. One of the concluding points was the rise of the Chinese middle class and the impact this could potentially have on the global hospitality industry. This section of the market potentially accounts for 300-400 million people. The panel agreed that whether the UK was in or out of the EU had relatively little influence on their decision to invest in Europe or not.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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