Top priority: Satisfy your target markets

• Women

Hotels are pampering female travellers, offering them a range of personalized services and facilities like emergency kits with all the necessities, make-up, ultramodern hairdryers, rooms with large closets, and yoga mats and DVDs. Vancouver’s Georgian Court Hotel has even set aside 18 rooms specifically for women, at no extra cost.

• Children

Hotels are treating children like little adults. The Steigenberger Hotel Gstaad-Saanen , in Switzerland, has installed a climbing wall and a kid’s spa. Le Meurice, in Paris, provides child-sized robes and slippers and serves children tea and sweets.

• Businesspeople

Flexibility is the key to attracting business travellers. As part of their loyalty program, Starwood Hotels and Resorts guarantees that customers who stay more than 75 nights per year can get a room at any time, day or night, at no extra cost.

Major changes in interior design

Hotels are transforming their decor to attract younger travellers, who like relaxed settings that encourage socializing and networking . Some hotel chains have been designed with this in mind, notably the Radisson Blu (see image, lower left) and the Hyatt House. Traditional lobbies are being replaced by common areas where guests can have a drink, enjoy a light meal or buy souvenirs. Reception desks are disappearing and self-service check-in terminals are becoming more widespread. Some establishments are making the hotel lobby a place for creativity. Le Méridien Hub (see image, lower right) reinterprets the hotel lobby as a “a gathering place for creative minds” with artwork, a lounge and a library (see also: Dessine-moi un nouveau hall!).

Sources: Chicagonista and Le Méridien Hub

So-called lifestyle hotels (see also: Hôtel lifestyle: autopsie d’un concept) are designed to meet the needs of young hip, urban travellers. The rooms in the Hôtel du Triangle d’Or in Paris are inspired by the theme of music and its lobby features a multimedia area equipped with headphones.

Source: Hôtel du triangle d’or

New must-have technologies

According to a hotels.com survey of Canadian travellers, the iPad is the second-most popular modern amenity requested by this clientele , following the high-end coffee maker. Although tablets and touch screens are increasingly common at concierge and reception desks, they are now appearing in restaurants and rooms as well. At Parisian hotel Mama Shelter, the restaurant tables feature inset touch screens and there is an iMac photo space so patrons can take pictures of themselves and display them on screens throughout the restaurant.

Source: Mama Shelter

Accor has joined forces with Microsoft to integrate video games into its new modular room concept. Created in the Novotel Vaugirard Montparnasse in Paris, room “3120″ was tested during a three-month pilot project.

Source: MSN.fr

Sustainable choices

More and more hotels have adopted sustainable development as a guiding principle. Delta Hotels and Resorts have launched “Delta Greens,” an initiative where every employee works to achieve the company’s stated goals: reduce energy consumption, carbon emissions and water consumption by 30% in the next five years. In France, the Comfort Hotel Lille Tourcoing in 2011 created a hotel room that is 80% recyclable, the first of its kind in Europe. In Accor’s Mercure hotels, all pillows and duvets are made of recycled plastic bottles. When no longer needed by the hotel, these items are then recycled and transformed into building and auto insulation.

Business events get a makeover

Basement-level meeting rooms are no longer popular, with users seeking rooms on the upper floors, preferably those with a panoramic view of the outside. New meeting spaces are bathed in natural light, like those at the JW Marriott L.A. LIVE, or offer a warm, inviting atmosphere, like the rooms at Meet at the apartment, in New York City.

Source: JW Marriott L.A. LIVE

Source: Meet at the apartment

Eating well and staying in shape

According to an Omni Hotels & Resorts survey, 56% of business clients would like hotel restaurant menus to offer more low-fat meal options. Over 70% of respondents would like to see healthy snacks in their minibar. In response, some hotels are replacing elaborate hard-to-digest business lunches with cold lunches. In addition, Fairmont has introduced a low-cal children’s menu, while Omni Hotels offer a gluten-free breakfast buffet. Connecticut’s Delamar hotels in Greenwich Harbor and Southport now stock their minibars with local products.

Source: USA Today

The Omni group survey also shows that business travellers would like more opportunities to work out. Therefore, the group’s Los Angeles and San Diego hotels now offer Get Fit Kits and Get Fit Rooms with treadmills. To make the fitness centre more fun, Le Parker Meridien in New York City has installed a Wii gaming console.

Well-rested guests are satisfied guests!

All the technology in the world is no good to a client who can’t get a good night’s sleep. Some hotels have taken this to heart and are working to improve the quality of their guests’ sleep. The Crowne Plaza hotel chain is testing snore-absorption rooms equipped with sound proof walls and headboards, specially designed anti-snoring pillows and wedges and a white noise machine to reduce the sound of snoring.

The Dorchester Collection has enlisted the services of a Paris sleep clinic to develop a sleep aid tool. Resembling a bedside lamp, this device diffuses light wavelengths and sound frequencies that help guests fall asleep. Finally, Scandic is the first hotel chain in the world to introduce beds that guests can adjust to their height, weight, body shape and sleeping position, using a remote.

There are any number of ways to amaze customers and foster loyalty. To remain competitive, Québec’s hotels must embrace innovation in order to reinvent themselves. Take inspiration from the creative ideas of the major chains and then call on design and technology professionals to help you carry out your new projects!

Sources:

- April, Alain. “Rôle de l’hôtellerie au sein de l’échiquier touristique québécois,” talk delivered at the Association des hôteliers du Québec annual convention, Manoir St-Castin, February 6, 2012.

- É. de B. “Chez Mercure, rien ne se perd tout se transforme“, L’Hotellerie Restauration, July 26, 2011.

- Lenoir, Aude. “Nouvelles tendances en hôtellerie“, presentation given at the Association des hôteliers du Québec annual convention, Manoir St-Castin, February 6, 2012.

- Hospitality Net. “Scandic introduces personally customized beds as the first hotel chain in the world“, hospitalitynet.org, February 16, 2012.

- Nayer, Mélanie. “Dorchester Collection Introduces Innovative Luxuries to Hotels“, 4hoteliers.com, February 15, 2012.

- Poulin, Ginette. “La CITQ fait le bilan de dix années de classification de l’industrie touristique“, hrimag.com, February 1, 2012.

- PR Newswire. “New Wellness Report Released by Omni Hotels & Resorts Reveals On-The-Road Habits of Business Travelers” prnewswire.com, September 20, 2011.

- Springwise. “Hotel “minibar” offers up food for the mind” springwise.com, February 23, 2011.

- Tendance Hôtellerie. “Crowne Plaza crée la nuit d’hôtel sans ronflements” tendancehotellerie.fr, June 28, 2011.

- Tendance Hôtellerie. “Etude TravelClick® aux États-Unis: 1/4 des chambres sont réservées sur les sites web des hôtels“, tendancehotellerie.fr, January 16, 2012.

- Tour Magazine. “Lille: ouverture de la première chambre d’hôtel recyclable“, tourmagazine.fr, September 6, 2011.

- Travelpulse. “Le Meridien Hotels Unveils New Lobby Concept in Barcelona“, travelpulse.com, June 23, 2011.

- Trejos, Nancy. “Hotels cater to special diets; gluten-free food now on menus“, travel.usatoday.com, February 5, 2012.

- Trejos, Nancy. “Goodbye potato chips; Hotel mini-bars turn exotic and even healthy“, usatoday.com, February 8, 2012.

- Vong, Katherine. “Flexible Hotel Check-Ins“, trendhunter.com, February 7, 2012.

 The influence of images on the choice of destination

Travel and photography have long been intertwined. Photographs seem to concretize experiences and allow them to be shared. But with the Internet, the notion of “sharing” has taken on a new dimension. We used to show our photo albums to friends and family or hold a slide show on our return from a trip. Now the presentation of travel pictures has moved from the private to the public domain, and often in close to real time, with instant messaging, online photo albums, blogs and social networks.

Travel photos shared with friends on Facebook can be very persuasive. According to Skyscanner, a flight comparison site, more than half (52%) of Facebook members say that photos uploaded by friends inspire them to book a holiday in the same location. As noted by Sam Baldwin of Skyscanner, viewing our friends’ travel photos on Facebook plants a seed in the mind and gives us travel ideas.

A study by HRS.com and eResult on hotel selection criteria reveals that photographs have the greatest influence on 78% of respondents, after online client reviews (67%) and star ratings (59%).

Matching images to customer segments

At the ITB Berlin Congress in March 2011, Markgraf and Scheffer presented the results of their marketing communication study and showed how they applied their findings to images in advertising brochures. Working on the assumption that up to 95% of our decisions are subconscious—arising from our personality, values, needs and desires— they concluded that a tourism ad aimed at the family should emphasize harmony and the interaction between family members, and depict a place where family members are happy in one another’s company. The images below, for this type of market, show the evolution of the visual imagery.

Source : Neuromarketing at REWE Touristik

The following illustration shows the same exercise for a different market: financially comfortable couples 40 and older without children, in search of an aesthetically sophisticated, quality establishment.

Source : Neuromarketing at REWE Touristik

Using images to advantage

Tourism Australia created a map of the country from photos or “experiences” of travellers in Australia. This approach encourages Internet browsers to plan their visit inspired by the photos and comments of Australian travellers (click on the link below the image for a better grasp of the concept).

Source : Tourism Australia

The Room 77 website does for hotel rooms what Google Street View does for streets: it allows users to locate a specific hotel room (upstairs, near an elevator, etc.) and to get a glimpse of the view it offers with a photo or image. To date, Room 77 has mapped approximately 460,000 hotel rooms in the United States, London and Vancouver. The database is also available as a mobile app.

