With over 1000 delegates flooding into Berlin's Intercontinental hotel each March, the International Hotel Investment Forum has become the largest hotel investment gathering in Europe. The theme for this year's IHIF was "Navigating the Seas Ahead", a course which was admirably steered by conference chair Kurt Ritter of Rezidor SAS Hospitality. A switch in dates, which saw the event held immediately before ITB, the massive hospitality travel trade show in Berlin, rather than its traditional slot after ITB, had little discernable impact on attendance figures, with conference organiser Jonathan Worsley reporting 1350 delegates over the three days.
Admirals of the Fleet
Some of the big guns were wheeled out to give an overview of the global hotel situation. Wolfgang Neumann told of the pressing need to re-unite the brands Hilton; Richard Hartman graciously pointed to the recent doubling of the InterContinental Hotels and Resorts share price; Roland Vos spoke of the integration of Le Meridien into Starwood; and Sir Rocco Forte, at a slightly different scale, expressed satisfaction at the growth of Rocco Forte Hotels. All pretty upbeat stuff, and no surprise with 2005 seeing Û16 billion of hotel investment in Europe, double that of 2004.
There was much talk of real estate shift. "Not asset light but asset right", as Vos described Starwood's asset disposals. Whilst Rocco Forte Hotels is all about ownership and control, the larger groups were agreed that they would retain, wherever possible, significant landmark properties in key destinations. Especially where the purchase cost is a significant barrier to entry. Vos also added, "Ownership is still important when we want to trial new concepts." Essentially groups need to show an initiative works before asking franchisees to accept it. In discussing the role of franchised hotels and the view that they were potentially brand destroying, Hartman was quick to point out "that with over 400 franchised hotels we have a model that works." With the necessary support and control of standards there was no reason why franchised hotels should damage a brand. Forte agreed that whilst franchised hotels allowed for quicker growth, for him it was all about control through ownership: "The consistent delivery of service is the key to developing a brand. And it is easier to start from scratch than having to train old staff."
Vos concurred that the development of Starwood's brands is mainly through staff development, "the staff are the brands". However he also pointed out the need to have the underlying asset right - this time referring to the guest experience. And here the importance of brand cleansing was discussed. The need to provide a predictable, understandable and acceptable face to the customer.
Brand migration highlighted a two way street across the Atlantic. Neumann warned to expect the arrival of Hilton's mainly US based brands in Europe. Hartman added that Indigo has "traction", so expect to see this InterContinental brand, once it achieves more scale, join Staybridge in Europe. Vos on the other hand was excited about the opportunities for growth of the Le Meridien brand in the US.
Sustainability
A panel discussion on Sustainability vs Financial Viability, was moderated by Mark Eckstien of Sustainable Financial Development. Here the issues of both environmental and social sustainability were dealt with.
Social aspects covered the need to nurture key local resources. Typically the opportunity to encourage the supply of foodstuffs from the community. Preferably not going as far as putting your USP on the menu! Lyndall De Marco of the International Business Leaders Forum described a situation in Taiwan, where a resort, famed for its 100-year-old clams, is no longer viable because the clams were being cooked. Educational and rehabilitation possibilities for the deprived and those forced into prostitution should also come with international hotel development. The downside is the very real chance of unsustainable violent conflict caused by insensitive development.
A main concern was the need to bridge the gap when the investor, paying for the sustainability aspects of a hotel development, was not the operator, who benefits from the subsequent environmental efficiencies. Robert Kennedy of Hilton argued that the main solution to the conflict was for all parties to use long-term investment horizons, acknowledging that it is never easy with owners, operators and architects all looking for their own return. Bob Zimmer of Zimmer Associates attempted to explode the myth that it costs 30-35% extra to go green. The reality is nearer 10-15% and furthermore the energy savings payback is only 3 years. To say nothing of the reduction in both absenteeism and possible litigation when non-toxic materials are used.
The over-riding impression is that in an ideal world hoteliers will do what's right for the long-term benefit of the industry. However unless hoteliers are forced / taxed into doing so, the impact of the consumers' willingness to pay a premium for a more sustainable hospitality product, is limited.
