For the second year running the Institute of Hospitality organised and hosted a series of well-attended hotel seminars at World Travel Market (November 2011). A distinguished line-up of panellists provided insights into investment, technology, recruitment, Olympic legacy and risk management.
Trophy hotels a safe haven
In today’s volatile economic environment, some European hotels are seen as a safe haven. Investors are taking a long-term view on assets in key European cities such as London, Paris and Moscow, said Arthur de Haast FIH, global CEO, Jones Lang La Salle Hotels, during the Institute’s WTM panel debate: Emerging investment opportunities for the hotel market.
“People are prepared to buy prime assets at extremely low (2-3%) yields and it is the same in residential and retail and even prime office space in central London (4.5 to 4.75% yields). People recognise these as long-term investments because it’s difficult to secure such sites. Bonds are almost as risky as stock. Real estate is a favoured asset class,” he said.
Looking beyond Europe, a bold approach was required in emerging markets, added de Haast: “Those who have invested in branded properties in Ghana, Angola and some Russian cities, are getting very high room rates and getting their investment back in three or four years.”
It was easy to sign new deals in emerging markets such as Nigeria because there is greater liquidity, but development can take much longer, highlighted Puneet Chhatwal FIH, chief development officer, Rezidor Group. “In Lagos we were seven years in construction compared to two in Sweden. The number of signings points to a very confident time but the actual opening schedule makes it a testing time,” he said.
The debate was chaired by Russell Kett FIH, managing director of HVS.
Technology investment is crucial
Investing in technology is just as important to a hotelier’s profitability as spending on room furnishings, delegates heard during the Institute’s WTM seminar: Technology: improving service or diluting relationships?
“I know there is only so much money to go around so the hotel with paint peeling off the walls but with really great technology is not common. But every decision a hotelier makes is based on return on investment (ROI),” said Rupert Gutteridge, EMEA regional sales manager, IDeaS.
“Do I buy a cheap mattress that guests don’t like or do I buy a better quality one and get repeat business? The broadband service you pay for should be a simple ROI equation too. I know technology gets put into a bracket but to me it’s no different from any other investment,”
A hotel with a slow broadband connection was actually worse than one with no broadband at all, added Casey Davey, UK sales manager, Rate Tiger.
Philippe Rossiter FIH, chief executive, Institute of Hospitality, who chaired the discussion highlighted that a frequent complaint from hoteliers in parts of Scotland was the lack of broadband and the most important infrastructure investment decisions often needed to be made by governments and telecom companies, not hoteliers.
Higher graduate salaries needed to win the talent war
Starting salaries for hospitality management graduates need to be higher if the industry is to win the talent war, says the head of an international luxury hotel brand.
Guy Crawford FIH, CEO of the Jumeirah Group was speaking during the Institute’s WTM panel discussion: Leadership: human capital – a look at the changing nature of the hospitality labour force- managing the global labour market.
“We’ve got to pay people properly if they are coming from university. We need to start paying to get the best and the brightest. Start them at £30,000 and if they want to be a general manager at 24 and they’re qualified, let them go for it,” he said.
Starting salaries for hospitality management graduates range from £20,000 to £25,000, although there are examples of luxury brands offering initial graduate salaries above the £30,000 mark, said Liz Hartstone FIH, managing director, Profile Management & Specialist Recruitment.
In order for the hospitality industry to attract the best and brightest graduates, starting salaries in hospitality need to match other sectors such as banking, Crawford stressed.
Hospitality key to Olympic legacy
The hotel industry can play an important role in the success of the 25-year Olympic Park legacy project, delegates heard during the Institute of Hospitality’s World Travel Market seminar: Olympic legacy: when the party’s over.
After the games, the Olympic Park will close for more than a year while new roads and infrastructure are built and the buildings are transformed. The site is due to re-open in 2013 as the Queen Elizabeth Olympic Park, a major regeneration project for east London.
“We need the hotel industry to make it a destination to visit,” said Malcolm Ross FIH, executive director of operations and venues, Olympic Park Legacy Company (OPLC). “By 2015 we are projecting 10m visitors to the Queen Elizabeth Olympic Park. From a tour operator’s point of view, it’s the third day in a visit to London.”
Ross underlined that compared to previous host cities, London was unique in planning its post-Games use far in advance. In Atlanta, Sydney and Athens planning only started after the event meaning that in some instances their stadia and venues were left abandoned for years. The OPLC’s plan is to build 11,000 new homes and create up to 10,000 jobs based in two employment centres in the park.
Ross called on hospitality companies to take a long-term view and invest in east London: “Westfield took the decision to put another shopping centre into east London. They were visionary. People at the time thought it was a step too far. I believe money is available. You have got to be aggressive, visionary and bold. The hospitality industry can support the legacy by being bold and coming to compete for funding.”
The debate was chaired by professor Peter Jones MBE FIH, project director, The Edge Hotel School.
Risk management increases profits
Effective risk management directly increases hotel revenue and profits. That was one of the main conclusions of the Institute’s World Travel Market panel debate: Long-term risk management – tourism recovery, going beyond security.
Paul Moxness, vice-president, corporate safety and security, Rezidor, said: “I can prove this year with numbers how much risk management has improved our business.“
Companies that have a duty of care to their employees were choosing to stay in Rezidor hotels, he said: “We see how much more business they bring to us – a huge amount.”
This was not necessarily because Rezidor was perceived as safer than other hotels, Moxness added, but because the client personally knew and trusted who was in charge in the event of an emergency.
There were other financial benefits of having a sound risk management strategy, delegates heard. “It’s not just revenue generation. Rigorous risk management significantly reduces insurance premiums and this goes straight to the bottom line. Everyone benefits,” added Dr Alexandros Paraskevas, senior lecturer in strategic risk management, Oxford Brookes University.
The health & safety and security disciplines within a hotel are shifting from being a business cost to becoming an income generator, observed Philippe Rossiter FIH, chief executive, Institute of Hospitality, who chaired the debate.
The risk management debate was reported on US website Hotel News Now
