GLOBAL Travel, Hospitality and Leisure Insights
Wednesday, January 6, 2016 Lloyd S. Nakano With a little help from my friends Global hospitality insights
Top thoughts for 2016 The Things Global Hospitality Thinks About Theyre NOT Your Traditional Inn-Keepers Anymore
Appetite for investment: the currentcapital climate Active Global M & A in theHospitality Industry Outbound Investment from Asia Seeking Operational Excellence;consolidation of 3rd-PartyManagement Companies Lifestyle Lodging Products Chritical Success Factors for NewLodging Brands Condominium Hotels Lessons Emerging Submarkets within MatureLodging Markets Hotel Technology 2.0 Investment Promotion Agencies Catalysts for Tourism Investment Mutual Learning; the SharingEconomy and Lodging Industry Global Tax Considerations Changes in Financial Reporting; theNew Revenue Recognition Standard Who Are the Key Players? Are we in the same room as they?
Who is driving Global Hospitality? Investors (REITs, Management andBrand Operators, 3rd PartyManagement, speculators,sovereign and wealth funds,Developers, Governments) Globally, TH&L has become a hugepeacetime economic driver Infrastructural master-planningnow routinely include hotels, andother transient accommodations Who are the key Frontline Executives? Managing Director General Manager Financial Controller Rooms Division Operations Director Sales, Marketing, Revenue Mgmnt Food & Beverage Customizers and Standardizers Whos Behind the Scenes? Who is Managing the Managers?
Stakeholders: 3rd Party Management Companies Investors & Shareholders Global NGO/Agencies Major Hotel Management Cos.(Franchiser or Management Ctct) Owners Real Estate Professionals Asset Managers Hospitality Management Finance Asset Light Managing notOwning Operational and Local Expertise Franchising / Franchisee Fee-based Operations (Royalties) Specialist Experts i.e. Luxury,Resorts, City-Center, APO Soft Assets (Human Resources) Thriving on Demand! Who are these people?!?
The Brand (Management Company) Marriott (Marquis, Ritz-Carlton, Courtyard, etc.) Starwood (Sheraton, Westin, W, St. Regis, LuxuryCollection, etc.) Intercontinental Hotels (Holiday Inn/Express) Accor (Mercure, Ibis, Sofitel, Novotel, etc.) now alsoFairmont, Raffles, and Swisshotels Hong Kong Shanghai Hotels Mandarin Oriental Hyatt Hotels & Resorts Park, Regency, Grand, etc. Asian Connection: Mandarin, Shangri-la, Peninsula,New World/Rosewood, Aman Courtyard, Doubletree, Hyatt House, Como Etc., etc. The Customer Millennials (but Boomers, too!) Asia, Middle East, Africa, BRICS Technology-savvy Design Classic, Contemporary, re-casted Improving & Balanced Global Wealth Emotion Authentic, Immersive, and CuratedExperiences (wineries, spas, etc.) Desire for Better, More, Quality, indulgence collectmemories (not stuff) Rising expectations, a new middle-class, re-calibrationof value (China, South Asia) Deepening the experience of Place, Time Changing Values, Expectations, Hopes The Marriott Starwood Deal Analyzed Globalization of Hospitality
What does it mean? Winners and Losers Great news for investors, but unfortunately not for Starwoodhotel guests and employees Career Disruption (or Opportunity) We are committed to what is best for shareholders. (BruceDuncan, Starwood) Employees and Guests are not the focus Industry consolidation is aimed at increasing investors profitsor killing a competitor Every major hotel chain has devalued its rewards program Redundancy and Consolidation Asset Disposition Re-branding, co-branding, confusion What Happened? Marriott (NASDAQ: MAR) and Starwood (NYSE: HOT) merged 5,500 hotels with 1.1 mil. Rooms Worlds largest hotel company. Starwoods lifestyle brands and international footprint Marriotts luxury and select-service tiers, convention andresort segment Fifteen Brands The merged company will offer more choices for guests,greater opportunities for associates Unlock additional value for Marriott and Starwoodshareholders. Spin-off of Vistana to Interval Leisure (+ $ 7.80 per share) Starwood shareholders receive 0.92 shares of Marriott (total37%) plus $ 2.00 per Starwood share. Buzzwords Worth Remembering!
