Sir David Michels on the shape of the coming recovery

The outlook for 20 key markets, from China and the USA to Germany, Brazil and Libya

Is it time to change in-room technology standards ?

How the crisis will affect luxury in 2010

Editorial input from 25 hotel industry CEOs

2010W h a t t o e x p e c t i n t h e y e a r a h e a d

This excerpt from the Hotel Yearbook 2010 is brought to you by :

Ecole hôtelière de LausanneThe Ecole hôtelière de Lausanne (EHL) is the co-publisher of The Hotel Yearbook. As the oldest Hotel School

in the world, EHL provides university education to students with talent and ambition, who are aiming for

careers at the forefront of the international hospitality industry. Dedicated to preparing tomorrow’s executives

to the highest possible level, EHL regularly adapts the contents of its three academic programs to reflect the

latest technologies and trends in the marketplace. Since its founding in 1893, the Ecole hôtelière de Lausanne

has developed more than 25’000 executives for the hospitality industry, providing it today with an invaluable

network of contacts for all the members of the EHL community. Some 1’800 students from over 90 different

countries are currently enjoying the unique and enriching environment of the Ecole hôtelière de Lausanne.

Boutique DESIGN New YorkBoutique DESIGN New York, a new hospitality interiors trade fair, will coincide with the 94-year-old International

Hotel/Motel & Restaurant Show (IH/M&RS). Designers, architects, purchasers and developers will join the hotel

owners/operators already attending IH/M&RS to view the best hospitality design offerings as well as explore a

model room, exciting trend pavilion and an uplifting illy® networking café.

Hospitality Financial and Technology Professionals (HFTP)HFTP provides first-class educational opportunities, research and publications to more than 4’800 members

around the world. Over the years, HFTP has grown into the global professional association for financial and

technology personnel working in hotels, clubs and other hospitality-related businesses.

Bench EventsBench Events host premier hotel investment conferences including the International Hotel Investment Forum ;

the Arabian Hotel Investment Conference and the Russia & CIS Hotel Investment Conference. Bench Event’s

sister company, JW Bench, is a benchmarking company that has launched the Conference Bench and the

Productivity Bench. An industry first, the Conference Bench, measures performance data for conference space

in hotels throughout Europe.

Cornell University School of Hotel AdministrationFounded in 1922, Cornell University’s School of Hotel Administration was the first collegiate program in

hospitality management. Today it is regarded as one of the world’s leaders in its field. The school’s highly

talented and motivated students learn from 60 full-time faculty members – all experts in their chosen disciplines,

and all dedicated to teaching, research and service. Learning takes place in state-of-the-art classrooms, in the

on-campus Statler hotel, and in varied industry settings around the world. The result: a supremely accomplished

alumni group-corporate executives and entrepreneurs who advance the industry and share their wisdom and

experience with our students and faculty.

HsyndicateWith an exclusive focus on global hospitality and tourism, Hsyndicate.org (the Hospitality Syndicate) provides

electronic news publication, syndication and distribution on behalf of some 750 organizations in the hospitality

vertical. Hsyndicate helps its members to reach highly targeted audience-segments in the exploding new-

media landscape within hospitality. With the central idea ‘ONE Industry, ONE Network’, Hsyndicate merges

historically fragmented industry intelligence into a single online information and knowledge resource serving

the information-needs of targeted audience-groups throughout the hospitality, travel & tourism industries…

serving professionals relying on Hsyndicate’s specific and context-relevant intelligence delivered to them when

they need it and how they need it.

WATGOver the course of the last six decades, WATG has become the world’s leading design consultant for the hospitality

industry. Having worked in 160 countries and territories across six continents, WATG has designed more great

hotels and resorts than any other firm on the planet. Many of WATG’s projects have become international

landmarks, renowned not only for their design and sense of place but also for their bottom-line success.

www.watg.com

BRAnDInG

What is it exactly that a hotel brand represents ? As JAMES STUART, Managing Partner of THE BRAND COMPANY in Hong Kong, explains, it’s not about the name and the logo but has everything to do with the customer experience. The CEO, he argues, must become the Chief Brand Officer.

« Inside-out brands »

OK, so the first part of the logic goes something like this :

a brand is a hotel company’s most important competitive

advantage because it’s pretty much the only element of the

entire customer experience that cannot be copied. In this age

of relentless technological catch-up, leapfrog and product

innovation it’s nigh-on impossible to stay ahead of the

competition based on what you do. You may be the best value,

most efficient, best located, most « wired » and best equipped

hotel now, but someone round the corner is inevitably looking

at, and about to improve on, what you’re doing as we

speak (and if you’re in China – as I am – it was probably done

last week).

