The Hotel Industry Needs Refreshing so it Won't be Strangled by Deflation
February 25, 2016 6:21am
by Georges Panayotis
The hotel industry is said to be one of the oldest in the world. Indeed, over several thousands of years of history, accommodations ranging from taverns to hostels, cottages to inns, hostelry to hotel-clubs, boutique hotels to palaces, concepts have succeeded one another and diversified, adapting to the times as they went along.
The hotel industry is anything but linear. It is, by nature, cyclical despite all attempts to smooth out peaks and valleys. It follows the evolution of traveler flows, the economic dynamism of destinations and source countries, consumer demands.
In a Europe that is gradually getting out of the stagnation in which the financial crisis thrust it, France is now in a depressed phase of the hotel cycle. It has unfortunately combined persistent economic slump, an aging supply of commercial accommodations, constant panic about security and outdated regulations. The leading tourist destination worldwide has become a battlefield for new forms of distribution and alternative accommodations offers that reinforce the bad image of French hotels that missed the train and did not reevaluate itself sufficiently when it needed to.
Today it is necessary to relaunch hotel activity by comparing the two challenges presented to its players: intelligent management distribution channels and renew the appetite for commercial concepts that exude the 21st century through their services and equipment. The good news is that the economic situation is quite favorable: the means available are accessible to enterprising entrepreneurs; global demand is steady despite geopolitical and economic instability; and regulations are increasingly coherent.
Will hotel groups make a strong comeback in financing supply growth? It is wishful thinking as it is their job to pave the way to renewal. There has not yet been a turnaround in the doctrine, however totally asset-light strategies are regularly adjusted when the financial equation is so favorable it would be foolish not to take advantage of it. With such low interest rates, nearly nonexistent inflation and a new available debt, the time is right to simultaneously launch the construction of new concepts, by trying to achieve critical size as quickly as possible; and the re-purposing of existing buildings to breath new life into them.
The goal of economic activity is, of course, to produce sufficient profit to satisfy investors and shareholders, but is it necessary to sacrifice their means to constantly improve the product? In order to generate added values and extraordinary dividends clients must prefer the products offered. Available cash-flows and unused credit lines accumulate, sometimes by the billions of euros, while waiting for external growth, whereas they could supply territories with new properties and contemporary conversions. It is undoubtedly a question of priorities and the swinging of the accountants' pendulum towards operators.
So, must we wait for new external pressure? Pressure from these very farsighted powerful groups that have significant financial means and a conquering spirit that has too long been restrained by the western establishment? Take a look at the websites of Chinese groups, which were absolutely unknown in the battalion just five years ago, and have innovative ideas for concepts with excellent quality for value. Star Wars 5: The Clone Wars was prepared secretly in a distant galaxy prior to crashing into The Galactic Republic: Who will be the next Jedi to join the industry?
Tags: georges panayotis
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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