2010 Hotels positioning in current economical downturn

1. Hotels positioning in current economical
downturn
1/09/10 Hotel positioning in economical downturn Cédric Michiels 1

2. Introduction
1. Underlying factors that have influenced hotel industry
2. Current tourism indicators and global outlook on the hotel industry
3. Revenue Managment in economic downturn
4. Ongoing hotel development pipelines
5. International hotel supply & evolution
6. Road map to recovery and emerging markets
7. Innovation
8. Quality control and sustainability
9. Conclusion
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3. Underlying factors that have influenced
hotel industry
l Non-regulated international
financial systems
l Currency and petrol fluctuation
l Credit crunch
l Real estate crash
l Reccuring natural disasters
l Terrorism
l Advances in technology
l Saturated hotel markets
l Influenza
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4. Underlying factors that have influenced
hotel industry
l Credit crunch impact on slowdown
in hotel supply growth
l UK sterling / US Dollar devaluation
impact on tour operators
l Goverment deficits subdued
through currency / petrol
fluctuations
l Enviromental impact
l September / March 11th attacks
Iceland Volcanic eruption
l 95,000 flights cancelled due to
volcanic eruption in April 2010.
“Mixed fortune to Hotels”
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5. Current tourism indicators and a global
outlook on the hotel industry
It is widely accepted that hotel industry is closely aligned with tourism industry.
Having a direct affect on occupancy levels.
2009 has been exceptionaly challenging and 2010 is already showing positive
prospects of recuperation in terms of tourist arrivals.
International World Tourist Arrivals % Chage
l Recuperation after 14 months of
negative results
l Last quarter of 2009/first quarter
2010 indicates increase of 2%
l Of 77 reported countries in the first
quarter 2010:
a) 17 are of negative growth
b) 60 show positive growth
of which 24 show double-digit
growth Source: UNWTO
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6. Current tourism indicators and global
outlook on the hotel industry
l Tourism growth has been positive in all
world regions in the first quarter of 2010
l Totalling 119 million as compared to 112
million tourist arrivals in 2009
Regions:
- Asia Pacific (+10%)‫‏‬
- Europe & Americas (+3%)‫‏‬
Sub Regions:
- South Asia (+15%)‫‏‬
- South East Asia (+10%)‫‏‬
- North East Asia (+10%)‫‏‬
- North Africa (+8%)‫‏‬
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7. Revenue management in economic downturn
“One of the keys to success in a down market is not offer across the board
price cuts, but to instead focus on particular market segments and
distribution channels”. Sheryl Kymes
l How to compete in a price war without
suffering long term damage?
Non Price Method Price Method
Reveal Strategic intentions Bundle
Compete on the basis of quality UnBundle
Creat Strategic Partnership Use opaque distributiion channels
Leverage your loyalty program Offer selected rate cuts
Develop additional revenue sources
Develop aditional market segments
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8. International hotel development pipelines
Europe pipeline by Chain Scale segment for May 2010 (number of rooms):
l
Chain Scale Existing Supply In Construction Total Active Pipeline*
Luxury 61,14 5,31 11,18 l Key market developments in Europe
Upper Upscale 209,22 11,3 18,97
Upscale 524,16 14,15 27,47 pipeline: UK, Germany and Russia
Midscale w/ F&B 464,47 9,59 19,58
Midscale w/o F&B 91,54 2,97 8,47 l 172 projects totalling 28,398
Economy 229,51 4,99 14,01
Unaffiliated 2,132,805 10,32 18,31 rooms expected to open in Europe
Total 3,712,842 58,62 118 in 2010
Middle East/Africa pipeline by Chain Scale segment for May 2010 (number
l
of rooms):
Chain Scale Existing Supply In Construction Total Active Pipeline*
Luxury 45,77 16,57 26,82 l Key market developments in
Upper Upscale 69,53 21,82 33,45
Upscale 78,74 12,9 19,96 Middle east pipeline: Dubai, Abu
Midscale w/ F&B 51,52 2,99 8,47 Dhabi and Saudi Arabia
Midscale w/o F&B 3,47 495 1,07
Economy 12,53 2,41 5,61
Unaffiliated 316,58 14,54 32,57
l The Middle East/Africa hotel
Total 578,15 71,71 127,94 development pipeline: 468 hotels
Source: STR Global construction report
l
totalling 127,938 rooms
2010
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9. International hotel development pipelines
Asia/Pacific pipeline by Chain Scale segment for May 2010 (number of rooms):
Chain Scale Existing Supply In Construction Total Active Pipeline* l Key market developments in Asia
Luxury
Upper Upscale
135,71
195,94
34,95
45,03
46,58
63,78
pipeline: China and India.