A brand, on the other hand, is related more to the way you

do things, and if this brand is built on the unique culture,

relationships within and heritage of the organization (as, in

part, it should), it cannot be copied, however hard technology

tries to invent some kind of culture-copying software. Culture

is too, well, human for that.

Now on to part two of the logic-flow : the simple definition

of a brand is « a perception » – what people think of what

you do and, more importantly, how they feel about you. So

what creates these feelings ? Everything you do that impacts

on the guest : your products, your services, your processes,

your people and the rest. That being the case, it seems

to follow that you first need to create a brand-centered

organization, effectively and consistently capable of delivering

a style of customer experiences that creates the desired guest

perceptions of who you are, what you do and the way you do

it (your brand).

Wow, so this brand stuff is really about shaping organizations

and the entire guest experience ?

Yes.

Cool, so I guess the hotel company CEO always plays the crucial

role in conceiving and implementing brand strategies, both

within the organization and to customers ? I mean, she or he is

always the driver of the brand, right ?

Er, well, often, not really…

And the brand strategy is pretty fundamental to a company’s

financial health in the long-term, so I guess that people like the

HR Director, the Finance Director… in fact, come to think of it,

all the departmental heads in a hotel group play a pivotal role is

establishing and nurturing the brand ?

Yes and no. Yes, it is crucial to long-term financial well-being.

No, you will usually find ownership of brand strategy and

implementation in hotel groups nestling in the office of the

Director of Sales & Marketing.

Well that doesn’t seem to make much sense… marketing’s only

one part of the mix. Our view exactly.

So why is it that so much brand-related activity seems to

focus on names, logos and advertising ? The answer can be

traced back several hundred years to when farmers stuck

hot « branding » irons onto their cattle, leaving a scar that

differentiated one owner’s cows from another’s. In the mid-

19th century, companies started using the term to describe

the symbol (subsequently « logo ») that differentiated their

products from others’.

All this was OK as a means of naming and packaging

differentiation : after all, many beers, toothpastes and cooking

oils were similar, so branding-as-packaging was fine. It was

often the key point of difference.

But then – just to make the whole branding thing a damn sight

more complex – in the latter decades of the 21st century, along

came the concept of corporate and service brands. Consumers

started caring about the values and ethics of the companies that

supplied the products they were buying. And as service brands

emerged, it became clear that the contents inside the can (the

organizational culture and the manner of dealing with customers)

was a huge point of differentiation. In other words, the packaging

became disproportionately less important as the distinctiveness

of the customer experience became much more so.

But the brand industry (and many of its clients) merrily carried

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on treating brands as packaging and making advertising

agencies and identity consultants very wealthy. It just seemed

too complex to change the brand-as-packaging method

into a brand-as-customer-experience approach, particularly

for communications and design specialists and marketing

managers, who were generally not well versed in the finer

points of Organizational Analytics and Change Management.

And the hospitality industry seems not to have escaped this

wrapping-paper approach to brand development. Think of a

great name, craft a sumptuous logo and create some exotic

advertising, and there you have it : your brand. All of which

leaves the brand strategy completely unconnected to the rest

of the organizational constructs and customer experiences.

But… a glimmer of hope is appearing as we head towards

the second decade of the 21st century, often in the guise

of smaller, newer hotels or hotel groups, who seem to be

recognizing the huge challenges but undeniable logic of a

brand-centered approach to organizational management.

In September 2009 we interviewed 30 entrepreneurial hoteliers

from across Asia. We wanted to know what it was they

were doing to create brands that were often punching above

their weight.

The chart you see here is a summary of one of the key outputs

of the research. The interviewees were asked what they felt

were the key drivers of brand perceptions among their guests.

As you’ll see, top of the pile came People and Products, while

bottom of the heap came Logos (and related designs) and

Names. Bear in mind these were relative ratings : we’re not

trying to suggest that the right name and logo is unimportant.

But these results turn traditional brand-thinking on its head :

brands are about what you do and the way you do it, not the

way you wrap it all up with a nice pretty ribbon.

So what else did these 30 brand pioneers have to say ?

Style more than standards

The industry needs to stop obsessing with standards and

become more focused on nurturing a unique way of operating

within the organization and a unique style of delivery to

customers. Of course brilliant basics are critically important.

