Weldon Mather reports from the 2015 Boutique and Lifestyle Hotel Summit in London.
With hotel visits on day 1 of South Place Hotel, The Hoxton and M by Montcalm (Tech City) hotels, the event got off to a great start with speed networking and sponsored drinks to help loosen the vocal chords. Some delegates got to know each other very well while some got stuck in a guest lift for 30 minutes kick starting the (sweaty) conversation for some in earnest!
Day 2 saw Piers Brown welcome everyone while event facilitator and consummate professional Georgina Burnett (also a TV weather presenter) predicting rising pressure and highs for the day ahead.
In conversation with David Richards CBE
Piers Brown in conversation with David Richards CBE (chairman of Prodrive and Aston Martin Racing, and owner of The Idle Rocks and St Mawes Hotels in Cornwall) asked how as a relatively new hotel owner David finds the challenges he has faced in the hospitality sector, and how he has applied lessons learned while running successful motorsports teams to operating boutique hotels. David opined that its all about the people and it doesn’t matter whether you are in hotels or motorsport – people are the vital ingredient.
Hotel case study 1: Stora hotellet, Umeå, Sweden
Erik Nissen Johansen told the story of two hotels in Sweden. Erik is the founder and creative director of multi-award-winning Swedish design agency Stylt Trampoli. Combining concept development, interior architecture, design and branding, Stylt creates memorable customer experiences with a genuine sense of place for hotels, restaurants and other hospitality and experience-driven businesses. Erik is also the author of the book “Storytelling as a marketing tool for the experience economy”. Winner of the World Boutique Hotel Award for Best New Boutique Hotel, Stora Hotellet Umeå, it is also featured in Sleeper Magazine which all delegates received and it has to be seen to be believed.
Sales representation v hotel soft brand
Michael Prager, non-executive chairman of Optimal Monitoring Limited, moderated this lively panel on an appraisal and comparison of the numerous options for independent hotels to promote, market and sell themselves. Philipp Weghmann, EVP, Preferred Hotels and Resorts & Alejandro Garcia-Andrade, business development manager, Luxury Hotels Group joined Peter Hancock, chief executive, Pride of Britain Hotels who quipped that: “Boutique Hotels representation is like being pregnant: you get to choose your due date and there is no long term obligation to father!” Delegates heard that “Boutique hotels don’t offer the scripted service that larger brands do” and that Tripadvisor is an OTA. The panel also noted that Tripadvisor has reduced the importance of star rating: it is important, but not what consumers look at first. The 10 largest hotel chains have between them created 113 different “brands”, but there is so much clutter in the market chasing the “boutique” theme there is a danger of overkill in this area driving some guests back to the safety of the traditional mainstream brands.
Disruptive distribution: When commenting on the new distribution channels and OTA alternatives, the pace of change is staggering. Moderator Imran Hussain of The Hotel Culture commented; “If you don’t believe in disruptors then just ask the record labels what happened to them – what is disruptive distribution defined as today?” Mobile will have 30 per cent of the market share mostly from Gen Y by 2016, and panellist Janel Clark, director of revenue at Avvio added: “There is so much choice out there now – different devices, websites, different sites, new business models and being customer-led, that it is customer driven and technology only enhances this; the traditional OTA model is changing.”
Cheryl Rosner, CEO of Stayful, noted that the “hyper connectivity of consumers” is making search so much more dynamic. She added that the “duopoly of Priceline and Expedia in the market and meta search is presenting opportunities for additional value add to sales”. YOLO (You Only Live Once) and FOMO (Fear of Missing Out) and “bleisure trips” are driving millennials to book more experiential activities. Terri Scriven, industry head of hospitality at Google said that they partner with hotels to improve their traffic to the website. She added that “Priceline entered the market in 1995 while Hotels.com entered in 1999 and meta search showed up in 2005; the duopoly only have a combined 10 per cent of entire market so the “search” game is far from game over. Millenials will make up 60 per cent of purchasing power by 2020, while mobile connectivity has skyrocketed and led to major disruption. Citizen M is doing a brilliant job online and is partnering with Booking.com as their only OTA with the same ability to be found according to Terri.