(Deloitte) Travel, Hospitality, & Leisure (THL) Millenial 21 to 35 Asset Light Brand Footprint Brand Engagement Loyalty (CRM) Sharing Economy Disruption Globalization of Products & Production (cookie-cutter) Economies of Scale Rule of Law (Normalization) Situational Awareness Technology Drivers Mobil Social Interactive Live time Innovative Ubiquitous Accessibility Standardized Marketing Mix Feasibility Studies (financial,political, environmental, currency,HRD, religion, design) Thriving on Demand! The Brand does make a difference!
Continued Record Revenues andProfits through 2016 Globally A Soft Landing in 2017 evenlonger for certain economies $ 550 billion USD in 2016 ($457 in % increase) 10 Global Hospitality Trends In Hotels &Resorts Axis Consulting -
What it means for Consumers: Less Real Service High Employee Turnover Highly Involved Owner Groups Multiple Brands/No Differentiation 3rd Party Management Companies Relative Luxury (Premium Economy) Accreditive Hotel Name Inconsistent Quality Revenue Maximization (Profit over BrandPromise/Delivery) Erosion of Formality The Bright Side of Bad Developments: Hybrid Experiences Entertainment Friendlier more Casual Environment Profitable Investment, quick returns Less Consistency, more surprises; butspontaneous customization More Enjoyable/challenging Jobs Transparency, Consumer Activism Better, healthier long-term results Sustainability and Variety Reduced Poverty better life Quality Diversity and Global Opportunities The Industrys Biggest Challenge! Why They Leave What Can Make Them Stay How Do They Do it? Service Delivery Blueprints Building the Brand
Blueprints provide a means of communicationbetween operations and marketing and canhighlight potential problems on paper before theyoccur. A depiction or map that accurately portrays the service systemso everybody can see it in the same way Stakeholders Breaks down service into logical components and depicts thesteps in the process, how the tasks are executed and theevidence of service as the customer experiences it. ( Interpreted from Thomson-Southwestern copyright 2003 Building the Service Delivery Brand Blueprint
Step 1 Identify the process to be blueprinted Step 2 Identify the customer or customer segment Step 3 Map the process and tools needed from the customers points ofview Borrowed from Zeithaml-Bitner, McGraw-Hill, Irwin Building a Service Delivery Blueprint
Step 4 Map contact employee actions, onstage and backstage,and/or technology actions Step 5 Link contact activities to needed support functions Step 6 Add evidence of service at each customer action step. Borrowed from Zeithaml-Bitner, McGraw-Hill, Irwin 2003 Case Study Non-Hospitality Service Delivery Blueprint:Express Mail Delivery Service Sample
PHYSICAL EVIDENCE Truck, Packaging Forms, Hand-held Computer, Uniform Truck Packaging Forms Hand-held Computer, Uniform Customer Calls Customer Gives Package Receive Package CUSTOMER Driver Picks Up Pkg. (On Stage) Deliver Package CONTACTPERSON (Back Stage) Customer Service Order Airport Receives & Loads Fly to Sort Center Other Dispatch Driver Load On Truck Fly to Destination Unload & Sort SUPPORT PROCESS Load on Airplane Sort Packages Other Other Borrowed from Zeithaml-Bitner, McGraw-Hill, Irwin copyright 2003 Sample Overnight Hotel Stay Service Delivery (note) I. T
Sample Overnight Hotel Stay Service Delivery (note) I.T. needs in Each Step Hotel Exterior Parking Cart for Bags Desk Registration Papers Lobby Key Elevators Hallways Room Cart for Bags Room Amenities Bath Menu Delivery Tray Food Appearance Food Prep. Bill Desk Lobby, Front Staff. Exterior Parking PHYSICAL EVIDENCE Arrive at Hotel Give Bags to Bellperson Call Room Service Check out And Post-dep. Pre-Arrival Go to Room Receive Bags Sleep Shower Receive Food CUSTOMER Check in Eat (On Stage) Greet and Take Bags Process Check Out/ Follow-up Process Registration Deliver Bags Deliver Food CONTACTPERSON (Back Stage) Take Bags to Room Take Food Order SUPPORT PROCESS Registration System Prepare Food Registration System The Ritz-Carlton Hotel Company, L.L.C
