Himmat Anand had led the Tree of Life for about 15 years. Ambuja Neotia has named Vinoth Ram as the new CEO.
“The Tree of Life brand architecture is perfectly poised to cater to the discernible shift in leisure travel trends, said CEO Vinoth Ram. “My primary objective is to expand the brand’s presence throughout this vast and diverse country, providing an array of unique and exceptional experiences.”
If you want to enter the hospitality sector, start small and get financial support. But be aware that scaling up beyond a certain threshold can be tremendously hard.
That was the advice from the head of one of the world’s largest hotel groups, Accor chairman and group CEO Sébastien Bazin.
“If it’s your dream or passion, just do it and make sure somebody actually helps you financially to do it, Bazin said. “Start with three, four, or five six bedrooms. Be authentic, be sincere, be warm, and welcoming.”
“The difficulty is not to start but to scale,” Bazin said. “To go from one hotel to 12 hotels.”
Accor’s leader said that it’s quite difficult for entrepreneurs to scale up hotel businesses above a certain level, partly because they need to rely on third-party middlemen for distribution to fill their rooms.
“They don’t have the size, and the tendency is to go to the online travel agencies, and they’re going to be eating your lunch,” Bazin said. “Then you have the big gorillas like me knocking on the door, and you’re going to end up working for Accor.”
“Many people have [created regional hotel groups] but could not grow them further,” Bazin said. “It’s a tough business in which you have some tough big guys who really don’t like you to grow that much.”
Advice to Hoteliers, Too
Bazin was also asked about what was something he “hates” about the hotel industry from the personal perspective of being a traveler. He said it was the trouble the hotel sector had in giving its young employees the resources, training, and support they need to thrive in their front-line and behind-the-scenes jobs.
“I was staying at a hotel, and this morning I went to check out, and there was a very young, nice gentleman,” Bazin said. “He must have been 22 or 23 years old — impeccably dressed. And he was in a total panic.”
“He just didn’t have the proper training,” Bazin said. “I don’t like it when people in front of you lose their self-esteem because they cannot operate the way they should operate, and it’s not their fault.”
“We as industry leaders should be better equipping and training our people and giving them what expertise they need,” Bazin said. “Our industry will be stronger if we have hundreds of thousands of different young people who probably never went to college, and we give them chances in life.”
Scandic Hotels Group has posted its third-quarter results today, with a $49.9 million net profit (559 Swedish krona) and a level of indebtedness that continues to shrink.
“We have delivered another record-breaking quarter and Scandic is standing stronger than ever. Scandic is continuing to make progress in increasing growth and has gradually become a more efficient and profitable company,” said president and CEO Jens Mathiesen.
Scandic operates 55,969 rooms across 269 hotels in the Nordics and wider Europe. The vast majority of its hotels are through long-term lease agreements with other operators, though, as Mathiesen states, an increasing chunk of the network is becoming Scandic’s own brands.
“We are now focused on growing our hotel portfolio with a stronger organization and intensified cooperation with property owners. For the fourth quarter, we expect occupancy at par with the same period last year at a higher average price per room,” added Mathiesen.
Looking at hotel-specific metrics, the quarter saw some of the highest revenue per available room (RevPAR) and average daily rate (ADR) levels on record for Scandic. RevPAR was up 6.5% compared to last quarter at $83.4 (933 Swedish krona) while ADR was up 5.7% to $117.4 (1,313 Swedish krona).
As of September this year, Scandic’s debt stood at $173.9 million (1.9 billion Swedish krona).
Becoming A Better Company
Mathiesen said in the earnings call that the company has remained focused on efficiency and costs post-pandemic, owing this approach to the group’s strong quarter.
He said: “There’s been a lot of prioritizations of our resources. We are on top of the market when it comes to gaining and taking advantage of opportunities [such as] OTAs and online sales. We are focused on being agile and speedy in our commercial activities.”
“We want to have the best version of everything thing we do. We’re always looking for opportunities to become stronger.”