Source : Room 77

Websites can display 360° panoramas, geotag them, and provide a links to related sites (a destination, for example). Certain restrictions apply, depending on the portal. The 360 Cities website, with one of the Web’s largest collections of panoramic photos, is directly linked to Google Earth.

Parc national des Grands-Jardins on 360cities.net via Google Earth.

Show what you have to offer…but just that

Technology offers endless possibilities. But visitors who have been burned by doctored and misleading images exert a strong influence on sites like TripAdvisor and other review portals. The following examples appeared in the Business Insider blog. Click on the link to view various publicity images juxtaposed with the harsher reality.

Source: Oyster dans Business Insider

Cover all the key sites

Finally, according to a survey conducted for the review site TripAdvisor, 92% of respondents are more likely to book an accommodation when there is a detailed description that includes photographs. Hotels have a vested interest in displaying their own information and images on TripAdvisor, in the section reserved for them, as well as on sites like Google Addresses and Facebook, and, of course, their own site.

Sources:

- Blodget, Kelsey et Jennifer Garfinkel. «Here’s Why You Should Never Trust The Photos Hotels Post Online», Oyster dans Businessinsider.com, 3 mars 2011.

- Craig, Daniel Edward. «How to optimize Your TripAdvisor Listing», ehotelier.com, 25 mai 2011.

- Guerrier-Buisine, Vanessa. «Selon le portail de réservations HRS, les photos ont plus d’impact que le «bouche à oreille» lors de la sélection d’hôtels», Tendancehotellerie.fr, 4 mars 2011.

- Koumelis, Theodore. «“Facebook factor” inspires 52% to book a Holiday, reports Skyscanner», traveldailynews.com, 25 février 2011.

- Lo, Iris Sheungting, Bob McKercher, Ada Lo, Catherine Cheung et Rob Law. «Tourism and online photography», Tourism Management, vol. 32, no 4, juin 2010, p. 725-731.

- Markgraf, Ingo et David Scheffer. «Trends and Innovations in Marketing Communication and Advertising», Congrès ITB Berlin, 9 mars 2011.

Sites Internet:

- 360cities.net

- Google Earth

- Room 77

- Tourism Australia

- TripAdvisor

Throughout our nearly 15 years of hotel Internet marketing experience, we have been consistently concerned about the increasing level of disparity between savvy Internet/Mobile marketers in hospitality and travel, and the Internet/Mobile Marketing-inept players in the industry.With the advent of social media in recent years, Web 2.0 technologies and the mobile Web, this disparity has accelerated dramatically.

On one side there are the extremely Web-savvy:

• Online travel agencies like Expedia, Travelocity, etc.
• Most major hotel brands’ e-commerce departments
• Airlines
• Some e-commerce departments at smaller and mid-size hotel and resort chains
• Some very bright individuals at the marketing departments of full service hotels, resorts and casinos

On the other side there is everybody else, which unfortunately means the majority of hospitality executives and sales and marketing professionals.
HeBS defines “Web Marketing Ineptitude” as the lack of hands-on experience in Internet marketing and all of its formats: website re-designs, SEO optimizations, search marketing, email marketing, strategic linking, banner advertising and online sponsorships, social media and Web 2.0 and more recently, mobile marketing. In addition, this ineptitude also indicates a lack of understanding of best practices and latest trends in the direct online channel.

In the 1990s, it was “normal” that only a few hospitality and travel marketers were proficient in the online channel.  Less than 3% of travel reservations in the U.S. were booked online back in 1999. In the 2000s (in 2001, online travel bookings reached 5.4% of all travel reservations in the U.S.), hospitality marketers and the major hotel brands began to pay closer attention to the Internet channel. In the years that followed, Internet travel adoption increased dramatically and in 2009 alone over 55% of all travel reservations in the U.S. will be online (45% of all hotel reservations) to the tune of a staggering $116.1 billion (eMarketer).

Yet, to our dismay, over the past 15 years the level of Internet marketing expertise in the hospitality industry has not kept up with this remarkable growth. On the contrary, we are witnessing whole new generations of hospitality executives and marketing professionals who are unfamiliar with Internet marketing in general as well as best practices and trends in the direct online channel.

This problem has been exacerbated by a) the social media and Web 2.0 phenomena, and b) mobile marketing. Both of these new marketing and distribution channels introduced an entirely new level of complexity and skill set requirements, as well as new best practices and trends.

• Social Media have changed how customers plan and purchase travel, how customers access information, and how customers perceive the credibility of information. How can hoteliers create/monitor/take advantage of the social media “chatter” around the hotel, target receptive audiences, and ultimately stimulate hotel website visits, interactions and bookings? What type of Web 2.0 and interactive features and functionality do you need on the hotel website?

• Mobile Web is expected to surpass the traditional Web within the next five years. The promise of “immediate, anywhere and anytime” Internet access, instant information and transaction capabilities, location-based services and personalization are some of the key factors for the “explosion” of the mobile Web. Hotel guests–past, current and potential–are increasingly becoming mobile-ready and hoteliers have to respond adequately to this growing demand for mobile services. This is the reason why hoteliers and travel marketers need to have robust mobile Web initiatives in place, including mobile brand websites, mobile apps, m-CRM and mobile marketing.

Why Is There a Growing Web Marketing Ineptitude in the Industry?

There are many reasons for this “Web Marketing Ineptitude” among the ranks, but here are some of the most important:

Franchised Properties:

• Many major brands control all Internet marketing initiatives at the corporate level, including property-level initiatives, thus depriving staff at the property from any meaningful experience in Internet marketing.

• We have seen a trend among small/mid-size chains to establish small but vital e‑commerce departments. In many cases, these companies outsource whatever online marketing they do to outside vendors. Here again, when outsourcing, they make a crucial mistake by not demanding professional development to be part of the Internet marketing vendor’s responsibilities. This results in Internet marketing expertise not being disseminated to the properties in the process.

Independent Hotels and Resorts:

• The biggest concentration of Internet marketing knowledge is at this level.

• Many big full-service hotels and resorts have some form of in-house Internet expertise. However, due to staff turnover and constantly decreasing budgets, these properties tend to have a very spotty Internet expertise retention rate.

• Smaller hotels and resorts are most vulnerable due to limited budgets and difficulties with hiring and retaining employees with expert knowledge.

Destination Marketing Organizations (DMOs) and Convention and Visitor Bureaus (CVBs):

• These organizations boast some of the brightest Internet marketing stars and some of the most inept marketers.

• In many cases among DMOs and CVBs, ignoring Internet marketing best practices is not even a matter of budget size, but a result of inertia and commitment to traditional advertising formats.

• The government or quasi -government nature of CVBs and tourism offices does not help with the hiring and retention of Internet expertise.

So What Is the Verdict?

HeBS believes there are different levels of Web Marketing Ineptitude in the industry regarding three important marketing media: Traditional Web, Social Media/Web 2.0 and Mobile Web. Here are our estimates of the ineptitude rates in each of these media:

Internet Marketing/Traditional Web

• Nearly 15 years of existence of the traditional Web

• Internet Marketing Ineptitude rate in hospitality:  65%

Web 2.0/Social Media Marketing

• Nearly 5 years of existence of social media

• Web 2.0/Social Media Marketing Ineptitude rate in hospitality:  90%

Mobile Marketing/Mobile Web

• Nearly 10 years of existence of Mobile Web but in reality, the Mobile Web in the U.S. exploded with the introduction of the first iPhone in June 2007.

• Mobile Marketing Ineptitude rate in hospitality:  97%

Conclusion

Hoteliers should strive to gain a crystal-clear understanding of what the best practices and latest trends are in hospitality Internet marketing: what works, what doesn’t, and why. Hoteliers should recognize that they do not have all the answers in-house and that there are thought leaders and other proven industry experts who can help them and their property stay competitive in these economic times, preserve and increase market share, and generate the highest website revenues and ROIs.

Hoteliers should take a hard look at how Best Industry Practices are being utilized by their corporate offices or major brands, as well as by the hotel’s Internet marketing vendors. Almost 15 years after the first online hotel booking, best practices have been established in practically every aspect of hotel Internet marketing. Hoteliers should not allow their Internet marketing vendors to “learn the business on the hotel’s dime.”

The prospect of professional development should become the main criterion when choosing an Internet marketing vendor.  Hoteliers should hire experts who are able and willing to teach the hotel and staff best practices and keep the hotel appraised of the latest direct online channel trends.

Hoteliers should work only with Internet marketing experts who can help them acquire new core competencies and adopt best industry practices in the direct online channel. 

They should provide crucial professional development as well as guide the hotel’s direct Internet marketing strategies, online brand building strategies, e-CRM, website re-design and SEO optimization, search and email marketing, social media and mobile marketing initiatives.

Offset Providers

The choice of offset providers internationally continues to augment, while the Carbon Catalogue presently lists 12 providers across Canada with an offset price range of 12.50 $ to 39.90 $ per ton CO2e.(1) For those wishing to purchase offsets from organizations based in Québec, the four principal providers include Planetair,(2) Carbone Boréale,(3) Zero GHG Inc.(4) and ZÉRØCO2.(5)

(1) Planetair is a not-for-profit organization managed by the Unisféra International Centre, also a non-profit organization. (2) Planetair is the exclusive distributor of Myclimate, one of the most respected offset supplier worldwide, since all their projects conform to the Kyoto Protocol’s Clean Development Mechanism (CDM)* and Gold Standard.** These projects finance only renewable energy and energy efficiency projects in various developing countries. Planetair plans to offer Canadian projects in the future depending on sales volumes.

