Master Innholders GM Conference 2014 - are hotels commodities?

George Sell By George Sell
Uploaded 27 January 2014

A packed programme included a two-days of seminars and fascinating, entertaining speeches from Hotelier of the year Stuart Bowery - general manager of the Grosvenor House Hotel - and all-round foodie legend Prue Leith.

One of the most engaging sessions was titled Are Hotels Commodities? The changing dynamics of distribution. Moderated by Russell Kett, chairman of HVS London, the panel consisted of
David Taylor, sales director, Grass Roots; Imogen Furness, head of supply chain, Morgan Stanley; Stuart Johnson, GM, Brown's; and Mark Lewis, managing director of Hotel Rez.

The panel discussed whether perceptions of hotels' value and services were changing and whether they were indeed increasingly viewed as commodities.

From a customer's point of view, Imogen Furness said: "Corporate buyers are not solely focused on price - value, especially added value - is the key. There is a lot of data out there that gives us an incredible amount of information about what is happening for when we go into negotiations. It is about value-adds, terms and conditions and other components." .

Stuart Johnson spoke about the challenges facing independent luxury properties: "We rely on reservation systems and OTAs to fill rooms in quiet times - this is where a five-star hotel like ours starts to flirt with commoditisation. But when this happens you are attracting an audience, particularly through packages, which you could not otherwise afford to market to fully. Independent hotels need to take every available opportunity to expose their properties to the market."

"We have to be very careful at the luxury end. Now at the three- and four-star level, we certainly are seeing commoditisation, especially in fast-moving hotel companies in which the guest basically gets a box and then seemingly has to buy soap, towels, Wi-Fi, service and so on."

David Taylor emphasised that "Independent hoteliers needs to work much harder than brands. They need to recognise their point of difference and establish exactly where they sit in the market."

Expanding on the OTA and flash sales theme, Mark Lewis said: "Working with the lines of Groupon is a strategic decision but it does lead to commoditisation of your property and quickly leads to dilution of margins."

Russell Kett suggested that the properties themselves, as well as their services, were increasingly viewed as commodities: "Property owners are beginning to treat hotel portfolios as an asset, in some cases a trophy asset, thus commoditising the properties themselves. There are comparisons with football clubs and their absentee owners."

While emphasising the importance of utilising all available modern technology, particularly in the field of revenue management, Stuart Johnson warned: "To draw a comparison, major airlines already treat you like a commodity. The Ryanairs and easyJets certainly do, but so do others, including British Airways in some areas of their service. It could very well become so in the hotel industry."

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