The GM panel saw expert general managers from the UK and Ireland discuss the evolving nature of their job. Moderator Ciaran Fahy, chief executive, hotels division, Ellerman Investments noted that “going back a decade there were no real asset mangers – what is your view on their value add?” Panellists included Paul Brackley, GM, The Beaumont – Corbin and King’s first hotel, who added that “guests and the team can get lost sometimes when there are so many distractions such as asset managers: overseas owners want an AM to develop trust so you have to surround yourself with the best team you can afford”. He added that a GM must be a great coach but should also be into people development.
GM’s need to be much more commercial, focused on revenue management and strategy according to Debbie Taylor, regional managing director, Manchester and north-west, Macdonald Hotels. She added that a GM is a generalist but now is a real commercial animal, dealing with Tripadvisor, online and that the skill set and demands of a GM have switched with the commercial strategy required. Most of Debbie’s career has been for private owners and she can “look them in the eye” as opposed to short-term ownership which sometimes leads to rate hikes and short term decisions. Talented people want to know where they are going and their career path and “if you lose a talented person you haven’t done your job”.
David Webster, GM, Powerscourt Hotel, Dublin, has seen significant change in his role over the years as a GM and is now dealing with new stakeholders while also dealing with customers. David “does not understand the GM that spends all their time in office” and said that GMs need to develop “high trust” relationships with the team and key clients, and spend the least amount of time in their office. David also suggested that some graduate trainees should work for chains (not private operators as they will not invest in them) and that brands bring distribution (Autograph Collection distribution is “incredible”) and if you are with a brand that does not bring you distribution then “move on”. David noted that OTAs are now switching from allocation to live distribution. He finished by noting the VAT rate cut in Ireland made a huge difference with the 13.5 per cent rate cut to nine per cent, compared with 20 per cent in the UK.
Meet the investors saw a lively discussion around who is investing in boutique and lifestyle hotels in today’s market, and what are they looking for? Moderator Charles Human, CEO, HVS London, asked when comparing boutique vs brand, is the playing field being levelled by the OTAs? Are Starwood Cap moving more towards the boutique end and what are the keys to success of the boutique hotels? Panelists included Rafael Bejerano, director, AB Hotels, the owner of Arch Hotel who “is not looking for any new projects presently but noted that banks are looking for confidence in the brand”.
Cody Bradshaw, SVP, head of European hotels, Starwood Capital Group, outlined that they are one of if not the most active primary equity funds in the UK with a large debt business in the USA and they are financing the W Amsterdam among many others.
Starwood Capital acquired three separate hotel platforms including up to 60 properties and are launching a new urban brand in the UK lead by David Taylor (ex Urban Hotels). The Ace Hotel Shoreditch was converted when bought and sold at c.£500k per key which is an excellent case study and when it was sold there was “juice still left in the lemon” for the new owners – which is always preferable when selling on. Price per key of this ex Crowne Plaza was high originally but is now justified in what was a submarket (east London). Starwood took a generic building and transformed it into the Ace brand. Cody also suggested that “boutique hotels are under attack from all sides” and that the sector is “industrialised” now everyone is in the boutique space it is no longer unique; even the budget operators are promoting ’boutique’ so it’s no longer unique.
Cody previously worked with Kimpton Hotels San Francisco before they became a takeover target and were bought by IHG. He also predicated that Bloomsbury is the next big London area with hidden gems and Starwood is about to refurbish the Russell Hotel and future-build it: “you need to get to the area before anyone else does”. He also tipped his hat to Zoku, a new concept from CitizenM co-founder Hans Meyer that reimagines the apartotel and hotel rooms with a large floor plate living area with loft bedroom and pull-out stairs like a NYC loft apartment.
Grace Leo, VP, Reignwood Investments UK, was an early pioneer of boutique hotels but “does not like the term boutique hotel” anymore! Grace noted that the survival of boutique hotels is continent on management and the moment you launch a new brand it is already out of date: same as a woman’s wardrobe once you wear an outfit its out there (according to Grace) so you need a timeless quality product. She added that: “Investors tend to be entrepreneurs and emotional, and you have to ensure they don’t over invest as some owners are not willing to relinquish control and become operational.”
Weldon Mather is an independent hospitality and tourism consultant in the hotel, restaurant and pub sector. He works with clients in throughout the UK and Ireland including banks, owners and managers, receivers/administrators, liquidators and investors. Contact: www.wmconsultancy.eu Tel: +44 77845 46066 or +35386 8684441