(2) Carbone Boréale (CB) is both a program, and a laboratory of researchers at the University of Québec in Chicoutimi. CB offsets finance tree plantations in a deforested area of Québec and contributes to supporting research. The plantations are verified and managed according to ISO 14064-3 norms, and are registered by the Canadian EcoProjectsTM GHG.(3)

(3) ZeroGHG Inc. is a private consultancy firm offering offsets in a variety of renewable and energy efficiency projects in addition to their consulting services to develop GHG reduction strategies, quantifying emissions and performing audits. ZeroGHG projects are located in various countries, and at least 80% must meet CDM* and Gold Standard**.(4)

(4) ZÉRØCO2 is a private enterprise selling offsets that finance reforestation projects in various communities. Since 2006, ZERØCO2 has reforested more than 20 hectares of land, creating green spaces equivalent to just over 40 football fields in the heart of communities. (5)

Indirect Offset Sellers

Some tourism businesses have partnered up with various offset-selling organizations. For example, since 2007, Air Canada (AC) encourages its customers to purchase offsets via non-profit organization ZeroFootprint that invests in forest restoration project in British Columbia. To date, AC customers bought $187,612 of offsets, equivalent of 11725 tones of GO2.(6) In contrast, Air Transat does not sell offsets for reasons relating to the efficiency of such projects in their ability to solve climate change related problems amongst other reasons.(7)

For those traveling by rail, VIA Rail also does not directly offer offsets to its customers, however it also encourages its customers to calculate their GHG emissions with Tree Canada, an Ottawa-based offset company. Since 1990, VIA Rail has reduced its GHG by 15% approximately, although it is responsible for only 0,03% of total GHG emissions compared to 13% generated by motorists in Canada.(8) For travelers that hire vehicles, numerous car rental companies also offer carbon offsets on-line such integrated into their reservation forms such as Alamo, Enterprise and National Car Rentals amongst others.(9)

Tourism Operations Buying Offsets

Some Québec and other travelers to Québec probably purchase offsets, however none of the above named organizations had data available at the time of writing this article about their clients. Some tourism operations also buy offsets in Québec, but no study assessed their transaction value to date.

Some accommodation establishments also have a carbon neutral policy. For example, the Chicoutimi Hotel has been offsetting its heating and electricity use and has been encouraging its clients to offset their stay with CB.(2) Since 2006, the hotel l’Auberge des Seigneurs in St-Hyacynthe has been offering Eco-Friendly Packages to its clients and in 2008, it has also engaged to calculate guest’s travel related GHG contributions amongst other environmentally friendly services.(10) This establishment also compensates emissions of meetings and events held in the hotel by planting trees. Similarly, in an effort to be carbon neutral, Novotel Montreal plants a tree for every online booking. (11)

Montreal based tour company, Karavanniers du monde has also taken climate change mitigation serirosly and since January 2009, its price structure includes carbon compensation costs with Planetair. (2, 12) The company’s client’s base is approximately 97% Québécois and based on discussions with the operation’ owner, there have been no complaints at all concerning the price increase resulting from mandatory carbon compensations. On the contrary, clients are pleased to see such an effort by the company. Some other travel companies such as Omnitour, Voyages Tour Étudiants also offers offsets to its customers. (2) Similarly, since 2006, the regional-based operation WeLa Aventure organizes eco-friendly hiking and cycling trips in the Saguenay,(13) and it compensated for its clients travel related CO2 emissions to and from the region via supporting tree plantations by ZIP Saugenay (14) and the cooperative COOP4Temps.(15)

Increasingly festivals and events across Québec are also eco-friendly, and some compensated for GHG emissions.(16) For example, since 2008, Montreal’s International Jazz Festival is carbon neutral.(17) Both Québec and Montreal Convention Centers offer eco-friendly events with their partner organizations (18, 19) and both centers offer offsetting as an option for such events. For example, In 2004, the Québec Convention Centre committed to reducing its energy consumption by 33% per m2 and its total GHG emissions by 50%.(20) Since 2007, it hosted 32 eco-friendly events of which 7 involved carbon compensations.

At Montreal’s Jean-Drapeau Park (JDP), sustainable development policy integrates GHG mitigation and compensation strategies for the organization and activities (about 100 events per year) on the park’s territory. (21) JDP created a fund (Fonds Oxygène) to implement this policy, and partners and suppliers will be asked to contribute to this fund, which will finance specific environmental improvement projects (22). Additionally, drivers to JDP will be required to pay $1 extra to leave their vehicles in the parking to help offset GHG emissions with CB.

Conclusion

Although it is well known that carbon compensation projects do not represent an ultimate solution to mitigating GHG emissions, the purchase of offsets in credible projects can raise awareness, and provide funds towards worthwhile initiatives.(23) Although buying offsets in tree plantations remains controversial, in certain cases they can deliver net environmental improvements, while buying offsets in renewable energy projects and technology developments permit a shift away from using fossil fuels.

This brief synopsis of the situation in Québec shows that carbon neutrality in the tourism sector is a patchwork. The analysis also highlights the need for measuring net contributions of greenhouse gases by the travel and tourism sector in order to enable a coordinated approach to assessing how this could be effectively mitigated.

* CDM certifies emission reductions that are sold on the voluntary market and it ensures that developed countries’ carbon credits comply with Kyoto Protocol regulations.
** The Gold Standard is an independent organization that certifies carbon credits sold on the voluntary market. Such carbon credits need to meet sustainable development objectives. This means that a carbon-offset project must lead directly to a net GHG emission reduction. Gold Standard does not certify forestry projects.

Sources:

(1) Carbon Catalogue Project: Find a Carbon Offset: Canada. Last Consulted Apr 25, 2009.  http://www.carboncatalog.org/projects/canada/
(2) Planetair. Offset Projects. Last Consulted Apr 2, 2009. http://planetair.ca/
(3) Éco-conseil. Plantations Compensatoires de GES. Last Consulted Apr 15, 2009.  http://dsf.uqac.ca/eco-conseil/ges/frame_ges.html
(4) ZeroGHG Inc. Last Consulted Apr 25, 2009.   http://www.zeroghg.com/
(5) ZeroCo2. Last Consulted Apr 15, 2009.  http://zeroco2.com/welcome.php
(6) Air Canada. Carbon Offset Program. Last Consulted Apr 25, 2009.  http://www.aircanada.com/en/travelinfo/traveller/zfp.html?src=hp_ql
(7) Transat AT (2009) Greenhouse gas reduction and fuel management. Last Consulted Apr 2, 2009. http://www.transat.com/en/social.responsibility/gas.reduction.fuel.management.aspx
(8) Via Rail Canada. Environment: Helping To Reduce Greenhouse Gas Emissions Last Consulted Apr 17, 2009. http://www.viarail.ca/corporate/en_environment/reducing_greenhouse_gas.html
(9) Terra Pass Inc. (2009) Rental Car Carbon Offset Program Proves Most Popular With Consumers. Published on-line in Earth News, April 6, 2009. Last Consulted Apr 25, 2009.  http://www.earthtimes.org/articles/show/rental-car-carbon-offset-program-proves-most-popular-with-consumers775734.shtml#%23
(10) l’Auberge des Seigneurs à St Hyacynthe. Last Consulted Apr. 24, 2009.
http://www.hoteldesseigneurs.com/notre_environment.asp
(11) Novotel Montréal Centre. http://www.novotelmontreal.com/home/novotel_news.shtm Last Consulted June. 2, 2009.
(12) Karavaniers du Monde. Destinatons: Fiche technique. Last Consulted Apr. 3, 2009.  http://www.karavaniers.com/voyages/calendrier/?voyage_depart=134
(13) Wela Aventure. Horaire et parcours. Randonnées des cols du Fjord 2009. Fiche d’information. Last Consulted Apr 25, 2009. http://www.welaaventure.com/
(14) ZIP Saguenay. Réalisations. Last Consulted Apr 27, 2009.  http://www.zipsaguenay.ca/zipsaguenay/index.php?option=com_content&task=category&sectionid=1&id=5&Itemid=12
(15) Coop Quatre Temps. Mission. http://www.coop4temps.com/ Last Consulted Apr 27, 2009.
(16) Réseau québécois des femmes en environnement. Sustainable Event. Last Consulted Apr 2, 2009. http://www.evenementecoresponsable.com/
(17) Festival International de Jazz de Montréal. Une édition 2008 carboneutre. Last Consulted Apr 27, 2009.  http://www.montrealjazzfest.com/Fijm2008/planetAir_fr.aspx
(18) Centre des congrès de Québec. Développement Durable. Évennements éco-responsables. Last Consulted Apr 27, 2009.  http://www.convention.qc.ca/tiki-index.php?page=devdurable_eve_resp
(19) Palais des congrès de Montréal. Environnement. Last Consulted Apr 2, 2009. http://www.congresmtl.com/fr/visiteurs/environnement.aspx
(20) Centre des congrès de Québec. Lauréate du prix Stellaris: Efficacité Énergétique. Press Release 2 April, 2004. Last Consulted Apr 2, 2009. http://www.convention.qc.ca/tiki-read_article.php?articleId=41
(21) Société du parc Jean-Deapeau (2009) Politique de développement durable. Montréal. 8 p.
(22) Société du parc Jean-Deapeau (2009) Fonds Oxygène.Le fonds de compensation de gaz à effet de serre Montréal. 4 p.
(23) Broderick, J. (2008). Voluntary Carbon Offsets. A Contribution to Sustainable Tourism? In Sustainable Tourism Futures. Perspectives on Systems, Restructuring and Innovations. In Gössling, S., Hall, C.M. and Weaver, D.B. (Eds.). Routledge, New-York. 169-197.

The global economy has fallen off a cliff and no one is sure when it will hit bottom. According to the International Monetary Fund (IMF), the world’s advanced economies experienced an unprecedented 7.5% decline in real Gross Domestic Product (GDP) during the fourth quarter of 2008. The IMF projects a similar drop for the first quarter of 2009 and says Euro zone GDP will fall more than 4% for the year. In 2009, the world economy will contract for the first time since the Great Depression.