Hotel Room of the Future - technology & mass-market
Always a hot topic at any such events, IHIF tackled the future hotel from two angles - the mass-market hotel and technology.
For mass-market also read budget or low service. As illustrated by the inclusion of EasyGroup's chairman, Stelios Haji-Ioannou, and Yotel's CEO, Gerard Greene. Alongside them Olivier Dupont described the viewpoint of Cedant International's Days Inn and Ramada Encore brands, and John Wagner, spoke from the standpoint of InterContinental's longer stay, four star, Staybridge Suites.
Concentrating on the design aspects, Dupont insisted that brand standards, safety and soundproofing for example, have to be met by franchisees. Franchisees will be able to choose between steel or concrete construction methods but the FF&E will be prescribed using the most cost effective solution. At Staybridge Suites, Wagner, described the use of traditional construction methods to assemble factory produced room modules. This delivers a four star product at 15-20% less cost. What is more, with build times of just four to six months, income generation can begin quickly. Greene described the Yotel concept as also being four star in terms of the quality of fitout, just not in terms of space. At 6m2 for a standard room this is clear.
On the technology side, a main motivation for the future was the experience of lost telephone revenues with the advent of the mobile phone. Having missed the boat once, hoteliers do not want to be caught out again in the digital television revolution. Alistair Forbes of Acentic sees the hotelier controlling the billing, so why not the content and pricing of hotel TV? New technology is needed to allow ease of use and maximise connectivity. Guests have to be dissuaded from watching internet TV over their portable PC's. Manufacturers of TVs are therefore building in USB slots and various docking devices to help the hotel claw back some of the technology steal from the content providers.
Infrastructure investment was the best insurance for the future explained Fredd Causevic of Otrum. Nevertheless, the existing coaxial cabling in all hotels provided sufficient bandwidth. If coming with a slight security caveat, being a serial system running from room to room and therefore increasing unauthorised access concerns, explained Graeme Powell of iBAHN.
Fiona Thompson of Richmond Design dwelt on the need to improve user friendliness. Be this at the very basic level of trying to find a plug socket to the use of nanotechnology to better understand a guest's profile. New hotels should ideally have pre-emptive conduit and aim for some guest room adaptability with sensible flexibility options, especially with regard to lighting. The consensus was reliability should be the prime motivation rather than the technology itself.
Chris Luebkeman
Chris Luebkeman, Director of Global Foresight and Innovation at international design and engineering firm, Arup, is charged with best guessing the future for Arup and had a refreshing lack of corporate "speak" in his animated presentation, "The Winds of Change". Less a specific look at the hotel industry and more a questioning of what the future might hold.
"Our future needs to be put in context and the context of our world is temporal," Luebkeman enthuses. "always changing and temporary. Contexts are not consistent across the globe. Nor for individuals, as one consumer can make several choices and have changing contexts throughout their lives. Architects therefore have to think of the many users and uses of everything they build." With a healthy dose of "why?" and thirst for knowledge, Luebkeman, gets you really questioning your own place in that future and the influence you, as an individual, can have on the sustainability of that future.
"What will we do when we run out of fossil fuels? And we will."; "Who is going to take care of me?" he asks of our aging population; "How long will we continue to flush our toilets with drinking water?"
"When will it be compulsory to learn Mandarin?"
It is these sorts of questions that were put to those attending a series of workshops run by Arup over the last three years that included a wide demographic from around the world. As Luebkeman explains, "The issues are local but as we have access to global information it is this global context of the future, rather than a particular location, that becomes important in the success of a project."
The most consistent conclusions reached by the workshops over a series of five domains were demographic change, technological convergence, the economic impact of Ch'India (China and India), resource depletion and a lack of political vision. These and other identified trends have been collated by Arup as a series of 50 cards, the "Drivers of Change 2006". Each two-sided card depicts a particular thought- provoking driver within a domain.
IHIF - www.berlinconference.com
The 10th International Hotel Investment Forum
5-7 March 2007
