04 November 2008

ââ¬ËœSurvival of fittestââ¬â¢ for hotels in 2009

Hotel sales are sat to tumble by at least 20% with five-star properties hit the worst as the recession bites in 2009, a leading hotelier predicts.

Niels Pedersen, managing director of the London-based Supranational Hotels consortium, believes revenues at four-star properties will be down by a quarter, with three-star hotels dropping by 10-15%, and budget hotels remaining static.

He warned the industry that the prospects will be even worse than the gloomiest pundits imagine because of a probable background of redundancies, VAT and tax increases, and salary cuts. 

The ââ¬Ëœsurvival of the fittestââ¬â¢ philosophy will mean that up to 10% of properties will go bust, be sold, or change use. But the industry will consider this ââ¬Ëœgood riddanceââ¬â¢ where the operators concerned havenââ¬â¢t tried hard enough, Pederson believes.

Hoteliers will seek to reduce costs by increasing staff productivity through more flexible working, getting rid of time-wasting or difficult personnel, and closing restaurants in favour of full-service brasseries or coffee-shops, according to Pederson, whose organisation is represented in 70 countries,

Hotels will have to shift to offering better value rather than marketing on price alone because corporate guests will not accept second rate service even when spending less. 

ââ¬ÅâœGeneral managers need to focus on mistake-spotting around their properties and not sit in offices,ââ¬~ Pedersen advised.

The business travel market will return to straightforwardness, with shorter stays to avoid time-wasting, and no place for accompanying spouses.

There will be an end to ââ¬Åâœhypocritical wastefulnessââ¬~ on expense accounts, extravagant add-ons by those attending meetings, or bogus ââ¬Ëœinspection visitsââ¬â¢.

Pedersen also believes a ââ¬ËœCanute-typeââ¬â¢ mentality to maintaining prices will not work when contracting with procurement officers or travel managers who are insisting on a return to 2007 tariffs for next year because otherwise they will simply book elsewhere. 

The best-performing hotels will be those with strong corporate markets because leisure travel will drop drastically.

ââ¬ÅâœThe promotion of the environmentally-friendly hotel has become meaningless at a time when companies and venues are only concerned with survival,ââ¬~ said Pedersen.

ââ¬ÅâœThere will be clear integration between operations and marketing with service standards more honestly matching the promises of sales staff. Hype will be eliminated in favour of honesty."

ââ¬ËœFickleââ¬â¢ guests who know their value to hotels will be more difficult to please, and hotel complaints procedures must be excellent to ensure that no disgruntled customers are being lost.

Pedersen also predicted that status-driven or ââ¬Åâœego-enhancingââ¬~ services will be unacceptable to executives returning to the basics of a clean, quiet, comfortable and functional bedroom with perfect high-speed internet access.

He said: "Nowhere is safe because the hotel industry is now having to pay for average price increases of 40% over the last three years. Survivors are learning to fight for every single extra guest.ââ¬~

by Phil Davies 

• PRINT
• SEND TO A FRIEND
• SHARE

Post your comment

Your Comments (2)

, be the first to post a comment.
Your email:

Your comment title:


Your comment:

Email other comments made to this story

5 characters

• Survival of the fittest
  
  

  A great deal in this artical rings true and many operators have known this has been coming for a long time now. Yes the client wants more for less but thats always been the case. Good hotel operations which offer "value for money" have a far better chance of survival, this is a very simple business but many operators tend to forget that a product is measured on the basic principles of inn keeping, A warm welcome, a clean comfortable room, a decent breakfast and a correct bill on check out. Cover the basics and the rest will fall into place. I do belive however, that the UK hotel industry is in a far stronger position than it was in the early 90's when hotel value had more to do with asset/building value and less to dso with profit !

  By Chris Sharp, Wednesday, November 5, 2008
• Adding value
  
  

  Niels is right to say the end user won't accept diminishing levels of service as rates come down, but it's not just true of corporate sales. The discerning leisure traveller will also expect a high level of service and value when hunting for a bargain. Sales will inevitably be driven on price for the foreseeable future but successful hotels will have to deliver more than just attractive numbers. As you would expect of the trade's favourite independent city hotel provider our 2500 directly contracted hotels are not just regularly reviewing their rates but many have an exciting range of value already in place for the is winter, such as guaranteed upgrades.

  By Jason Grist, Wednesday, November 5, 2008