The world’s largest economies are particularly challenged. GDP in the United States has contracted at an annual rate exceeding 6% for the last two quarters. The IMF forecasts that Russia and Japan will see GDP shrink by a similar amount through 2009. Japan’s export-driven economy will experience its first-ever trade deficit and the country will likely experience a dangerous deflationary spiral.

Fragile Tourism

Travel and tourism are particularly sensitive to macroeconomic developments.  The United Nations World Tourism Organization (UNWTO) reported a year-on-year drop in international tourist arrivals for the second half of 2008.  Asia and Europe experienced particularly steep declines of 3%.

The current year got off to a frightening start with international travel agents and tour operators reporting substantial declines in reservations for the coming summer season.  The US hotel industry is suffering massive losses as both occupancy and room rates dive precipitously.  In New York, March revenue per available room (RevPAR) dropped 35.5% on a year-on-year basis.  RevPAR in Orlando and Miami declined by 28% and 29%, respectively.

Two Canadian provinces, New Brunswick and Prince Edward Island, finished 2008 with average hotel occupancy at a paltry 45%. Both provinces are forecasting further demand deterioration this year. Some Canadian urban markets are faring even worse. Annual hotel occupancy for Niagara Falls’ 10,000 hotel rooms was just 38% with no improvement foreseen this year.

Asian powerhouse markets have also been devastated.  Chinese and Indian hotels reported March year-on-year RevPAR declines of 35% and 40%, respectively.  The Thai market, complicated by political unrest, witnessed a RevPAR drop of 37%.  While globalization ignited the twentieth century international tourism boom, it also eliminated firewalls that could have contained the economic contagion ravaging the travel and hospitality industries.

The Upside of a Downturn

With so much gloom on the economic horizon, many business executives are suffering from managerial catatonia. Conventional wisdom dictates that opportunities abound in surging markets, while recessions oblige businesses to hunker down and weather the storm. In contrast, Professor Don Sull, my colleague at London Business School, has become a guru of sanguinity by suggesting that the most lucrative business opportunities are present during economic downturns.  Professor Sull’s research argues that it is significantly easier to implement organizational change and instil better practice in stressful recessionary markets than in boom times. He explains how managers can harness a downturn to identify lucrative investment opportunities, renew a sense of urgency, justify unpopular decisions and overcome complacency (www.donsull.com).

Applying Sull’s hypothesis to the tourism industry during the gravest financial crises of the last century can be an insightful exercise.  Entrepreneurs, investors and managers have frequently identified silver linings in dark economic clouds.  The following three examples illustrate how travel and hospitality professionals have seized opportunities during economic recessions of the past.

Case 1: The Waldorf-Astoria

Hotelier Lucius Boomer opened New York’s Waldorf-Astoria on October 1, 1931, in the midst of the Great Depression.  Towering 42 stories above Park Avenue with almost 2000 rooms, it was the largest and most expensive hotel ever built.  With equity markets in shambles and a quarter of the US population unemployed, few were the fools who expected the hotel to remain open for long. Stock markets had been declining for two years and there was no end to the economic turmoil in sight.

In spite of the gloomy discourse, the opening of the Waldorf-Astoria manifested how the Great Depression had radically altered a fundamental business paradigm. Boomer focussed on depressed costs to attain a competitive advantage. He capitalized on the idle construction sector to negotiate favourable building contracts.  The cost of previously expensive finishing materials had plummeted, permitting use of the finest marble, granite, hardwood and brass.  Unemployed artisans and craftsmen were brought from Europe to work on the hotel interiors at a fraction of their pre-Depression wages.  In the end, a palace was built on a pauper’s budget.

President Herbert Hoover inaugurated the Waldorf in a radio address on the eve of its grand opening. “Our hotels have become community institutions,” said Hoover.  “They are the central points of civic hospitality … The erection of this great structure has been a contribution to the maintenance of employment and an exhibition of courage and confidence to the whole nation.”

The Waldorf-Astoria was also an extremely lucrative investment.  By the mid-1930s the hotel was filling its suites with presidents, royalty and captains of industry.  While the value of the Waldorf’s real estate, management contract and goodwill are debatable, it is probably the most valuable hotel in the world today.  In the end, it was the economic conditions of the Great Depression that permitted the Waldorf to have been built in all its glamour and glory.

Case 2: Carnival Cruise Lines

Most tourism professionals would hesitate to consider the economic turmoil of 1974 the ideal business climate in which to found a capital-intensive enterprise in an industry sector heavily dependent on discretionary spending by retired senior citizens.  Following the breakdown of the Bretton Woods system, US GDP was contracting and inflation exceeded 12%.

In the face of this economic ataxia, Ted Arison purchased a distressed cruise ship for one US dollar and the assumption of $5 million in debt.  In November 1974, with the Dow Jones Industrial Average down 45% from its previous year high, Arison registered the Carnival Company as owner and manager of Carnival Cruise Lines.

At the time, it was difficult to understand why Arison, a savvy businessman, would purchase a near-bankrupt cruise company on the heels of the Arab oil embargo. Petroleum prices had recently quadrupled and a cruise ship could burn up to 200 litres of fuel per minute.  On the surface, the deal made no economic sense.  Arison had different ideas, however. He was about to revolutionize the cruise industry.

Arison targeted a younger market segment (25-40 year olds) that had considered ocean cruises a leisurely pastime for the geriatric set.  Carnival’s ship was redecorated in a flashy neon-esque style. An onboard casino and discotheque were added. Marketing imagery turned away from elegance and genteelness in favour of youthfulness and frivolity. Micky Arison, Ted’s son, made sales calls on dozens of travel agents, employing a casual youthful style to convince them that cruises would be the next big holiday trend for young adults.

Within a year, Carnival was operating at 100% capacity.  It went on to become the world’s largest cruise line. By identifying opportunities in a downturn, Arison’s one dollar investment made him a multibillionaire.

Case 3: Emirates Airlines

Following the September 11, 2001, terror attacks in the United States, the global travel industry came to a screeching halt.  Airlines and hotels were besieged with reservation cancellations. Looking longer term, air carriers began to cancel aircraft orders.  Share prices for Boeing and EADS (Airbus’ parent company) plummeted.

Ahmed Bin Saeed Al-Maktoum, Chairman of the Emirates Group, sensed an opportunity where his competitors saw a threat. No one knew how long the downturn would last but Sheikh Ahmed knew that Emirates was well positioned for growth in the long term.  At the lightly attended Dubai International Air Show in October 2001, the Emirates Chairman negotiated with Boeing and Airbus for an enormous aircraft order.  In an attempt to defend market share as order cancellations poured in, the two manufacturers offered deep discounts.

Emirates ended up splitting the order between the two companies, buying US$15 billion worth of airplanes. While the purchase was more than originally anticipated, Sheikh Ahmed later explained that fire-sale prices resulting from the economic downturn were too attractive to forego.

While delivery of the aircraft would take place over several years, client and investor confidence was immediately apparent.  In the airline industry’s worst ever year, the Emirates Group finished the 2001-02 fiscal exercise with net income representing 8% of revenue. The airline paid a substantial shareholder dividend and a bonus payment of 3 weeks salary to all employees. While competitors laid off large numbers of staff, Emirates did not make a single employee redundant and paid salary increments in full. Among numerous awards, Emirates was voted “Airline of the Year 2002” by 4,000,000 Internet users in the second annual Skytrax Research Study and Best Cargo Airline to the Middle East by Air Cargo News. By considering long-term strategic opportunities, Emirates seized the upside of a downturn.

So where are the opportunities?

Some hospitality businesses are less affected by broad economic strife than others. In comparison to many restaurant companies, McDonald’s Corporation has held up well over the last year. It is ranked as the fourth best performer on the Dow Jones Industrial Average. Its share price is down just 9% compared to the DJIA average of -38%. The company had sufficient confidence in its short-term performance to increase its 2008 fourth quarter dividend by 32%.

McDonald’s is capitalizing on Starbuck’s misfortunes to launch McCafe, a quick service restaurant concept offering cappuccinos, lattes and mochas. With Starbuck’s closing nearly 1000 units, McDonald’s is betting it can attract consumers specifically to purchase specialty beverages rather than just as a support for its food offerings.

Lucrative long-term investment opportunities also exist in the lodging sector. While the number of portfolio and single asset hotel transactions has dropped significantly over the last year, investors with access to capital have been purchasing properties at deep discounts.  The United Kingdom, in particular, has witnessed the liquidation of premium hotel assets at prices that would have been shocking two years ago.  Distressed companies like Royal Bank of Scotland and hospitality giant Mitchells & Butlers have been obliged to sell hotels to generate desperately needed cash.

In a market frozen by the credit crisis, Britain’s Travelodge has been on a buying spree, picking up six properties (650 rooms) from Menzies for £85 million, seven Swallow Hotels (669 rooms) for £70 million and five independent hotels (500 rooms) for £35 million.  Travelodge is opportunistically fleshing out its geographic coverage with aspirations of dominating the British budget sector when the country emerges from its current downturn.

New Eyes

In challenging economic times it is difficult for business leaders to see the light at the end of the tunnel. Indeed, it is even harder to identify opportunities at hand. As such, failure can be a self-fulfilling prophecy.  A Chinese proverb advises that “If we don’t change our direction, we’re likely to end up where we’re headed.”

In challenging times, it is critical that managers in the travel and tourism industry recognize existing business opportunities. There is a silver lining in most black clouds.  As illustrated in the three cases presented herewith, the challenge is not seeking new opportunities but having new eyes to identify them.