If you don’t have them, no one will care what your brand

is all about, but they are simply points of entry that can be

copied by others. Many talked of the decades-old star rating

system as an albatross round the industry’s neck. Is it five-

star ? I want to build a four-star ! These ratings have become

meaningless nowadays anyway as many dream-mongering

hoteliers have stretched the credibility of the descriptions of

each rating beyond the point of no return. But in any event, the

rating systems never gave consumers clues about the nature

of the experience they would receive : i.e. their key points of

differentiation. Brands do.

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BRAnDInG

BRAnDInG

The brand and the organization are inseparable

« Our brand started with a clear idea of what and how we

wanted to be and was then woven into every part of the

fabric of the company. We’re first and foremost a culture as a

brand….it guides the way we do things internally which gives

us a great platform for expressing the brand consistently

and believably to our guests, » said one of the hoteliers we

talked to.

It’s about instilling a strong sense of brand from the word

go and holding true to the essential principles that bring the

brand to life, regardless of who is steering the ship at a given

point in time. We sense that a number of larger hotel groups

either lacked a strong brand culture at their outset, or did not

« bottle » and hold on to what made them special, different

and valuable in the first place. If you don’t know what it is that

makes you special, it’s much more likely that you’re going to

lose it, without realizing that you have.

The message from the group we spoke to ? For the customer

and the brand to be as one (in other words creating a strong,

lasting bond of trust), the organization and the brand first

needs to be so.

Brands, culture and service must share the same bed

How many hotel organizations actually align « people

processes » with « brand development » ? If your people are

at the heart of driving brand perceptions, isn’t this is critical ?

Surely the head of People Development (HR) should be one of

the most important brand drivers in the organization ? Stop

for a moment and consider to what extent the person or team

responsible for « human capital » in your organization is able

to help inspire and nurture a brand-centered organizational

culture. It’s the view of many of the interviewees that precious

few HR people understand and have the skills for such a

task. They’re not particularly brand-literate. That’s not to

criticize HR folks : it’s just that they’ve rarely been asked to get

involved in brand matters. It’s the responsibility of those who

lead organizations to make sure that those responsible for

« people » within an organization are just as responsible

for « brand ».

The majority of those we spoke to don’t believe many hotel

groups align any aspect of « people development » with their

brands effectively. Likewise, our own experience suggests that

large numbers of hotel groups rather blithely say that their

service people are their most important brand-builders, but

when you scratch the surface there’s precious little going on to

ensure that the unique qualities of the brand have found their

way to the mindsets, attitudes and behaviors of the service team.

A number of smaller, newer hotel groups are hiring people

based on behavioral principles that underpin the uniqueness of

the brand: in other words hiring more on attitude and mindset

than skills and experience – and often hiring from outside the

industry. Likewise for coaching and performance management

systems : these companies are nurturing and measuring styles

of behavior, not just tangible results. In the end, what these

companies are simply doing is trying to measure the way

in which every individual in the team is reflecting and

expressing the very thing that makes the organization special

and successful.

Why would you not want to be measuring and rewarding that ?

The CEO is the CBO (Chief Brand Officer)

David D’Alessandro, former Chairman and CEO of John

Hancock Financial Services, said in his book « Brand Warfare, »

« The safekeeping of the brand is the CEO’s responsibility.

If a company is going to be successful in the long-term, the

CEO’s first concern has to be the brand. Brand has to trump

even short-term financial questions, because all the financial

measures, everything from market capitalization to margins are

directly affected by the health of the brand. »

We hear CEOs from across many industries saying they are the

ultimate brand manager. Yet, in many cases, they are confusing

« brand » as a description or name for the organization with

« brand » as a definition of what the organization stands for

and what the nature of the relationship with customers is all

about. Far too many leaders are referring to the former, with

little clarity about what their brand is all about and even less

what their role is in shaping and building it.

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The simplest way of looking at the value of the hotel CEO’s

role in shaping and building the brand is to consider what

happens if he or she abdicates this responsibility. The result is

that it gives everyone else in the organization an excuse not

to be a brand builder : department heads, team leaders, new

recruits, part-timers. If the CEO isn’t living the brand, then why

should they ? It’s obviously not important to him or her, so why

bother ? And if the people across the entire organization are

not living the brand, then we would argue that you have no

brand at all. You simply have a commodity that will never allow

you to realize your financial potential.