As for next year, the CEO was hesitant to make any big promises, but said his group would benefit from the strong macro environment of global hospitality. He said: “Right now, globally, the hospitality market is doing extremely well. We’re keeping up a high momentum. There’s a willingness to prioritize traveling and events. It’s holding up. When we look into next year, that’s what we expect. We are well prepared.”
Accor has signaled over several years that it plans to become more asset-light. Bloomberg News reports that the Paris-based hotel giant is about to take more steps as its owner-operator arm sells hotels.
AccorInvest, a hotel owner-operator company created in 2017, wants to sell more than $2 billion (about €2 billion) of hotels in Europe and Latin America, sources told Bloomberg.
AccorInvest is a hotel owner and operator that, as of September, runs 753 hotels. Accor creates and manages brands and a loyalty program while offering technology and other services.
Sources told Bloomberg that AccorInvest has properties under the Sofitel brand in Paris for sale, along with five Ibis hotels in Britain, a hotel in the Netherlands, a Sofitel in central Europe, and some other properties.
The money will at least partly be used to pay off debts, Bloomberg said.
California Governor Gavin Newsom signed into law on October 7 a bill to ban mandatory hidden fees — also called junk fees — starting July 1, 2024.
“The price Californians see will be the price they pay,” said RobBonta, the state attorney general.
As Skift previewed, the law broadly requires upfront disclosure of any mandatory fees by hotel companies, online travel agencies, car rental companies, online concert ticket sellers, and others.
If a company doesn’t comply, a consumer could seek “at least $1,000” in damages via the state’s existing consumer protection claims processes. (See the law, embedded below.)
Junk Fee Reform
It’s unclear how California’s new law will impact companies in mid-2024.
California has the largest population of any state in the U.S., and so some big companies choose to apply its requirements nationally.
Yet there could be lawsuits from industry groups, and corporations could find workarounds to keep profitable fees. California has rules on fees for car rentals, but many online travel agencies choose to display those fees in ways that vary depending on jurisdiction.
Another wrinkle: Newsom hasn’t yet taken a position on another bill awaiting his signature, Senate Bill 537. He has until Saturday night to decide whether to let that bill pass into law. The bill would prohibit businesses that sell lodging for up to 30 days in California from displaying a room rate that doesn’t include all fees or charges (except government-imposed taxes) as of July 1, 2024.
It’s possible the Governor may feel the bill he’s signed already covers this, making a law specific to hotels unnecessary. Either way, the state’s 6,000 hotels and thousands of short-term rentals are currently facing new rules about the display of so-called junk fees, such as resort fees and housekeeping fees.
There have been plenty of headlines in the past few days about a lawsuit against an Airbnb guest in Brentwood, California, who has allegedly overstayed her reservation, which ended on March 19, 2022 —without paying rent for more than a year-and-a half.
A vacation rental that was listed on Vrbo. We show this for illustrative purpose, and not for any connection to the squatter issue. Source: Vrbo
The property owner filed a lawsuit in June, seeking to evict the squatter, who has supposedly performed a somewhat similar caper previously, according to published reports.
Squatter Issue Resonates in NYC
Regardless of the details of this particular case, the issue of squatters and laws in many localities that are designed to protect tenants from abusive landlords, hit home in New York City in light of the new host registration law that became effective September 5.
The New York City host registration law seeks to enforce short-term rental regulations that have existed in the Big Apple for years, but often went unheeded. Among them, owners of one- and two-family homes that are owner-occupied don’t need to register as hosts of their vacation rentals, but the minimum stay would need to be at least 30 days.
That’s exactly when squatter laws come into play. New York State law states that people who live in a property for 30 days become legal tenants, and after that time period it can become a protracted battle to evict guests — even if they are paying nothing for the stay.
This issue is a concern for New York City homeowners, many of whom live in Brooklyn, Queens, Staten Island, and the Bronx, who are seeking to rent out their properties for short- and long-term rentals to help pay mortgages and for extra income.
“Many of our RHOAR (Restore Homeowners Autonomy & Rights) members are concerned about the risk of bringing on a tenant that ultimately doesn’t pay their rent and uses NYC’s laws to delay eviction, which has been a financially ruinous experience for many of RHOAR’s members,” spokesperson Lisa Grossman told Skift a few days before the New York City host registration law became effective.