Collaborative Initiatives

To date none of the 21 tourism regions had produced a comprehensive regional scale sustainable development strategy with a clearly articulated vision, set of achievable short and long-term objectives and progress measure indicators. Yet, tourism is an important economic activity in Québec and in 12 regions it directly generates at least 3% of all income (3). Tourism has much more potential to be sustainable, since most regions have rich natural and cultural resource bases and diversified economies. Although natural resource exploitation forms the foundation of many regions across Québec, there is much untapped potential to expand tourism in these areas, thereby achieving greater economic integration. Untapped potentials also remain between biodiversity conservation and tourism development on private and public lands besides the protected area networks managed by the Provicial Parks Authority, la Sépaq and Parks Canada.

In some regions such as the Laurentians, concrete initiatives have been undertaken towards strategically integrating tourism into the regional economy through the Provincial Government’s Accord Program (4). In other regions a shift towards increased collaboration between stakeholders is occurring by the establishment of various cooperatives. Examples include the Lac Saint Pierre Biosphere Reserve (5), l’Échappé Bleue (6), Le Parc Aventures Cap Jaseux (7) and V.E.R.T.E. cooperatives (8). There are probably numerous other locally driven projects, but to nobody has examined their socio-economic value or general importance.

There are also 23 territorial areas across Québec with Local Agenda 21 (LA21) strategies (9) and one of the best examples with a strong tourism orientation includes the municipality of Baie-Saint-Paul. There, an LA21 process and willingness and leadership by certain stakeholders continue to enable greater community interaction as part of the redevelopment planning of Le Massif Resort (10).

Operational Changes to Improve Performance

Some tourism operations have a longer history of functioning according to sustainability ideals such as the Le Baluchon rural resort (11) and the zoos in Granby and Saint-Félicien (12, 13). However, very few businesses have a transparent Corporate Social Responsibility strategies, such as those published by the Granby Zoo(12) and Transat AT (14). Many tourism operations have reduced their energy and water use and waste output via different mechanisms, but their overall impact is not evaluated. Hotels in Québec seem to be making visible progress, especially since the Québec Hotel Association has its own Reser-Vert certification program (15), and the CITQ also recently modified its rating system to include environmental considerations and carries out checks on behalf of the Canadian Hotels Associations of Green Key rated establishments (16). Since recent years, numerous events including conferences and festivals are increasingly organized as ecologically and socially responsible, such as Montreal’s International Jazz Festival (17). Many other tourism operations also have supply chain management policies and source various products locally and or produced responsibly. Abitibi-Témiscamingue is the first ‘green’ Tourism Region awarded by Recyc-Québec for achieving more than 80% waste recuperation for its office operations (18).

Besides environmental efforts, some tourism businesses are also making contributions to improving north-south relations. For example, L’Auberge l’Autre Jardin (19) has been directly providing financial benefits to developing countries via its support of Carrefour Tiers Monde. Similar actions can be observed by Parc Safari that sells fair-trade products from developing nations (20). Sustainability news about small and medium enterprises (SME) in Québec is not well documented, which suggests limited progress. Since SMEs comprise about the majority of the tourism industry (21), it might be worthwhile to examine their progress, and issues so that appropriate tools could help them implement change towards sustainability.

Quebec’s tourism includes a variety of products to help reduce its greenhouse gas emissions such as a vast bike network developed by Vélo-Québec (22), the Bixi bike in Montreal (23) and the bio buses in Old Quebec and Montreal (24). Some businesses and events are also carbon neutral, but their profiles and numbers has not been documented. For example, Karavaniers du monde is the first tour operator in Quebec to include the cost of carbon offsets in its pricing (25). Climate change does not seem to be a preoccupation of the Quebec tourism sector, despite the vulnerability status of some products notably ski, snowmobile and various other outdoor activities (26).

Some sub sectors in Québec have a long history of encouraging businesses and visitors alike to reduce their environmental impact, notably Québec’s Adventure and Ecotourism Association (27). How many visitors to and from Quebec travel environmentally consciously is not known. Undoubtedly Québecois travelers are increasingly ethically minded. Since 88% of tourists in Québec are of domestic origin, consumers locally need more indication about industry’s progress so they can choose responsibly (28).

Where to next?

Various operational changes to improve environmental and social performance of the tourism sector are occurring at all scales, but nobody knows the real progress in the absence of benchmark indicators. Québec is not ahead nor behind other Canadian Provinces but there has not been a national study to compare progress at this scale. Québec’s tourism sector is in the beginning phase of operationalizing sustainable tourism and the above examples highlight the need for a Provincial scale action plan combined with a set of feasible progress indicators.

The support tools and knowledge network to put sustainable tourism principles into action is growing across Québec, and numerous institutions offer special training to improve human resource capacity, in responsible environmental managers that is directly applicable to tourism (29).

There is also a growing amount of effective tools and mechanisms reported from outside Québec to help implement change rapidly and help sustain a viable and responsible industry sector. However, local leadership remains an important key driver to implementing any action plan. There needs to be more leadership from government and industry to move the fragmented sub-sectors forward and to provide a coordinated approach to the entire process in Québec. The tools are wide ranging, and many remain unexplored potentials in Québec, including financial incentives and voluntary measures.

Sources:

1. Ministère du Tourisme du Québec (2005) Towards a Sustainable Tourism. Tourism Policy of Québec. Governemenet du Québec: Québec City. 37 p.

2. La Fédération des clubs de motoneigistes du Québec (2008) Plan d’action quinquennal de la FCMQ pour l’environnement. La Fédération des clubs de motoneigistes du Québec (FCQM): Montreal. 8 p.

3. Sauvé, R. La reconnaissance de l’industrie touristique dans l’économie locale et régionale. Presentation at the International Symposium on the Sustainable Development of Tourism. March 17 to 19, 2009. Québec City, Canada. Available at: http://www.bonjourquebec.com/mto/activites/symposium-developpement-durable/fr/programme-mercredi.html

4. Ministère du développement Économique Innovation et Exportation. Accord Program. Last accessed 14 April, 2009. [http://www.mdeie.gouv.qc.ca/index.php?id=3715]

5. La réserve mondiale de la biosphère du Lac-Saint-Pierre. Coopérative de solidarité de la réserve mondiale de la biosphère du Lac-Saint-Pierre. Last accessed 14 April, 2009. [http://www.biospherelac-st-pierre.qc.ca/content/cooperative.html].

6. L’Échappé Bleue. L’Échappée bleue. Coopérative de Tourisme durable. Last accessed 14 April, 2009. [http://www.lechappeebleue.com].

7. Le Parc Aventures Cap Jaseux. Qui sommes-nous. Last accessed 14 April, 2009. [http://www.capjaseux.com/-Qui-sommes-nous-.html].

8. La Coop V.E.R.T.E. Qui nous sommes? Last accessed 14 April, 2009. [http://www.coopverte.com/coopverte/index.php?option=com_content&task=blogcategory&id=19&Itemid=37].

9. Gagnon, C. and E. Arth. Guide des Agendas 21e siècle locaux. Les Agendas 21e siècle locaux québécois. Last accessed 14 April, 2009. [http://www.a21l.qc.ca/9544_fr.html].

10. Le Massif. Territoire Le Massif. The development project. Last accessed  14 April, 2009. [http://www.lemassif.com/en/territoire_le_massif/the_development_project.php].

11. Le Baluchon. About the Baluchon. Last accessed 14 April, 2009. [http://www.baluchon.com/inn-accomodation/index_ang.cfm].

12. Zoo Granby (2006) Réalisations en responsabilité sociale et environnementale. Zoo de Granby: Granby. 24 p.

13. Zoo Sauvage de Saint-Félicien. Au sujet du CCBB/Zoo Sauvage. Last accessed 14 April, 2009. [http://www.borealie.org/page.php/fr/1/4.htm].

14. Transat A.T. (2008) Transat for Sustainable Tourism. 2008 Corporate Social Responsibility Report. Transat AT Inc: Montreal, Québec. 44 p.

15. L’Association des hôteliers du Québec. RéserVert, le Programme de reconnaissance en développement durable. Last accessed 14 April, 2009. [http://www.reservert.com/fr/page.php?label=r%E9servertleprogramme].

16. Corporation de l’industrie touristique du Québec. CITQ is mandated by the Hotel Association of Canada for the Green Key Eco-Rating Program visits. Last accessed 14 April, 2009. [http://www.citq.info/EN/classification.asp].

17. Festival International de Jazz de Montréal. Une édition 2008 carbon neutre. Last accessed 14 April, 2009. [http://www.montrealjazzfest.com/Fijm2008/planetAir_fr.aspx].

18. Bisson, K. Là où commence un tourisme plus vert. Last accessed 16 April, 2009. [http://lafrontiere.canoe.ca/webapp/sitepages/content.asp?contentid=87930&id=836&classif=].

19. L’Auberge Autre Jardins. Mission et historique. Last accessed 15 April, 2009. [http://www.autrejardin.com/auberge.php].

20. Ranger, J.-P. Tourisme durable. Parc Safari. Presentation at the International Symposium on the Sustainable Development of Tourism. March 17 to 19, 2009 Québec City, Canada. Available at http://www.bonjourquebec.com/mto/activites/symposium-developpement-durable/fr/programme-mercredi.html

21. Ministère du Tourisme du Québec. Programmes et services aux entreprises touristiques. Last accessed 15 April, 2009.  [http://www.bonjourquebec.com/mto/ministere/index.asp].

