‘Survival of fittest’ 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 ‘survival of the fittest’ philosophy will mean that up to 10% of properties will go bust, be sold, or change use. But the industry will consider this ‘good riddance’ where the operators concerned haven’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. 

“General managers need to focus on mistake-spotting around their properties and not sit in offices,” 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 “hypocritical wastefulness” on expense accounts, extravagant add-ons by those attending meetings, or bogus ‘inspection visits’.

Pedersen also believes a ‘Canute-type’ 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.

“The promotion of the environmentally-friendly hotel has become meaningless at a time when companies and venues are only concerned with survival,” said Pedersen.

“There 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.”

‘Fickle’ 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 “ego-enhancing” 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.”

by Phil Davies