Deliver on your promises

Karl Popper once said, « Those who promise us paradise on

earth never produced anything but hell. »

It’s not only the hospitality industry that makes extravagant

promises, but it’s up there with the best of them (or the

worst, depending on whether the promises are kept). Take

these statements from hotel groups : « When perfection is

perfected », « The utmost in Asian hospitality », « A unique

refuge of timeless elegance, unwavering taste, and unrivalled

care and courtesy that simply cannot be found elsewhere »,

« Guests discover more than just a new destination. They

discover a new way of seeing things. »

Well, OK, no one is actually promising paradise, but these are

some pretty weighty commitments. We picked these out as a

sample from an industry that is full of lavish pledges. There are

many more from around the world. If the brands making these

promises deliver on them, that’s fine, although one wonders

how some of them can ever be delivered.

Our thirty interviewees felt that the discrepancy between

promise and delivery was a major weakness in the hotel

industry as a whole and reinforces some of the views expressed

earlier about treating brands as packaging rather than as a

driver of all the organization does and the way it does it. If the

brand, the organization and the customer experience aren’t

interlocked, then it’s hardly surprising that promises made

through external communication are often left undelivered by

the reality of the experience.

Many of them felt that far too many marketing promises create

unreasonably high expectations in terms of quality (for example,

the ubiquitous « world class luxury »), yet they are ultimately

bland and indistinct, leading to a fuzziness in customers’ minds

about what kind of experience they will receive. Fuzziness and

powerful brands don’t make good bedfellows.

The bottom line is you cannot say one thing and do another,

be it over-promising or making a promise that’s impossible to

decipher. If promises are broken – as between friends – it’s a

long, hard and expensive road back to re-building trust again.

HOTELyearbook2010

BRAnDInG

2010 crystal ball-gazing

Emerging markets, led by China and India in terms of scale,

are increasingly driving the hospitality agenda. One of the

most refreshing things about new markets is that they don’t

so much have to unlearn things as create things for the first

time. Although hoteliers in these markets may not always be as

sophisticated as their counterparts in developed nations, they

come to the table armed with two invaluable assets.

First, a relentless drive to succeed.

Second, an insatiable to desire to learn and improve on what’s

gone before.

China is sometimes depicted as a nation hell-bent on growth.

That’s partly true. But my experience has revealed a very

different side to the world’s most populous nation : a desire

not just to learn, but to create. Contrary to much mainstream

rhetoric, China is not just a country of doers, but a nation with

a growing number of inventors.

So if you assess the hospitality opportunity in China and add

in to the mix the relentless drive and inventiveness of the

Chinese, what do you get ? A fast-growing, but potentially very

different kind of hotel industry and one that wants to build on

the successes and avoid the weaknesses of the current crop of

Western-based global players.

In the last year I have got to know two delightful Chinese hotel

entrepreneurs. One runs a single luxury hotel in Hangzhou ; the

other is the COO of a nationwide budget hotel group which has

grown to 600 properties in 7 years (last year was a « slow » year

according to the COO : they only opened 120 new properties).

I mention these two individuals as they are united by more than

hospitality and nationality. They both share a fervent belief in

and desire to build their brands from within their organizations.

They see « brand » as fundamental to everything they do and

the way they do it. It is central to what they see as their path to

success. They understand the logic of what one of them calls

« inside-out » branding and are determined that their brands

become a way of life for those who work in the organization as

well as their guests.

Yes, China is still full of copycat brands and piracy, but we

see an increasing level of smartness and sophistication in

planning and execution in the hospitality industry in the PRC,

creating brands that are far removed from the world of pirated

fakes. They may not all work perfectly, they may not all be as

consistent as their polished western competitors and things

may occasionally fall off the wall because the construction

schedule was mind-numbingly frantic. But they’re learning and

changing fast and their focus is increasingly on where their

points of difference and advantage are. More and more of

them are seeing that this lies with their brands and that their

brand engines lie deep within the soul of their organizations.

Many predictions of the expansion of Chinese, Indian and other

emerging markets-based companies into regional and global

markets seem to be based more on the enormous scale and

speed of growth of those companies in their home markets :

in other words if you’re big enough, fast enough and wealthy

enough, you’ll be successful beyond your own borders. But to

suggest that growth and success will eventuate based entirely

on those factors is a little disingenuous.

The other part of the tale is the agility and inventiveness of

hotel companies in these markets to learn from and improve on

existing hospitality models – fast.

I won’t predict any radical new fads or trends for 2010 (after

all, branding is about the long-term haul), but I would venture

to suggest that as we look back on 2010 in 2020, we’ll view

it as a time when the existing illogical, outmoded and

financially irresponsible approach towards brand development

adopted by many hotel groups finally started to be replaced as

the « way to do branding » by smaller, smarter, entrepreneurial

hotel groups – often conceived and grown in emerging

markets – that viewed their brands as more than contestants

in a beauty pageant.

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