Gold Standards Our Gold Standards are our foundation. Theyencompass the values and philosophy by which weoperate and include: The Credo The Motto The Three Steps of Service Service Values The 6th Diamond The Employee Promise 23 Four Seasons Hotels and Resorts
Isadore Sharpe, Chairman Four Seasons Hotels and Resorts Automate thePredictable So you canhumanize theExceptional! and the Brand Proposition 24 International Hotel Investment Forum (IHIF) March 7-9, 2016 Berlin, Germany
Each year, the most influential players in the international hotel industry meet in Berlin for the International Hotel Investment Forum (IHIF). IHIF consists of a variety of networking events, a comprehensive educational programme and an exhibition. The leading companies within the industry use IHIF as an important platform from which to do business. For companies that want to get into the lucrative hotel investment business, IHIF is an invaluable introduction to the industry. IHIF 2014 was a tremendous success, again attracting over 2,000 people from over 73 countries including more Investors and Owners and Global Hotel Chain CEOs than ever before. HOTEC Operations & Technology April 11-13, 2016 Austin, Texas Crafted specifically for professionals in the operations and technology sectors of hospitality, HOTEC Operations & Technology brings decision-makers from hotels, cruise lines, management companies, purchasing firms, and more face-to face with suppliers representing innovative products and services. We welcome domestic and international buyers and vendors, offering expansive exposure and a truly global perspective. Asia Pacific Hotel Investment Conference (APHIC) May 25-27, 2016 Bangkok, Thailand The Asia Pacific Hotel Investment Conference, an IHIF Summit, will return to Thailand for a third year. The APHIC together with our key partners will present an opportunity for you to gain access to new projects and contacts of over 400 hotel owners/investors, operators, developers, policy makers, design/architect, master planners in Asia Pacific. Whether you are an Asian investor looking to diversify, or a global investor looking for high yield growth opportunities, APHIC provides you with the perfect platform to seek your next deal. Hotel Management Thailand Summit (HMT Summit) May 24, 2016 Bangkok, Thailand The leading conference in Thailand that directly addresses all operational/management challenges, Hotel Management Thailand Summit provides a platform for hotel executives from both corporate level and property level to discuss key operational, branding and financial issues directly impacting corporate and property P&L.CEO, COO, CFO, VPs, GMs, Financial Controllers, and executive committee members will gather to strategize and debate on essential topics including brand equity, cash-flow management, cost control, innovation and staff retention and development. Industry leaders will share their best practices and recommendations with their peers. Hotel Technology Conference Singapore (Hotel Tech) TBD
Hotel Technology Conference Singapore (Hotel Tech) TBD The Hotel Technology Conference is Asias only dedicated platform for hotel CIOs, CTOs, Information Officers and E-commerce Directors to discuss how existing and emerging technologies can support and help grow new revenue sources, improve operational efficiency and enhance customer service standards. North America Hotel Investment Conference TBD The North America Hotel Investment Conference (NATHIC) is the leading meeting place for senior-level hospitality investment professionals. Brought to you by Hotel Management and the International Hotel Investment Forum (IHIF), NATHIC is topical in nature and pertains to important topics to the hospitality industry in a timely manner. Each year, NATHIC delves into the issue most relevant to senior-level hospitality investment professionals and allow them to learn from industry leaders and experts during educational sessions.