Upscale 241,02 40,32 60,32
Midscale w/ F&B 173,3 14,33 21,79 l The Upper Upscale segment made
Midscale w/o F&B
Economy
27,23
87,79
2,66
4,67
5,91
8,77
up 25.1 % , followed by the Upscale
Unaffiliated 1,351,505 32,03 46,66 segment 23.8 %, the Luxury segment
Total 2,212,494 173,98 253,82 18.4 % and the Unaffiliated segment
18.4 %.
Caribbean/Mexico pipeline by Chain Scale segment for May 2010 (number of
rooms):
Chain Scale Existing Supply In Construction Total Active Pipeline*
Luxury 21,43 1,29 2,15 l Key market developments in Mexico,
Upper Upscale 32,83 2,31 2,69
Upscale 85,14 1,54 4,05 Dominican Republic and Puerto
Midscale w/ F&B 50,73 260 935 Rico
Midscale w/o F&B 26,22 1,5 4,88
Economy 3,45 456 696
Unaffiliated 272,2 1,53 1,78
l The Caribbean/Mexico hotel
Total 492,01 8,88 17,17 development pipeline comprises 133
hotels totaling 17,172 rooms in 2010
Source: STR Global construtcion Report 2010
l
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10. International hotel supply & evolution
International World Tourist Arrivals
l Despite global economic
challenges, hotel developments
continue to progress.
l 432,000 new rooms injected into
global supply by both independent
hotels and groups
Source: MKG Hospitality 2010
l Renewed dynamism in mature
market-continents is most
apparent!
l “Moderate growth and reduced
pipeline developments are
anticipated due to the difficulties
Source: MKG Hospitality 2010
in obtaining financing”
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11. European hotel supply and evolution
l Best Western is now Europe’s
second largest group, following a
3.3% growth in supply to reach
87,017 rooms.
l NH Hoteles rooms count also
jumped over 16% following its
Source: MKG Hospitality 2010 recent merger with Hesperia
l Clear rise and new trend in Budget
and Economy hotels.
l Investors looking for a quick
investment return with reduced risk
and size of investment.
Source: MKG Hospitality 2010
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12. Road map to recovery and emerging markets
l Getting back to basics is often a l The recovery is lead by Asia with
starting point for making China and India projecting
improvements. What motivates economic growth of 8-10 %
people? Our values?
l Brazil, India and Rusia
l 2010 shows positive signs of
recovery on different fronts.
l European average occupancy has
been on steady rise in last two
quarters.
l Current volatile markets may
deviate such pogression if cautious
and constant pace is not kept.
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13. Innovation in hospitality
“Innovation is the ability to see change as an opportunity - not a
threat”
New hotel / accomodation concepts
l The source of innovation is people,
l POD Hotels / POD Beds so motivation is the ingredient.
l Versatile / mobile modular rooms l Develop stronger technological
revenue optimization tools and
l Pixel Hotels
distribution channels.
l Dream and Fly l New marketing dimensions exist,
designed for greater consumer
insight and reaction analysis.
l Incoporate a high degree of social
and environmental responsability in
the product.
l Use energy saving technology.
Qbic Hotels
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14. Quality control and sustainability
l Clear HR policies of a Hotel
determines health and quality of its
working members and services it
offers.
l Turning intangible product into a
tangible one is where quality
comes in.
l Ongoing internal assesments of the
quality of operation processes and
management are essential.
l Periodic recycling training courses
to re inforce quality standards.
l Reduce enviromental impact
through, eco purchasing, waste
management, energy consumption.
Adding luxury hospitality to the birdwatching experience
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15. Conclusion
l The current world economic dowturn is at a turning point, the slowdown has
allowed the tourism and hotel industry to regain confidence.
l Positive prospects of recuperation are underway in the hotel industry.
l Perception has to be aligned with positioning objectives.
l There is a clear shift in demand and supply with regards to development of
budget and economy accomodation in the Eurpean continent
l Human capital will be stake holders in reassurring the continuity and
improvements in the hotel industry.
l European hotel industry / training instituitions is a reference point for all
emerging markets.
l Stronger focus on management for natural and human resources.
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