As of a few days ago, RHOAR has conducted meetings with 15 of 52 New York City council members, looking for an amendment “to allow owner-occupied one- or two-family homes the ability to do short-term rentals,” Grossman said.
In other words, these would be rentals for a night, a weekend, a week — anything fewer than 30 nights.
Dan Driscoll, co-founder and chief operating officer of luxury vacation rental business boutiq, based in Austin, acknowledged that squatters might be a problem in some urban markets, but doesn’t see it as a major problem for the vacation rental sector.
“I am not a lawyer and not qualified to give legal advice, but from my vantage point, I think the horror stories are out there, but I think these are wild outliers and fairly isolated to urban markets with unique tenant laws,” Driscoll said.
Michelin Guide, whose star ratings are coveted by restaurants worldwide, said on Thursday it would begin designating “the most exceptional hotels.”
Like with the restaurant rankings, Michelin intends to create a stir by revealing its list of hotels at a ceremony in the first half of 2024.
Unlike its restaurant ratings, Michelin will award its favorites “keys” instead of stars. Michelin will judge hotels by criteria including local character, design, decor, and amenities — among other factors.
Michelin bought the online travel agency Tablet Hotels in 2018. The site’s hotel vetters use guest reviews to help evaluate hotels. For several weeks now, the Guide has been offering a selection of over 5,000 hotels globally on its site, long-listed from top-reviewed properties on Tablet Hotels. This long list of about 5,000 hotels will be the ones Michelin reviewers will use to award “keys.”
Generator Group, which owns or runs 21 hotels, gave a financial update on Monday that underscored the post-pandemic boom in travel.
London-based Generator Group forecasted that it’s on track to produce revenues of about $238 million (€225 million) this year — which would represent a 25% jump over the company’s revenue in the pre-pandemic year of 2019.
The privately held company anticipates this year it will produce earnings before interest, tax, depreciation, and amortization of about $80 million (€75 million). That would represent a 50% jump in earnings compared with 2019 — highlighting strong pricing power in so-called “compression,” or high-demand, markets.
Private equity firm Queensgate Investments bought Generator for $480 million (€450 million) in 2017, and the group’s flagship brand is Generator, a set of premium economy hostels. Queensgate spent about $400 million in 2019 to acquire Freehand Hotels, which operates properties in New York, Chicago, Los Angeles, and Miami, and folded that into the group.
Generator said it has nearly 12,000 beds in ten countries. It told the Financial Times, “in the next year, it is planning to launch 10 more sites worldwide under an asset-light model where it does not own the long-term lease, including a new hostel in Bangkok.”
Hyatt said on Thursday it would shift its strategy in marketing vacation rentals. It plans to launch before year-end a short-term vacation rental platform called Homes & Hideaways by World of Hyatt.
Hyatt also said it intended to sell its vacation rental management business — Destination Residences Management — to a company called Lowe, which, through an affiliate, will run it under Lowe and Coral Tree.
The Homes & Hideaways project will spotlight U.S. vacation rentals managed by Lowe, such as a home by the sea in Hawaii or a ski chalet in Colorado.
To book these vacation rentals, customers have to be one of the 40 million members of the hotelier’s loyalty program.
Marriott International on Wednesday debuted Four Points Express by Sheraton, a midscale hotel brand aimed at Europe, the Middle East, and Africa.
The brand aims to target the “midscale” segment of affordable lodging. Marriott estimates that about a half-million independent or locally-branded hotels are in this segment — many of which may be ripe for conversion to a global brand.
The first hotel will be a 52-room property opening later this year in Lara, a district of Antalyain Turkey. Next year, another property in Turkey is likely to open. So is a 201-guestroom property in London near the Euston rail station.
Other hotel groups are also focusing on midscale brands, such as IHG’s Garner, Hilton’s Spark brand and an upcoming (as-yet-unnamed) extended-stay brand, and Hyatt’s Hyatt Studios extended-stay brand.