The annual Hotel Management Thailand Summit returned to the Banyan Tree Bangkok on 25 May, proving once again to provide an excellent opportunity for hoteliers to get together and discussion the burning issues of the day. While a range of topics were discussed throughout the day, including the latest technological innovations, the way trends from other industries are driving customer expectations, the optimization of distribution channels, the question of brands or independents, the recruitment challenge, and the pitfalls of management agreements, the day began early for Hotelintel.co as CEO Wimintra Jangnin posed the questions for the opening leaders’ panel discussion on profitability.
The invited panel members included Jonathan Wigley, CEO of Absolute Hotel Services; Alejandro Bernabé, Group Director of AVANI Hotels & Resorts; Kevin Wallace, Managing Director of Dream Hotel Group, and David Topolewski, CEO of Qooco.
With such a panel, a variety of ideas can be expected, and the question of incremental revenue brought immediate disagreement. Kevin took the view that spending had to be brought back on property and that F & B was one of the best ways to do it. In Dream’s New York properties the revenue ratio for F & B to rooms was around 70:30 so the approach could certainly work. Jonathan took the opposite view, however, stating that at the design stage, no property should be thinking about having four or five F & B outlets. Instead, the space should be devoted to providing facilities that guests actually wanted. F & B could be more profitably outsourced, since he took the view that very few hotels were actually able to run restaurants profitably. The question of whether a hotel should take pride in making its mark through its own outlets was raised, but Jonathan suggested that profitability should be the deciding factor, while admitting that an exception might be made for those hotels which excelled in F & B.
Importantly, it was pointed out that hotel F & B outlets are not competing against those of other hotels, but against standalone restaurants, and Jonathan noted that such a competition is a difficult one to win – indeed, if hotels were paying rent they would not survive. In Bangkok, however, one approach would be to ensure that the restaurant offered good value, and also something special, because Thai diners would always be eager to try something new and different. This also implies that to keep Thai customers happy it is necessary to change style frequently in order to avoid becoming stale.
Another idea put forward to boost profitability came from Alejandro, who noted that it was important to find ways of serving the local community as well as hotel guests coming from further afield. David concurred, albeit with the caveat that it would depend on the exact nature of the local market.
On the subject of costs, both David and Kevin believed that savings could be made on operating costs and there were gains to be made in productivity. In recent years the operating side had become far more reliant on data, and auditing requirements had become more rigorous. In contrast, Jonathan chose to focus on revenue, observing that growth in income would yield greater benefits that close attention to cost cutting.
One final point of agreement was that the hotel industry still lags behind others in terms of gathering customer data and using this to seek out additional selling opportunities. The marketing and sales techniques used in the cruise market were perceived as relatively advanced compared to hotels. Jonathan pointed out that one trend in the future may be a reduction in sales staff with an increase in those being employed to connect brands with customers through social media.
In an industry as diverse as hospitality, it is no surprise that hotels targeting different markets will encounter different operating conditions and be exposed to different opportunities to succeed. The good news in Bangkok is that rates are not falling, and visitor numbers continue to rise. While customer expectations may be moving towards higher standards, the basic needs of guests have not changed. All that is needed is the imagination to find new ways of giving customers an opportunity to spend.