22. Laraue, S. Tourisme durable et velo. Presentation at the International Symposium on the Sustainable Development of Tourism. March 17 to 19, 2009 Québec City, Canada. Available at http://www.bonjourquebec.com/mto/activites/symposium-developpement-durable/fr/programme-mardi.html

23. Montreal Tourism. BIXI: Montreal’s Brand New Public Bike System. Last accessed 15 April, 2009. [http://www.tourisme-montreal.org/Press/Whats-hot/News/bixi-montreal-s-brand-new-public-bike-system].

24. Société de Transport de Montréal. For one year, 155 STM buses to run on biodiesel in downtown Montreal (Press Release). Last accessed 15 April, 2009. [http://www.stm.info/English/info/a-biofiche.htm].

25. Karavaniers du monde. Cuba. Mère des Caraïbes. Informations Techniques. Last accessed 15 April, 2009. [http://www.karavaniers.com/voyages/calendrier/?voyage_depart=134].

26. Singh, B. and C. Bryant (2006) Impact et adaptation aux changements climatiques pour les activités de ski et de golf et l’industrie touristique : le cas du Québec. Rapport préparé pour Ouranos Inc. Département de géographie, Université de Montréal: Montréal. 404 p.

27. Aventure Écotourisme Québec. Leave No Trace Program. Last accessed 15 April, 2009. [http://www.aventure-ecotourisme.qc.ca/content/templates/content_en.asp?articleid=46&zoneid=10].

28. Tourisme Québec (2009) Le tourisme au Québec en bref – 2007. Ministère du Tourisme du Québec: Québec. 16 p.

29. Villeneuve, V. Chaire en éco-conseil. Last accessed 15 April, 2009. [http://www.uqac.ca/recherche/organismes/chaire_ecoconseil.php].

Although there is no question that tourism needs to be sustainable, the actual demand for sustainable tourism is difficult to assess as most figures reflect anecdotal evidence of market share. In recent years, a number of surveys have assessed the demand for more sustainable forms of travel and, in some instances, a willingness to pay and/or financially offset the impact of respondents’ travel.

A number of studies have shown that consumers are becoming more interested in sustainable forms of tourism. In Europe, 95% of Swiss tourists consider respect for local culture to be highly important when choosing a holiday(1) and approximately 87% of respondents in a 2004 responsibletravel.com survey indicated they were also interested in locally produced food, local culture and using local guides when on holiday. A 2002 survey commissioned by the Association of British Travel Agents(2) found that, for 87% of respondents, it was very important that their holiday not damage the environment and, for 76%, that it benefit the people of the destination they were travelling to (for example, through jobs and business opportunities). According to National Geographic Traveller(3), there are 55 million Geotourists in the United States who are environmentally and socially responsible. Geotourists are defined as having “ceaseless expectations for unique and culturally authentic travel experiences that protect and preserve the ecological and cultural environment.” Of these travellers, 38% would be willing to pay a premium to patronize travel companies that use sustainable environmental practices (although it should be noted that only 6% of US travellers take holidays overseas).

It would seem that 2007 was the year when everyone jumped on the “environment bandwagon,” with contradictory results. Most optimistic, a Lonely Planet poll of 24,500 consumers from 144 countries stated that 93% of people said they would or might purposefully partake in environmentally-friendly travel in the future(4). Travellers who consult Lonely Planet are already likely to be much more sensitive to sustainability issues, which accounts for this high percentage that is not supported by other research. For instance, in April 2007, the online travel community, TripAdvisor(5), surveyed 1000 travellers worldwide. Of these, 38% said that environmentally-friendly tourism is a consideration when travelling, 38% had stayed at an environmentally-friendly hotel, 9% specifically seek out such hotels, 34% are willing to pay more to stay in environmentally-friendly hotels and 37% are willing to pay a premium of at least 5-10%. Perhaps of greater long-term concern to the travel industry was the finding that 24% believe air travel should be avoided.

An October 2007 study by TNS Travel & Tourism of over 6,000 people in Great Britain, France, Germany, Italy, Spain and North America(6) concluded that the willingness to pay to offset the environmental costs of their holiday ranged from a low of 2% for Germans, to a high of 12% for Spaniards. With regard to taking steps to reduce their environmental impact, the Italians lead all countries with 32% willing to switch to greener plans, while the United States lag well behind other countries with only 16% expressing such a willingness.

In an American STI survey(7), 75.4% of respondents who are self-declared environmentally-oriented consumers indicated that they were willing to pay $1-20 extra per ticket to mitigate the greenhouse gas effects of their travel and 76.7% said they would switch online travel sites to one that made contributions on their behalf to offset the portion of their emissions. The TNS Travel and Tourism survey was thus less optimistic about the attitude of Americans than the earlier STI study and the survey undertaken by the Travel Industry Association of America (TIA) in 2003(8). The TIA study suggested that more than half of all US adults would be more likely to select an airline, rental car or hotel that uses more environmentally-friendly products and processes. Yet only 14% said their actual selection of a supplier would be influenced by the supplier’s efforts to preserve the environment. In terms of products, 13% would be willing to pay more to use green products – although fully 56% said they might. The amount or rate of the fare premium seems to be the source of their hesitation: 76% would pay less than 10% more per usage, with the majority indicating they would pay less than 5% more.

Compared to their American neighbours, Canadian “travellers express a willingness to take personal action. One-third say that they would switch from a preferred holiday destination to another that supported sustainable tourism, while four in 10 would try to find and use a travel agency that adheres to environmentally sensitive guidelines. And over one-quarter (28%) say they would pay a premium for an ethical and sustainable holiday.”(9) Research conducted by Dodds & Leung(10) suggests that 25% expect travel agents to provide information on climate change and carbon-offsetting options.

While it has been suggested that 44% of British travellers would likely choose an airline with a reputation for fuel-efficient planes(11), Tiscali(12) found that 67% would not even be thinking about the impact their summer holidays could have on the environment. Although consumers may indicate that they expect environmental and social issues to be taken into consideration on their holidays, they do not take it upon themselves to ensure these criteria are being met. Responsibility for ensuring that tourism is more sustainable falls into the hands of the operator. In the UK, over 80% say tour operators should be responsible for preserving the local environment and culture and ensuring that local people benefit from tourism, and the same percentage is more likely to book a holiday with a company with a ‘responsible’ travel policy – a 28% increase since 2001(13). A report by Tearfund(14) declared that 55% of consumers believe that travel agents have a responsibility to provide the information, while 48% think tour operators should provide it.

So what now? Are industry and government moving in this direction?

Although consumers may expect to see social or environmental considerations addressed in the brochures and Websites of operators and travel providers, they do not currently demand these when booking travel packages because many operators simply do not offer responsible/sustainable travel options.

To further the sustainability agenda within the tourism industry, there are a number of recommendations. First, governments should focus their capacity-building efforts on suppliers, using methods like legislated compliance (e.g., environmental, reputation and business probity) and ensuring that resources are available for supplier training and learning and, where needed, filling resource gaps. Second, there is a need to increase public-private partnerships to train the tourism sector in environmental and social awareness and mitigation strategies and industry associations should offer incentives and reporting guidelines. Governments and industry alike need to support training and the sharing of best practices while encouraging industry associations to make adherence to sustainable or responsible tourism policies a condition of membership and to report on progress.

Third, with greater consumer awareness of issues such as climate change, the demand for more information is growing. Demand for sustainable tourism products and services may also grow, if the industry starts to offer more sustainable choices to clients. Businesses can diversify and gain a competitive advantage.

Finally, there is a need to encourage corporate social responsibility reporting from tour operators, airlines, cruise lines, hotels and destinations so that they can understand the impact they themselves are having. Reporting will also provide measurable criteria to allow for comparison of companies and destinations.

Sources:

1. Switzerland Travel Writers and Journalism Club, cited on the Fair Trade in Tourism South Africa Website. Retrieved July 5, 2005, from http://www.fairtourismsa.org.za/fairtrade/index.html
2. MORI (2002). “Package Holidays 2002.” London: Association of British Travel Agents (ABTA).
3. Travel Industry Association of America (2003). “Geotourism: New Trend in Travel Study.” Prepared for National Geographic Traveller, October 2003.
4. Travelmole (2007). “Travellers Back Radical Moves to Protect Environment.” Retrieved August 8, 2007, from http://www.travelmole.com/stories/1121133.php.
5. TripAdvisor (2007). “TripAdvisor Travelers Keen on Going Green.” Retrieved January 16, 2008, from http://www.tripadvisor.co.uk/PressCenter-i120-c1-Press_Releases.html.
6. TNS Travel and Tourism (2007). “Quarter of holidaymakers say they’ll switch to greener plans.” Press release. Retrieved January 16, 2008, from http://www.tnsglobal.com/news/news-4078B2FF93A14AD084EE03C776EE6009.aspx
7. Anavo & STI (2004). Retrieved July 5, 2005, from http://www.sustainabletravelinternational.org/enewsletters/february05travelreport.html
8. TIA (2003).
9. TNS Canadian Facts (2007, December 4). “Canadian travellers express willingness to change their travel behaviours owing to environmental concerns: survey”. Press release. Retrieved January 16, 2008, from http://www.tnsglobal.com/news/news-4CEBC86E3705458FBD60A0D5D960E94A.aspx
10. Dodds, R., & Leung, M. (2007). “Climate change awareness in the tourism industry.” Conference Proceedings TTRA Canada, October 18-20, 2007.
11. TNS Travel and Tourism (2007).
12. Tiscali (2007). “Summer Lifestyle Report 2007.” Retrieved January 16, 2008, from http://www.tiscali.co.uk/presscentre/press_release/2007/july/071807summerlifestyle.html
13. Taylor Nelson Sofres (2004). Responsible Travel ‘Had Enough’ Survey. Retrieved July 5, 2005 from http://www.responsibletravel.com/Copy/Copy101763.htm.
14. Tearfund (2001). “Worlds Apart – A call to responsible global tourism.” Middlesex, UK

This trend is closely associated with another, dubbed “Work hard, play hard.” In fact, Benchmark notes that a bigger slice of meeting and convention budgets is being allocated to leisure and team building events. Though companies are still demanding more from their employees, they are also recognizing the need to balance this with fun activities like a round of golf, a spa visit, or even a cooking class. Microsoft, Westin, KLM, eBay and many other corporations are sending their employees to the kitchen.

