Investing Into Brands of the Future
February 22, 2018 12:14pm
By Pascal Gauvin , Managing Director, India, Middle East and Africa (IMEA), IHG
Today, investors ultimately select brands based upon strong operations, distribution, production, revenue management, ADR, occupancy, and RevPAR achieved. However, in the immediate future and beyond, investors should be looking at hotel brands with more granularity. As competition across the industry becomes more fierce and more disruptors enter the market, investors should assess which hotel brands are more receptive to the changes in consumer behaviour and are likely to adapt and consistently remain relevant to the traveller of the future.
Brands that will survive in the long run will be the ones that are intuitive about travellers' needs and their purpose of travel. This is applicable to brands across the travel spectrum; whether you play in the luxury sector or in select service as guests are becoming increasingly astute about their needs and precise in their articulation of these needs. This is why investors must focus on brands/operators that allow guests to design their own stay based on personal preferences and then train their guest delivery teams to adjust their service style to the customizations per guest.
To deliver such intuitive and personalized service, brands will have to move away from rigid operational and brand standards and develop more experiential guest touch points. For example a guest that books a non-smoking room is also likely to want to be seated at a non-smoking table for meals at the hotel's restaurants and bars. The hotel's operations team must be able to deliver on this preference without any additional prompts or requests from the guest. Furthermore, the profile of this guest must carry forward to every hotel being managed by the brand across the world, empowering the guest to focus on the travel purpose while the brand consistently meets his/her needs and delivers a great guest experience at every stay.
Other areas that need an investors' attention is how brands meet guests' food and beverage requirements today and how they plan to in the future. Today guests have varied requests for different ethinic cuisines, vegan or organic food options and spaces where they can unwind and have a relaxed meal. Such requests already require hotel operators to engage in detailed planning and cost efficiency management to keep their food and beverage operations profitable. In the future, consumers may be able to customize their own food menu and order based on nutritional value via menu apps on their smartphones. Brands must be able to cater to these demands with a seamless operation whilst maintaining owner ROI.
Lastly, investors must investigate how brands hire and train people. Currently, across the world, there is a considerable gap between the hotel pipeline and suitable talent required to operate the new hotels. Specifically in the Middle East, a large segment of the new generation is unaware or unfamiliar with the hospitality industry and the rewarding career path it offers. Hotel operators must work diligently to increase the profile of the industry and position it as an attractive career option for the youth.
More importantly, investors should look at partnering with brands that consistently adjust their employee training programs to cater to changing consumer trends, thus developing strong talent pipelines for the future.
Brands that are receptive and adaptive to the changing consumer context are the ones that can be expected to deliver consistent ROIs over the next 10-20 years.
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Pascal Gauvin is Managing Director, India, Middle East and Africa (IMEA), responsible for driving the growth and strength of IHG and its hotels across the region. Pascal's previous role was Chief Operating Officer, IMEA, leading the operations and performance of more than 124 hotels as well as overseeing the strategic development of IHG's plans, including the 74 hotels in the region's development pipeline.
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