July 23rd 2013 | Considerations on the Future - A report from HOSPACE 2012 by EP Business in Hospitality Magazine
With over 400 delegates HOSPACE 2012, the annual conference and exhibition of HOSPA, proved to be an enlightening discussion which covered a number of topical areas and featured an array of inspirational industry leaders.
- Looking at 2012, Konstanze Auernheimer from STR Global stated that during the two weeks of the Olympic period RevPar increased by 40%, rising to 100% in the luxury hotel market. Occupancy averaged 91% during this period.
- However, she confirmed that the market had seen an ‘Olympics slump’ in June – July – this usually takes place post-event (impacted by weather and some negative media coverage).
- Current trading in the London hotel market was 2.1% down on occupancy, and averaging 81% YTD.
- The regional market continues to experience weaker demand than London, with the key question being how the UK economy is doing.
- The UK is set to add 43,000 rooms over the next few years; the UK along with Russia and Germany are set to be the leaders in this area.
- Liz Hall from Pricewaterhouse Coopers reviewed the supply and demand trends in more detail and confirmed that “strong headwinds were not making it easy”
- Whilst noting that consumers were still cutting back in areas such as eating out, she stated that they were more positive than last year.
- The Eurozone crisis had impacted on inbound markets to the UK.
- London is presently experiencing a softer market, but Liz stressed that “trading was down, not out”.
- She said that any Olympic hangover in relation to room supply in London would not hold back the market for very long.
- Looking ahead to 2013, the forecast is for a 7.2% decline in RevPar made up almost equally of occupancy and rate, and an average occupancy of 77.2%.
- The regions are forecast to have another challenging year, but one that would be broadly flat.
- Liz concluded that the “The new normal is slower growth”.
Two of the major panels at HOSPACE were the Leaders’ Panel and Revenue Management Panel, and they were particular highlights.
Featuring: Robert Cook, CEO at De Vere Hotels and Village Urban Resorts and HOSPA president; Surinder Arora, chairman and founder Arora Hotels; Angela Vickers, managing director, Apex Hotels; Grant Hearn, CEO, Travelodge and Steven Cassidy, area vice-president UK & Ireland, Hilton Worldwide.
In a session chaired by Paul Dukes, chairman of HOSPA and Kew Green Hotels, the panel covered a range of issues with the following key quotes made:
On the positives over the past five years
“Business has become more nimble and there is more entrepreneurial thinking in relation to combating the pressures. As the pipeline starts building, a key question is how we will develop our people – this has to be thought about” – Robert Cook
“One of the things that I am most proud of in relation to Travelodge is the work we have done with unemployed people. The industry has to take on the challenge of job creation, which will give us real clout in areas where we haven’t had it. This means getting much closer to local communities” – Grant Hearn
“One of the important things where we stand a chance of making real progress is in relation to the visa situation for Chinese visitors. The first port of call for Chinese visitors is currently Germany, Spain or France – it should be the UK” – Grant Hearn
On whether there was a need for a dedicated tourism minister
“What we really need is to talk to Cabinet” – Robert Cook
“The UK is the fifth largest sector in the UK and it makes sense to have a dedicated minister” – Angela Vickers
“Government has forgotten the hospitality and travel industry; the runway issue would have been sorted years and years ago in other European cities” – Surinder Arora
“The UK should follow the US example where Obama established a cross-departmental committee to drive tourism. If there was a dedicated minister I would not put them in the DCMS” – Grant Hearn
On the influence of social media
“The commercial battleground of the future will be how close you are to your customers” – Steven Cassidy
“It’s one channel but it’s important not to blow others out of the water. Corporate business has traditional ways of doing such as sales teams, which are important” – Grant Hearn
On future routes to CEO positions
“If you want to be a senior role, you have to have worked in at least two different functions. You have to be able to run the line” – Grant Hearn
“It’s more and more about the competencies you have had no the jobs you have had” – Steven Cassidy
“It’s a sad indictment that many leaders of today are not from the industry. In the future I think we will see more from revenue management – it’s a science and key to growing a hotel business” – Robert Cook
Revenue Management Panel
Featuring (left to right): Chris Cooper, group director of revenue management, Rocco Forte Hotels; Mark White, general manager, Millennium & Copthorne; Pamela Carvell, president, Hotel Marketing Association; and Jim Cockell, group IT solutions director, National Express.
In a session chaired by Professor Peter Jones MBE, chair of HOSPA Education Committee, the panel delivered some of the most thought-provoking points of the conference, illustrating the impact of revenue management on business in the current market:
On whether revenue management is an art or a science
“It is a bit of an art but still a black art in terms of perception; mature revenue management markets are much more scientific (eg travel, airlines)” - Jim Cockell
“It is more strategic and has evolved from simplistic systems; the supply chain for revenue management is now a multi-million pound business” – Chris Cooper
“For independent hotels it still an art; automation is therefore vital” – Pamela Carvell
“It’s seen as a science, but it’s not rocket science. It’s great to have the management information, but you need to be there…” – Mark White
“I agree, revenue management can influence a business both positively and negatively – you have to be part of the management team” – Chris Cooper
“Having worked for a much more commercial business, at National Express, revenue management is removed from operations, with a number of people whose sole job is to make quick-paced decisions. I have actually learnt more in the two years that I have been at there than the last five in hospitality” – Jim Cockell
On the future of OTAs:
“Smaller hotels and independents need OTAs to reach their markets, but what needs to change is that OTAs are more accountable. I often advise that commission is marketing spend, and you only pay when you get business through the door” – Pamela Carvell
“I use OTAs for incremental business in markets that are difficult to reach, and will pay a high commission for this” – Chris Cooper
On future leaders management skills
“There is a natural synergy between technology and revenue management. We talk about revenue management, but we need to look at impact and engagement” – Jim Cockell
“I agree with Robert Cook’s point earlier, we will see more revenue managers come through into senior roles, but they have to know hospitality – how to manage a business from a revenue generation point of view” – Mark White
“Keep people looking at other industries and focus on how to make strategic decisions quickly, and start developing your teams to do this” – Jim Cockell
In conclusion, HOSPACE served to spark much discussion and debate amongst its attendees and highlighted a range of technical and leadership issues relevant to this moment in time.
Our thanks to EP Business in Hospitality Magazine for allowing us to re-produce this article.
For more information please contact Arlene.McCaffrey@epmagazine.co.uk or 020 7534 0392.