The costs of running a hotel keep climbing, which brings more scrutiny to the costs associated with guest acquisition, especially in London, one of the world's busiest hotel markets.
A panel of hotel brand leaders and operators emphasized cost control and how to build customer loyalty at the recent London Hotel Summit hosted by the Atlantic Hotel Industry Conference & Exhibition at the Pan Pacific London.
As prices keep increasing, hotel food and beverage is one of the biggest headaches for hoteliers, along with labor, procurement and distribution. But as a hotel market, London has shown to be resilient as midscale hotel demand has recovered, business travelers and conferences are returning and U.S. tourists are traveling again.
One complication hoteliers need to consider is the polarization of that global guest base, said Dimitris Manikis, president for Europe, the Middle East and Africa at Wyndham Hotels & Resorts. On one side, there are more young people living with their parents, but on the other, the world now has more billionaires than it ever has.
“Who is your customer, and where they will be in 10 years? I see extremes,” Manikis said on the panel.
Tapping into loyalty can smooth over some of these issues, though for some hotel owners, aligning with a brand via franchising brings inherent costs.
“You do not see a Marriott stand at a convention, you see a Bonvoy one; you do not see an Accor stand, you see Limitless,” said Andrew Boshoff, chief financial officer of Global Hotel Alliance.
Loyalty is a must for hotels to gain ground against online travel agencies, which have consistently been threats to hotels' customer acquisition efforts by being tech-savvy and marketing forward, Boshoff said. He added 57% of first-time hotel bookers reserved their stays through online travel agency sites, but over time as these consumers enter the upper-upscale and luxury hotel segments that number drops to 2%.
Regardless of how a hotel guest walks through the door, they're all looking for the right combination of experience and value. Yet for hoteliers, food and beverage costs and operations remain the largest stumbling point, said David Hart, CEO of RBH Hospitality Management.
“F&B is not a good thing, but in luxury it is a must, so you have to drive value and experience,” he said.
Beyond the traditional leisure guest, hotels are also trying to drive conference and meetings business, which generally come in via a different acquisition method. Anne Golden, vice president of operations, Pan Pacific Hotels Group, said group demand has been phenomenal at the Pan Pacific London since it opened almost five years ago.
“We have almost been a victim of our own success as some of our repeat business has grown so large it has outgrown us,” she said.
How hotels market themselves and invest in their programming to increase value among potential guests is top of mind for the hospitality industry.
With the drop in number of guests to the Middle East since the Iran-U.S. conflict began, those markets that are seeing upticks in displaced guests, which includes London, must go beyond the call of duty to make sure experiences are new and world class, especially in the higher hotel segments.
“I am based in Dubai, and we were very worried about the U.S. traveler. … The U.S. not turning up would be a disaster,” Boshoff said, adding he is starting to see signs of a return.
Developing feeder markets is critical for running a successful hotel in a market like London, Manikis said. In order to find an edge in key travel markets, a hotel or company has to build awareness, and that takes time.
Manikis added the Days Inn London Hyde Park is that brand’s most successful hotel, and it is front and center for Wyndham’s 148 million loyalty members.
Marketing and relationship-building with Middle Eastern and Indian guests and scaling hotels in those markets help boost loyalty and fill hotel rooms in major markets around the world such as London.
On a separate panel at the event, Camil Yazbeck, global chief development officer for premium, midscale and economy at Accor, said he is seeing signs Chinese travelers are beginning to take international trips again. Loyalty is essential in capturing this demographic, he added.
Yazbeck said in some markets loyalty is so ingrained, members even pay rent with points.
In their increased desire to travel, guests are taking more risks than they once did, Yazbeck said.
“Yes, Dubai hotels have dipped, but people are going to Egypt, and it is on the forefront,” he added.