The quest for future success in the international hotel industry

An expedition in Africa

Do you want to dance with me?

By Jan Jansen

Do you want to dance with me? (2)

Success

Success is achieved by gaining and sustaining competitive advantage on lucrative locations.

International hotel sector = highly competitive

Leading question:

How do I outperform my direct competitors on the short and long run?

Do you want to dance with me? (3)

Answer:

Sustainable competitive advantage and superior

performance.

With whom?-partnerships-stakeholder management

How?-assets-capabilities

What?-low-cost-differentiation

Company DNA

Do you want to dance with me? (4)

What?

• Low cost concept– Price is the leading element in service design

(Ibis, Formule1, Motel6)

• Differentiation concept– Offering ‘new’ experiences (Okura)– Offering ‘new’ locations (Four Seasons)

What is the product / service concept I have to implement?

In the hotel sector, both concepts are not mutually exclusive. The hotel products become a commodity in which price will be the decisive factor .

Do you want to dance with me? (5)

How?

Assets• Location• Brand / Reputation• Economies of scale• Expertise• Human resources• Technology / IT• Loyalty program

Capabilities• Environmental

adaptability• Organizational

learning• Innovative strengths• Strategic alignment

What are my unique assets and capabilities?

Do you want to dance with me? (6)

With whom?

• Strategic partnerships– The number and strength of strategic partnerships

(airlines, car rental companies, customer reservation systems)

• Stakeholder management– Analysis of and collaboration with direct and indirect

stakeholders (developers, government, local communities)

– Obtaining the ‘license to operate’

With whom do I need to collaborate?

Do you want to dance with me? (7)

Company DNAWhat is the context my company emerged in?

• Home country culture– Language– Values, rituals, heroes and symbols

• Home country institutions– Societal norms or ‘rules of the game’– Political and juridical framework

What is the way of doing business I am used to?

(an interfering variable that cannot be easily modified)

Do you want to dance with me? (8)

The key to (future) success (1)

• Conrad Hilton:

“Location, location, location”

• Gérard Pélisson (Accor):

“Offering good value for money”

Do you want to dance with me? (9)

The key to (future) success (2)

Operational (existing hotels)

• Creating brand awareness and emotional appeal

• Strategic alignment

Strategic (new hotels)

• Stakeholder management / Corporate citizenship

Do you want to dance with me? (10)

Model for value creation

Host CommunitySustainability

BusinessProfit

TouristGuest satisfaction

Host CommunitySustainability

BusinessProfit

TouristGuest satisfaction

Classic Contemporary

Do you want to dance with me? (11)

Africa is promising

Opportunities• Tourism is emerging• Demand > supply• Rich of natural

resources• Relative low

competition• Many ‘locations’

Threats• Weak tourism

infrastructure• Low amount of

educated and skilled employees

• High political and economic volatility

After the U.A.E., Eastern Europe and China, multinational hotel corporations have identified Africa as being a lucrative market that needs to be developed.

Do you want to dance with me? (12)

Hotel Presidente: AngolaWebsite:

• 5 star hotel

• 196 rooms

• 26 floors

• elevators (!)

• doctor on call (!)

Average Daily Rate: 303 USD

Average Daily Rate Amsterdam 2006:

200 USD

Do you want to dance with me? (13)

Stakeholder management (1)

Africa is a promising tourist destination

BUT

It needs to be developed

SO

Multinational hotel corporations have to collaborate with multiple stakeholders.

Do you want to dance with me? (14)

Stakeholder management (2)

Traditional approach: “What is in for me …”

Corporate community approach:“What is in for me AND the community …”

The multinational hotel corporation has to be aware about its role in the economic, societal and environmental development and preservation of local communities.

Then, and only then, it will gain and sustain competitiveness and be granted with the most lucrative locations.

Do you want to dance with me? (15)

Stakeholder management (3)

Africa: enduring relationships are more important than contractual agreements.

Invest in trust and mutual understanding:

- Developers / investors

- (Local) governments

- Citizens

- NGOs

Do you want to dance with me? (16)

Rezidor Hotel Group (1)

• Hotel management company: “asset light”

• Five operating brands in different segments

• 300 hotels / 45.000 rooms

Vision

“we manage brands, people, relationships and other peoples’ properties”

Do you want to dance with me? (17)

Rezidor Hotel Group (2)

• Focus on Africa for future development in cooperation with Nordic Fund.

• ‘Responsible Business Program’

HOTEL

Environment

Employees

Suppliers

Customers

Investors

Community

Government

Do you want to dance with me? (18)

Rezidor Hotel Group (3)

Investors-High ROI

Community-Local employment-Community involvement

Government-Regulatory compliance

Team work: License to Operate

Do you want to dance with me? (19)

Do you want to dance with me?

The ‘good’ hotel is invited to develop new properties in promising markets.

Reputation ↑

-Guests

-Employees

-Suppliers

Operational costs ↓

-Lower employee turnover

-Strategic alignment

Likelihood future expansion ↑

Demand for hotel rooms ↑

Contribution to local development ↑

Access to the capital market ↑

Do you want to dance with me? (20)

Thank you for your attention.