A simple recipe for cooperation

Team building sessions can take a variety of forms, but they are often associated with physical activities, sometimes extreme in nature, that are not necessarily suitable for all employees. Golf, rafting, treasure hunts and role-playing are just some of the ways in which employees can accomplish something together outside the workplace. Unlike golf, which is appeals primarily to golfers, and rafting, which is too extreme for some people, cooking lessons are a simple, relatively inexpensive and highly accessible way to get people together. Furthermore, culinary activities focus more on cooperation than other, more competitive, activities do.

Delicious benefits

Like any organization, a cooking class follows a system: to succeed, participants must set deadlines, use limited resources, make decisions and cooperate. In the kitchen, individuals assigned different roles are put into groups to create a product, in this case, a meal. Participants share responsibilities and learn to appreciate the individual skills of each team member as they work towards a common goal: grilled lamb, sautéed mushrooms or a rich chocolate sauce!

Events can be customized to meet the goals and budget of each specific group. Another very popular option is to have the experience include an opportunity to work with a renowned chef.

Cooking is an enjoyable activity that everyone is capable of doing. In fact, one’s prowess in the kitchen is in no way related to one’s tasks in the workplace; roles are sometimes reversed, stereotypes fall by the wayside and a new group dynamic can emerge. Since the kitchen is a familiar environment and food is a universal language, people who cook together can become closer in a way that endures beyond the team building exercise itself.

The secret to success: Planning and consistency

• To be successful, a team building activity begins long before the session itself, which must be well planned. Ideally, a team of employees should be formed to organize the event.
• For maximum effect, the activity should be consistent with the company’s overall organization. In other words, its corporate culture, values and internal practices should underscore the team concept on an ongoing basis.
• Participation will be greater if the team building activity is organized around a business goal that all employees can contribute to.
• To take full advantage of the potential of team building, organizers must set real work goals, determine how the learning will be integrated into the workplace and decide what type of follow-up will be done, all before the activity even takes place. Doing so will lead to better planning.

A poorly planned team building activity can lead to negative consequences. This can happen if the event does not complement the company’s usual work environment. For example, if the company normally rewards individual efforts, an activity to build team spirit will likely have no impact and even strike employees as a waste of time. Similarly, if an event lacks follow-up or is not related to concrete, consistent actions in the workplace, it could well damage employee confidence, motivation and productivity.

Some examples

• CEO Chef is first and foremost a team building company. Following a short introduction and some safety tips, participants form teams and name a leader. Then the workshop leader presents the “culinary challenge.” Teams must prepare the food according to the instructions (which are often far from complete). The goal is team work, creativity and trusting others. After the cooking, the workshop leader leads a discussion about the lessons learned. CEO Chef comes to the convention or meeting site and brings all the equipment needed for the team building activity.
• Along the same lines, Recipe for Success has a very diverse menu: sushi, chili, chocolate, ice cream, and even ice sculptures! Other outfits are Hands on Gourmet and Parties that Cook.

Source: Hands On Gourmet

• Other companies like Gourmet Retreats in California and Tall Order in Vancouver specialize in a variety of culinary experiences, with team building being just one of their activities.
• The Bellagio Hotel in Las Vegas is currently building an enormous kitchen that will be used exclusively for classes and demonstrations as well as team building activities.
• The Institut du tourisme et d’hôtellerie du Québec (ITHQ) and the Académies Culinaire de Québec and de Montréal offer cooking classes to private groups and open their facilities to companies who wish to hold team building events.
• The Québec Resorts and Country Inns network offers culinary team building as one of the indoor activities available at its establishments.
• Montreal outfit La Cuisine de Lili Margot is a place where guests help make their own meal with the help of a chef. It is also available for team building activities.

Source: Tall Order

Take the plunge!

With its positive outcomes, accessibility and user-friendliness, culinary team building seems to be making a name for itself. Participants gain a better understanding of their team’s strengths and challenges, as well as insight into how to manage its dynamic. And, of course, the highlight is the delicious group meal that follows.

The phenomenon has even reached Quebec. However, while there are some exciting initiatives, it is not clear that the supply is ready to meet the demand of meeting and convention organizers. There is definitely room for an organization to develop such activities for conventioneers and business travellers in Quebec. Of course, though hotel owners cannot simply become group leaders of team building activities overnight, they can certainly open the doors of their kitchens and develop such events in partnership with specialized companies, organizational psychologists or other professionals.

Perhaps the idea should simmer for a while…

Sources:
- Healthfield, Susan M., “Keys to Team Building Success,” About.com: Human Resources.
- HotelOnline. “Benchmark Hospitality’s Top Meeting Trends for 2007,” March 6, 2007.
- Vallerand, Nathalie. “Drôle de team building!” Affaires Plus, December 2007.

Websites:
- www.recipeforsuccess.com
- www.handsongourmet.com
- www.partiesthatcook.com
- www.tallorder.ca/retreat-programs
- www.desmondgv.com/conference/team_cook
- www.academieculinaire.com
- www.reunionschampetres.com
- www.lilimargot.com

An expanding service

Around the globe, an ever‑increasing number of places now offer wireless internet service (wi‑fi). According to an ABI Research study, the number of wi‑fi hotspots worldwide will grow by over 25% in 2007, for a total of 179,500 of those areas so beloved by laptop owners. About 72% of them are found in North America and Europe, but the Asia‑Pacific area is showing rapid growth in that respect.

It’s not just the offer; the interest on the part of internet users is also rapidly expanding. In addition to the burgeoning number of internet subscribers there is an astonishing growth in wireless use, as people become more and more used to going online to check the internet and e‑mail.

The trend reaches accommodation

The hotel industry is well positioned to make the advantages of wireless internet available to its clientele. There are currently 46,000 wireless hotspots in various kinds of accommodation establishments. This amenity confers an obvious competitive advantage that many large hotel chains are eager to acquire. Some operators also use wireless networks for their internal communication.

Two recent surveys conducted in January 2007 by YPB&R shed some interesting light on the relative importance of wireless internet service in hotel rooms. The first survey was conducted on 304 leisure travellers, while the second focussed on the same number of business travellers. Both samplings surveyed American travellers who had travelled over 120 km from their home and spent at least one night in commercial accommodation.

Internet in the room

Clearly, the internet is becoming an essential service and, increasingly, clients expect it to be offered free of charge. Business travellers more or less demand high‑speed wireless internet access in their hotel room (Figure 1). Over 39% of business travellers surveyed said that this free service is extremely important, and 46% of leisure travellers said it was very important (see ratings in columns 4 and 5). The stated importance of this service to travellers decreases significantly as soon as there is a cost attached to it.

Since an increasing number of travellers use laptops, customers obviously prefer wireless internet service. However, both clientele segments still displayed significant levels of interest in having wired connections in their rooms (Figure 2). However, it is to be expected clients will increasingly prefer wireless access.

When questioned about the importance to them of knowing that an accommodation establishment had a public space with high‑speed internet access, almost half (49%) of the business travellers surveyed (compared to 36% of leisure travellers; see Figure 3) felt this amenity was very important as long as it was provided free of charge. Travellers who are prepared to pay for this type of service are in the minority.

As soon as a cost is attached to internet access it becomes clear just how much travellers expect to receive it for free (Figures 4 and 5). Interestingly enough, 9% of leisure travellers not only refuse to pay for high‑speed internet but would quite simply stay elsewhere where the service is provided for free. Almost one quarter (23%) of business travellers feel the same way.

The majority, or 58%, of leisure travellers have less definite opinions: although they do not necessarily want to pay for internet access they would not change establishments in order to get it for free. However, 37% of business travellers would. Regardless of the type of travel, one out of five feels that $5 a day or less is an acceptable amount to pay for this type of service. Only 2% of tourists and 7% of business people would pay $10 or more.

There is one final factor that only affects business travellers, and that is the availability of Internet access in conference rooms. Roughly 44% feel that high‑speed wireless service is very important when it is provided for free, compared to 24% who still think it is important even if there is a charge for that service.

As the number of wi‑fi hotspots grows they will become an increasingly large part of consumers’ everyday life. In fact, a number of cities are working toward turning some of their neighbourhoods into wi‑fi areas, with either paid or free access. For instance, in September 2006, Toronto’s financial district went wireless. Industry players, particularly hotel owners, need to adapt to this trend because clients are becoming ever‑more demanding in that respect.

It begins by chronicling the emigration of hotel assets from American ownership to foreign investors in the 1980s and their subsequent repatriation starting in the mid-1990s. Second, it examines how the management focus of large international hotel groups has shifted from a real estate orientation to an emphasis on brand management. Finally, the article explains how this business reorientation resulted from the increasingly shorter planning horizons of global investors.

The Great American Sell-off

Recent reports in the press speculate that InterContinental Hotels Group (IHG) will be the target of a US$ 11.2 billion takeover bid in the coming months. The stratospheric price tag stuns even seasoned industry analysts who have followed hotel mergers & acquisitions for decades. IHG has an impressive portfolio of internationally recognized brands – InterContinental, Holiday Inn, Crowne Plaza and Indigo among others. The company is well diversified in terms of market segments and global coverage. Nonetheless, IHG’s 60% increase in share price from August 2006 to January 2007 raises numerous issues concerning market speculation, quality of management and company financial fundamentals. Industry analysts predict an American REIT (Real Estate Investment Trust) or private equity group will make an unsolicited offer of 1500p for outstanding IHG shares during the first half of this year. Such an offer would represent an 80% premium over the August share price (840p) on the London Stock Exchange.

