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ALIS 2009: Industry Looks to the
Long-Term, Leaders, and Innovation
This article will appear in the upcoming issue of Hospitality Upgrade. To receive a copy of the Spring 2009 issue of Hospitality Upgrade please request a subscription at http://www.hospitalityupgrade.com/_subscribe/subscribe.asp or send an e-mail to subscriptions@hospitalityupgrade.com."

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By Julie-Keyser Squires, APR

February 9, 2009 - The mood was reserved but skies were sunny over the 8th annual Americas Lodging Investment Summit (ALIS) in its new home at the Hilton San Diego Bayfront in late January.  The 2400 hotel executives, lenders, investors, developers and professional financial advisors who attended this year’s conference were cautiously pessimistic and looking for answers to two questions:  “When will the downturn end?” and “What do we do in the meantime?” 

Mostly gone was last year’s imaginative green track; in its place were pounding discussions, breakout events and ALIS TV panels focused on falling asset prices, the lack of debt financing, rationalization of air routes, decline in travel, pressure to reduce costs by trimming staff, rates and RevPAR.  New on the scene was a Human Resource Time Bomb session highlighting the fact that between now and 2015, the population of people 65-years and older will increase 26%, while the 24- to 39-year-old workforce will grow just 5%.

“When will the downturn end?”

At the centerpiece Hotel Leaders Outlook session, six panelists – representing nearly two million rooms in over 100 countries - agreed that:

  • The markets are dealing with the greatest level of uncertainty since 9/11 due to the lack of liquidity, collapsed housing prices and the depletion of business confidence. 
  • Recovery timeline depends on the global government rescue bailout plans and world banking systems easing credit and debt. 
  • Every geography in the world is affected. 
  • ADR is staying up longer than it did after 9/11 because the industry has matured its thinking, and sophisticated revenue and yield management solutions are in place.
  • It is imperative to maintain price integrity.
  • Discounting does not build brand equity.
  • When a recovery happens, Travel and Tourism will be one of the most resilient, fastest growing segments; globally it is increasing as a percent of GDP. http://www.wttc.org 
Quotes from the executive suite: 
“2009 will be a tough year.  There will be a recession for Q1’09, or all of 2009.” 
– Jean-Claude Baumgarten, President, World Travel & Tourism Council

“Q1 2009 will be worse than Q4 2008.  The strongest geographies will be AsiaPac, Middle East, and the non-US Americas.  Most challenging areas will be the US, Europe and the UK.”
-Christopher Nassetta, President & CEO, Hilton Hotels Corporation

“What will recovery look like?  Room night demand will increase on a regular basis. When the US turns around, it will be two or three quarters later in foreign markets. There will be a rebound in 2010; things will look better by Q4 2009. – Mark Lomanno, President, STR

“Now is a very special time; you must show stability.” 
– Donald Semmler, EVP, Full Service Brand Management and Global Operations, Marriott International.

“Q4 2009 will be flat.  We currently have no projects in the ground and anything planned for the next two years is on hold.” – CA Anderson, EVP, Interstate Hotels & Resorts

“Ultimately lodging is a local market story. It will be a longer journey this time; 2009 is the low point going forward. Weak occupancy postpones ADR growth until Q2 2010.” 
– Mark Woodworth, President, PKF Hospitality Research

“Market share and flow through is everything.  Our use of revenue management is better now and while we may be using third party sites, we’re not giving it away.” 
– Rick Smith, President & CEO FelCor Lodging Trust

The bottom line: “You’re going to do just fine in 2009” and “Finally in heaven by 2011” 
– James Burba, Chair, ALIS and President, BHN


“What do we do in the meantime?”  Leadership, Innovation and Value

Additional takeaways from ALIS include a mandate that the shrinking availability of debt financing demands a corresponding expansion in leadership that can steer teams toward innovative solutions which add value to guests, owner groups and other stakeholders.

Leadership + Strategies:  “If you can be seen to be investing in your brand right now, you will be rewarded.”

“Leadership sets a vision of beauty and excellence, then executes great selection.  It says ‘Here is who we are, join us in our dream.“ – Horst Schulze, Former President and COO, Charter Member, The Ritz-Carlton Hotel Company and President & CEO, The West Paces Hotel Group.  Note:  Mr. Schulze was awarded the ALIS 2009 Lifetime Achievement Award.

“Focus on operations, watch costs and prepare for a turnaround and growth. You must have an enormous amount of will to ask how we can be internally more efficient and reach out to our guests and stakeholders.” 
– Frits van Paasschen, President & CEO, Starwood Hotels & Resorts Worldwide.

“Learn to dial back on the cost impulse without affecting the customer.” “We are increasing 30% globally the number of sales people to track big corporate and regional accounts. People look more for value.  Keep the brand alive and relevant, and provide value. If you can be seen to be investing in your brand right now, you will be rewarded. You have to be offering a reason why, especially in this market.” – Andrew Cosslett, Chief Executive, InterContinental Hotels Group

“People are looking for value-minded things; less gloss and glamour than in the last 10 years. This is not a quick flip back; this is a mega trend that will last.  The psychological impact is just too strong.” - Christopher Nassetta, President & CEO, Hilton Hotels Corporation

“Build loyalty with your end customer, team members and ownership groups.   Be intelligent about the cost structure of hotels and above the hotels. In the last 60 days, we cut our own program fees by 12%.” -Christopher Nassetta President & CEO, Hilton Hotels Corporation

“Do we have the means to recover and rebound?  We have to cut and anticipate.” 
-Gilles Christian Pélisson, CEO, ACCOR

“We’ve added sales and marketing costs this year and pulled back on Capex.  We’ve taken measures to maintain flow through and reduce labor and operating costs.  We encourage innovation on the revenue and cost side.” – David Johnson, CEO, Aimbridge Hospitality

Innovation + Value:  Deliver the Customer Experience

Innovating around value was a strong theme at ALIS 2009.  Hilton set the tone Monday morning with the announcement of its “hip and humble” extended stay offering Home2 Suites by Hilton™.  The new brand targets young millennial business travelers that book10 or more stay nights.  The new brand provides an Oasis community area off the lobby, outside spaces, an exercise perimeter path around the property and a green theme including 70% recycled tile carpet and water savers in the bathrooms.

The journey through 2009 will demand strong leadership and an attitude of business confidence. “When trouble comes, you have to stand together,” said Andy Cosslett, Chief Executive, InterContinental Hotels Group.  “The big systems have to turn on their taps and rebalance.  This sends a great signal of hope and a future.  Show great leadership.” 

The rewards of maintaining that commitment could be a fast rebound when recovery comes.  Said Frits van Paasschen, President & CEO, Starwood Hotels & Resorts Worldwide, “Today’s cancelled vacation and business meeting is tomorrow’s pent up demand.” 



 

Julie Keyser-Squires, APR is Vice President with Softscribe Inc.  Visit her on twitter @Juliesquires; comment on her First Light business blog http://blog.softscribeinc.com/ or give a shout on her new social media site:  www.marketingsnacks.com

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Contact:


Geneva Rinehart 
Managing Editor 
Hospitality Upgrade magazine 
and the Hospitality Upgrade.com website
http://www.hospitalityupgrade.com/
grinehart@hospitalityupgrade.com

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