Grow to Gain Strength
March 10, 2016 9:50am
by Georges Panayotis
Not so long ago, the natural growth of hotel groups led them to build solid foundations on their national market place in order to gradually make their foray onto neighboring markets as soon as they were well established.
Like sponges gradually soaking up water, groups enriched their supply through organic growth or by absorbing local partners, accumulating assets when that was still popular. The quest for geographic balance across the continents was intended to offset regional cycles, to accompany their countries' nationals in their travels abroad and capture growing international markets.
But this thought-out strategy was upset about fifteen years ago when investment funds seeking lucrative paybacks focused their interest on the finest sponges. By becoming a shareholder, then gradually taking control, it was enough for them to squeeze them out regularly to enjoy the added value of sales and exceptional dividends. Financial strategy has prevailed in place of patient, opportunist, and voluntarist construction by pioneering companies.
But times are changing, it seems. The pendulum is swinging back and may allow the sponges to grow again. Pressure from the online hotel distribution giants has placed the emphasis back on the importance of the brand and product differentiation. The "shared supply", which emphasizes customer experience, encourages responding with original, innovative, differentiating products.
With its megabrand, ibis felt the tide rising and the need to impose an image that is both global and renewed. The next stage will affect the upscale and midscale. Work being done on Holiday Inn and Holiday Inn Express is similar with a goal to prevent widespread aging of brands that would be fatal. American groups, meanwhile, are multiplying niche brands by encouraging the unfurling of new networks. Emirate Sovereign funds and other oil powerhouses have decided to take over the renewal of luxury hotels with a long-term property strategy and very generous investments that have breathed life back into the monuments to our hospitality heritage. Chinese groups, meanwhile, are determined not to be limited to their continent and are participating in the restructuring of the supply with their considerable means.
After a long period of indecisiveness and focusing on finance, hotel groups have made their way back into the game of global restructuring and consumer marketing. More than ever, the future lies in the pursuit of a real industrial and operational strategy. This challenge is at least as passionate as speculating on real estate assets. But it would be nice to be able to play fair. While Americans and Asians see the discourse regarding the importance of tourism and its actors backed at the highest levels by efficient support, Europeans cannot end the debate over shared agricultural policies while they continue to view tourism as a given with no need for support. It is high time means were invested to support discourse
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Georges Panayotis is President of MKG Consulting. Born in a family of hoteliers for three generations, Georges Panayotis, 51, left Greece at the age of 18 to pursue his studies in Political Sciences and to obtain his Master in Management at the French University of Paris Dauphine. He then joined the Novotel chain, which will become the Accor Group, to manage the International Marketing Division. After developing specific marketing tools for the hotel industry, he left the group in 1986 to start his own company, MKG Conseil, now MKG Group. In twenty years, the group has become the European leader in studies and consulting for the Hospitality industry. The company employs over 70 people in four departments: marketing studies, database, quality control and trade press, with two publications HTR Magazine and Hotel Restaurant Weekly. The company helped the development of over 2,000 hotels in France and in Europe, with offices in Paris, Cyprus and London. Georges Panyotis is the founder of the Worldwide Hospitality Awards and the Hotel Makers Forum, and the author of several publications on Marketing and Operations in the hotel business, He is a regular consultant for several television channels, among which Bloomberg Television, and radio networks.
Contact: Georges Panayotis
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