An IHG takeover would be significant for reasons in addition to the lofty price. The two most frequently cited contenders are US investment firms – Barry Sternlicht’s Starwood Capital and the Blackstone Group, a private equity firm with extensive hotel assets. The acquisition of IHG by American investors would bring the international hotel industry full circle, reestablishing North American dominance in the global lodging sector.

The American withdrawal from international hotel markets began in 1981 when Pan American Airways sold its InterContinental division to Grand Metropolitan, a British food and hotel group. The sale sparked a prolonged sell-off of North American hotel companies to foreign investors. Most notably, Holiday Inn, the world’s largest hotel company at the time, was sold to England’s Bass Brewing Company in 1987.

The InterContinental sale sparked another trend that would radically transform the travel industry over the coming years. Airlines began to shed their hotel assets to focus on core transportation activities. Within a period of a few months in 1987, Chicago-based United Airlines sold its Hilton International, Westin and Camino Real hotel subsidiaries to British and Japanese investors. In the following years, all of the world’s major airlines liquidated their lodging divisions. Travel industry executives came to reject the conventional wisdom that airlines and hotels, operated by the same company, were strategically complimentary business units.

Asian investors were particularly eager to acquire American hotel groups. Hong Kong-based New World Development purchased the Ramada International, Renaissance and Stouffer’s hotel companies. Regal, another Hong Kong group, acquired Richfield, one of North America’s largest management companies with a vast portfolio of hotels flying Sheraton, Hilton, Choice and Holiday Inn flags, among others. Dubai’s Kingdom Hotel Investments went on a Canadian shopping spree, picking up Delta and CP Hotels, as well as taking significant positions in Four Seasons and Fairmont.

While Asians were focusing on the luxury segment, French investors turned their attention to the US budget sector. With its purchases of Motel Six and Red Roof Inns, Groupe Accor acquired more than 1000 lodging establishments in the US and Canada.

As one hotel company after another was sold to foreigners, North American investors were accused of an obsessive focus on short-term profits. Analysts claimed that Asian and European investors with longer planning horizons would reap handsome returns further down the road. American impatience, it was argued, was allowing foreign investors to purchase the crown jewels of the global hotel industry at prices that were likely to appreciate at supernormal rates of growth.

Coming Home

Just as the American sell-off appeared to have reached the tipping point, a curious thing happened. In 1994, a group led by little-known Starwood Capital and Goldman Sachs purchased Westin from the Japanese Aoki group, returning the company to US ownership. While Aoki had liquidated some non-strategic assets, the $537 million selling price was approximately a third of what the Japanese had paid United Airlines for the company in 1988. Analysts claimed the Westin takeover was an opportunistic acquisition that did not portend a trend in hotel asset repatriation. It did not take long, however, to prove them wrong.

In 1997, Marriott purchased Renaissance, Ramada International and New World Hotels from their Hong Kong-based proprietors. More recently, Hilton Corporation bought Hilton International, its British based namesake, for $5.7 billion. The Hilton acquisition reunited the company 42 years after the international division had been spun off to Trans World Airlines and nearly 20 years after it moved its headquarters to the UK.

American investors are not known for tiptoeing into business markets any more discreetly than the US Army tiptoed into Baghdad. Such was case with their return to international hotel investment. Not satisfied with merely reclaiming “American” hotel companies, US investors went on a shopping binge, acquiring a vast array of international lodging firms. Sheraton purchased CIGA, the Rome-based company that maintained a virtual monopoly on Italy’s upscale hotel market. The Carlson Companies, parent of Radisson Hotels, purchased Regent International, the Hong Kong-based hotel group that had established Asia’s reputation for luxury hotel keeping. Starwood picked up Le Meridien Hotels, a chain founded by Air France and sold to British interests in 1994. Starwood also acquired Hotels du Louvre, Europe’s 2^nd largest hotel company which included the upscale Concorde brand.

Shorter Investment Planning Horizons

Have American capital markets given up short-term investing to concentrate on long-term asset appreciation? Nothing could be further from reality. The return of US dominance to hotel equity markets manifests the economic globalization of international investment activity in general. Investors of all nationalities are calculating risk and return for increasingly shorter planning horizons. In uncertain times, why would Hong Kong investors wait several years for investment returns when the Shanghai Composite Index was up 122% in 2006? Bourses in Peru, Vietnam and Venezuela appreciated at168%, 144% and 156% respectively last year. In the interconnected and interdependent world of the 21st century, investors from Albania to Zambia are using the same investment criteria to identify the most lucrative opportunities in global markets. Calculations no longer focus on the net present value of expected cash flow for decades to come. The key is to assess appreciation of asset values (real estate or management contracts) next year or even next month.

The Hotel Washington in the US capital provides an illustrative case study of this trend. Gal-Tex, which owned the hotel for 65 years, sold it to Westbrook Partners for $120 million in the spring of 2006. Barely six months later, Westbrook turned the property over to Istithmar Hotels for $150 million, reaping more than $1 million profit for each week it had owned the hotel.

The Savoy Group in London provides an even more astonishing example of such rapid-fire turnover of trophy assets. The Savoy Hotel and its three sister properties with a total of 772 rooms were purchased by the Irish investment group Quinlan Private in May 2004 for $1.36 billion. The 226-room Savoy Hotel was valued at approximately $380 million at the time of sale. Within a few months, Quinlan sold the Savoy to Kingdom Hotel Investments for a reported price of $475 million. Measured by the $1.8 million per room price tag, the sale represents one of the highest prices ever paid for a hotel. While Quinlan had been widely criticized for overpaying for the Savoy Group, the acquisition provided a $95 million profit on the sale of just one hotel that it owned for less than a year.

From Real Estate to Brand Management

The plethora of hotel transactions also manifests the value of non-tangible assets in the hotel industry. As lodging companies divest of real estate, the value of management contracts, franchise agreements and internationally recognized brands has become increasingly easier to assess. When Hutchinson Whampoa, the proprietor of the Hong Kong Hilton, demolished the hotel in 1995 to build a commercial office complex, it was obliged to pay Hilton $125 million to buyout the remaining 20 years of its management contract. In a bizarre paradox, the sum was not being paid to manage the hotel but rather to not manage the hotel. In testament to the potential value of a management contract, Hilton made clear that it did not want a payment of $125 million. The company preferred a continuation of the management contract. In the end, Hilton was legally obligated to vacate the premises and accept the settlement. The case illustrates, however, the radical changes that have turned the hotel sector upside down.

The growth of franchising has further altered the basic structure of the industry. While franchising of lodging establishments was pioneered by Holiday Inn’s standardized motels in the 1960s, only recently have upscale international groups been willing to permit owners to manage their hotels under a prestigious corporate banner. Almost all of the major international hotel companies now engage in franchising as a capital-free vehicle for rapidly growing their brands. The Carlson Companies have taken the concept to the extreme, having sold all of their hotels and given up most management contracts. The group now focuses almost exclusively on franchising its Regent, Radisson, Park Plaza and other hotel brands.

As hotel franchisers and management companies put increasing emphasis on international product recognition, brand management is becoming the critical skill for competitive advantage. This revolution has been manifested in recent years by the selection of brand management professionals (rather than hoteliers) to head the world’s largest lodging companies. Ian Carter, President of Black & Decker EMEA was appointed Chief Executive of Hilton International in 2005. When Hilton Corporation acquired the company the following year, Carter was the only top executive retained by the parent company, where he now serves as Chief Executive Officer for international operations.

Andrew Cosslett, President of Cadbury Schweppes EMEA, was named head of InterContinental Hotels about the same time Carter joined Hilton. The following year, the logic for hiring an executive from the confectionary industry to head a hotel company was explained in a CNBC broadcast. Interviewer Ross Westgate asked Cosslett, “Because you manage hotels now rather than own them – you’ve sold a lot of the assets off, so is it now brand management – is that essentially what you do?” The new chief executive replied, “That’s really our focus.”

When Starwood Hotels founder Barry Sternlicht decided to step down as Chief Executive Officer, none of the short-listed candidates to replace him were from the hotel industry. Steven Heyer, President of Coca-Cola was eventually recruited to assume the CEO position at Starwood, primarily for his branding prowess. Shortly thereafter, Starwood recruited Javier Benito, President of Coke’s US retail division to serve as the company’s Executive Vice President.

While peddling Coca-Cola in supermarkets may appear greatly removed from selling St. Regis suites on the web, the success of both depends on the effectiveness of brand management. The fact that executives with no hotel experience are increasingly recruited to manage the world’s largest lodging companies has significant implications for hoteliers, investors and educators. If branding skills are the most important qualifications for heading a global hotel company, what is the future of the industry? Where is the value in a hotel company?

Traditional hotel executives may scoff at such trends but stockholders are euphoric. The recent 60% rise in IHG share price has persuaded investors that hotel companies need a new breed of leader to maximize return on investment. If the IHG takeover bid is successful, providing stockholders an 80% share appreciation in less than a year, it will be difficult to argue with them.

Conclusions

The increasing divergence of hotel ownership (real estate), operations (management) and marketing (brand distribution) will intensify in the coming years. “Hotel management” will refer only to those activities that directly impact above-GOP (Gross Operation Profits) controllable expenses. Private equity funds, REITs and institutional investors are dominating the hotel real estate markets. Franchisers are achieving competitive advantage in sales and distribution. Increasingly, companies once considered at the core of the lodging industry are getting out of the hotel business and into the business of hotels.