26 November 2009

2010 a year of Ã¢â¬ËœtensionÃ¢â¬â¢ for hotels

A downbeat assessment of the prospects for hotels next year has been delivered in what is described as a "year of reckoning" for the sector.

Only hotels that have adapted to current and predictable trends will survive 2010, according to Niels Pedersen, managing director of the 1,200-member Supranational Hotels consortium.

He predicts "flat or falling tariffs, continued severe cost cutting, and more managers and owners opting to leave the profession".

"I foresee 2010 as a year of tension for us all," he warns.

"Because the recent drivers of the hotel market such as prestige, extravagance and status display have gone forever we should not expect much improvement before 2015."

Pedersen identifies five key influences for the next 12 months.

The business travel market will continue slowly to decline, remain price-sensitive, and the length of stay shorten further.

However, an added problem is the emergence of the 'spoiled brat' generation of executives, says Pedersen.

"They are aged around 30, have excessive expectations, and are not frightened to complain and switch loyalties to the point where hotel branding has become meaningless. Their use of online criticism is now soaring."

Secondly, he believes hotels will find it "desirable" to trim operating budgets by up to 40%.

This will happen through a halving reception staff, doubling the workload of cleaners, and sacking unproductive management. The use of more multi-tasking personnel is the way forward.

"Budget and smaller hotels will find that because they have reduced prices too far already, and because they are often heavily abused by guests, their standards, profitability, and market share will inevitably slip." Pedersen warns. "Many properties with fewer than 15 rooms will close."

Fourthly, hotels must respond to massive social changes.

"Taking one example, leisure clients now prefer a comfort zone characterised by ordinariness and humility, and not airs and graces. Too many hotel staff retain an innate snobbishness which they use to offset their low pay," claims Pedersen.

Finally, the profession will have to rediscover the "back to basics" psychology that worked well in the 1960s.

This involves co-operating with competitors, not being greedy, employing staff genuinely good at service, and learning to value and tolerate all sources of business, however small, difficult, and from whatever origin, according to Pedersen.

by Phil Davies