4 Worries That Keep Hotel Executives Up at Night

The beauty of an annual hotel investment conference is getting the opportunity to speak with a lot of hospitality executives, all in one place. And that’s exactly what Skift embarked on during the NYU International Hospitality Industry Investment Conference in New York City on June 6 and 7.

What surprised us, during many of our conversations with these leaders is what’s on their minds most—and what, frankly keeps them up at night. (This is also a question we posed recently to more than two dozen chief marketing officers as part of our Skift CMO Series.)

Overall, the general mood during the conference could be best described as “timid optimism” on the part of hotel brands and management companies. And one of “getting ready for a downturn” on the part of hotel owners.

Whether we’re talking strictly about the hotel industry itself, or the larger global tourism industry as a whole, it’s clear that 2016 will be a year of tremendous transition. We’ve already dealt with political instability (Brexit), acts of terror, the Zika virus, and a looming U.S. Presidential election.

Having had so many prosperous in years past, especially in 2015, hoteliers are now anticipating things to change, and they’re preparing themselves for whatever may lie ahead. Here’s a snapshot into what’s keeping them up at night, and what their plans are for the future.

Knowing What’s in Your Control and What’s Not

AccorHotels CEO of Hotel Services for North & Central America & the Caribbean, Christophe Alaux, said that although there is a lot of volatility in terms of global politics, security and economics, hoteliers need to focus on whatever opportunities they have.

“I think that there are a lot of discussions around the insecurity worldwide and all the things we cannot manage directly,” Alaux said. Like the instability in the Middle East or some tension in Asia Pacific, or some economic situation in Western Europe or in brazil. Or some political turmoil in Europe or Britain — should England leave or not. And in the U.S., with the presidential campaign. A lot of things we cannot manage or control directly. At the same time the are a lot of opportunities.”

Where does he think the opportunities lie? In new digital initiatives, brand creation, guest experience, food and beverage, and the short-term rental space.

When asked if he though there was a fair playing field for short-term rental sites like Airbnb and HomeAway to coexist with traditional hotels, he referred to those sites as a “new segment” and that “they need to grow.” He also said that the strength of what Airbnb offers is that fact that if provides a non-standard, thoroughly unique experience for guests, and that’s exactly why Accor decided to “jump onto these new businesses.”

Accor has, in recent months, made deep investments in brands that play in the short-term rental space, but also offer more traditional hospitality services. It invested in Squarebreak and Oasis Collections and earlier this year, it purchased Onefinestay for $169 million.

When asked for his thoughts about Airbnb and other short-term rental players trying to offer more hospitality-driven services or branded experiences, Alaux said, “If they try to do so, that means we [hotels] are going to succeed. In the long run, they are coming close to our business model, services and experiences. Not anymore just a digital site or sharing economy, it’s a true business model based on service, real uniqueness, recognition. This has been the job of the hospitality industry forever.”

Figuring Out the Customer

For Choice Hotels COO and President Pat Pacious, his biggest concern is one that has been eternal to every business: figuring out what customers want and need, upping Choice’s direct booking game and building customer loyalty.

“You can’t let product stay complacent,” Pacious said. “Whether it was flat screens years ago or charging stations, for example, you need to meet the changing needs of the consumer.”

He also added, “The online distribution space continues to be a very fluid space. A lot of the hotel chains, including us, have gone to a book direct rate for our loyalty members. Brands are taking back a little bit of the distribution pie. We want to have the best rates on our sites. A lot is going to go on in that space.”

“To respond to the consumer change, we’ve revamped our loyalty program. Back in January, we launched a new program. Points don’t expire. We’ve increased the value of our points. We offer instant rewards now. Consumers today want instant gratification. When you stay with us we’ll give you an Amazon or Starbucks gift card, for example. It’s all about providing features that guests who are traveling with us want and they want immediately.”

Addressing Labor Concerns

Dream Hotel Group CEO Jay Stein has been pretty busy lately. The company just announced it will be adding six new hotels to its collection by 2019 — five in the U.S. and one in Qatar. When we asked Stein what’s on his mind most these days, he brought up the increasing cost of labor, or increasing challenge to find good labor, as well as the perennial difficulties of marketing a hotel brand.

“The labor issue is always something that’s affected our industry and it’s getting bigger and bigger,” Stein said. “One on just the cost of labor. It just continues to escalate. The quality of labor gets tougher and tougher as we have kids getting out of great hotel schools and they don’t have a desire to work in the entry-level and mid-level positions at hotels. They want to start out as vice presidents of operations the day they get out of school. So that’s a bit challenging. [So is] the legislation that’s going on for us to stay on top of.”

He added, “Marketing is changing dramatically with hotels. How we market to consumers and on social media. It’s ever changing and expensive. You think you need to do everything but you can’t afford to do everything and you need to make a decision about where to put those dollars.”

Those Direct Booking Wars

Red Lion Hotels Corporation CEO Gregory T. Mount spends his time thinking about consolidation and the direct booking wars, especially since his hotel company has taken a somewhat contrarian approach to bookings than its competitors.

He said, “What I’m really kind of keeping my eye on and watching is what is the impact of some of this consolidation that’s going on? Particularly with the Starwood-Marriott merger? How does that impact the owners and franchisees? As well as what are some of the potential positive outcomes for the customers? I think those are the people that will benefit most from those consolidation efforts.”

“And then really kind of understanding where the equity is going to fall between the larger brands and online travel agencies (OTAs), you know, as they start to jockey for position and the brands — the larger brands continuing to try to discount themselves to take more of the share form the OTAs, from the share they currently have. The OTAs trying to fire back on that with accelerating their marketing efforts to retain that share. It’ll be interesting to see who wins.”