Innovation in Hospitality: Change is Good
January 23, 2018 8:54am
by Georges Panayotis
Each upheaval in the hotel industry offers an efficient response to the problems of the moment and these answers make it possible to reset the counters to zero and start over on sound foundations. About fifty years ago, hotel chains contributed to a major transformation in the sector by introducing strong innovations to the hotel product. They built a model that offered a better value for money and made the offer more reliable through standardization. The customer who booked a night in a hotel knew exactly what to expect in terms of products and services. This new way of looking at the hotel business has been accompanied by economies of scale in terms of purchasing, marketing, sales, recruitment, communication, etc. thanks to the centralization of support functions. Thus, hotel groups were able, with support from state investment aid schemes, to develop a large network of properties and maximize the profitability of their operations. Inflation, which was very strong at the time, took care of the rest.
Today, the situation has changed. No matter what we say, the hotel sector is not a priority for our government. On the one hand, the welfare state is no longer there and the consumer society has changed drastically. To adapt to the current context, hotel groups have sold their assets to investors with longer-term profitability objectives. The owner of the trademark is no longer the owner of the walls. On the other hand, the giants of the web have absorbed distribution, which in turn offers a turnkey solution to hotel owners by giving them the power of the Internet network to reach new customers. Although the transition has not been smooth, there is no doubt about the role played by online booking platforms.
It is no longer a question of hotel chains orienting their franchised hotels, but rather a customer/supplier relationship. As each owner-operator has invested considerable sums of money, he expects his franchisor to provide concrete logistical assistance and support that will help his property become more profitable. Hotel operators are no longer passive, they have become active, they must be convinced and will choose the products, solutions and services adapted to their properties. Hotel chains must innovate once again, they must rework the product/market pair so that it corresponds well to the reality of the needs of the end customer and also of their business partner, the franchisee. It is important to give the operators not only tools but also a strong brand that stands out for the customer by tapping into their imagination. The facts of the equation have changed in a few decades, it is no longer a question of reassuring the guest but of making them dream to develop a strong attachment to a brand that must resonate with their own values and encourage them to remain faithful to the brand's products.
By innovating in terms of products, promoting economies of scale to regain productivity, training staff in new technologies, and providing the robotization necessary to give vitality to operating accounts... the brands will justify their remuneration. The change in the way that hoteliers have served their customers with increasingly individualized proposals has been gradual. Groups would be wise to consider their ties with franchised properties in a similar way.
The real competition and production of service happens locally. It is vital for groups to get back in touch with the field to be more responsive and provide each of the properties under their banner with useful answers to maximize profits and facilitate day-to-day management. It is indeed the product manufactured on this scale that will give hotel owners new impetus to win back their clientele.
Hotel chains can take destination marketing back under their control, by way of operational marketing and training hotel staff. Because only the field teams know their territory well and bring a relevant offer to the hotel's clientele.
The hotel business has not completed its transformation and if cycles repeat themselves, they nonetheless change. It's worth the risk, but we need to put our cards on the table and renew with the culture of a partnership that is profitable for both parties in the long term. In the end, change is good.
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Georges Panayotis is the President & Founder of MKG Group & Hospitality ON.
Born into a family of hoteliers, Georges Panayotis left Greece at the age of 18 to study Political Science and earn a management degree at the University of Paris, Dauphine.
In 1986 he created his own company and started developing specialised marketing tools for the hotel industry.
Over the past 30 years, MKG Conseil, later to become MKG Group, became the leading European consulting firm for the hotel business, food service and tourism industries. He is also a consultant for several radio and television stations that focus on the economy.
Contact: Georges Panayotis
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