How will the European hotel market react?

When the credit crisis really took effect in the UK, many felt Europe would not be hit as hard. It was not long before the realisation that this was a false hope struck and, in fact, Europe was hit just as badly, if not more so. How do hoteliers in Europe view the summer months ahead – with hope or with trepidation? How have customer traits changed? EP asked a number of senior figures for their thoughts

As we write, it appears as though May is  showing signs of a bounce in the market after what has been a testing time for all.Whether this is a sign of a true recovery  or just a bounce, it is too early to judge. What is certainly true is that few will look back at the last nine months with much enthusiasm. However, many will say that the pain has been worthwhile as it has enforced change and new thinking. However, some senior executives are beginning to talk more bullishly about the  future. gain this may be just fighting talk or a tiredness with talking about recession.

Europe is a complex picture with many different regional variations. It is traditionally a wealthy and robust market, but it was as bruised as any by the crisis. How hoteliers view this market will provide us with an insight as to where the market sits, what lessons had been learned and the changes that were beginning to be seen.

David Scowsill Director at ilG Digital, Director at On the Beach Holidays, Chairman at YuuGuu Limited

“Business and leisure customers are becoming ever more discerning in their choice of hotel, researching properties online before booking direct or through travel management companies. Consumer-generated content on the web cannot be underestimated – travellers need to view their prospective accommodation choices and will be influenced by recommendations from ‘like-minded’ people. Assuming that price is not the only determinant, providing rich content on the web and actively participating in social networking sites will be a key differentiator coming out of the recession.

“Now is a great time for hoteliers to take a hard look at their pricing and distribution strategies. Which tour operators or corporate travel management businesses are key? And which channels of distribution do they want to grow? Building deep relationships with key sources of supply is critical in a downturn, so that you can drive forward together when the upswing comes.”

Jim Fitzgibbon President, Worldwide Hotel Operations, Four Seasons Hotels and Resorts

“There’s no question that our industry as a whole has been affected by the current economic environment. Our approach to business at this time is the
same as always – to provide our guests with the consistency and excellence they have come to expect of Four Seasons. Providing exceptional experiences to our guests is a fundamental part of our business model and the foundation for success, through good times and bad. In times of uncertainty, our guests value the reliability and care that we provide; trust is more important than ever.

“Our foucs continues to be on providing the services our guests need to be productive when they stay with us on business, and to focus on family and loved ones when on vacation. Whether it’s 24-hour room service, one-hour pressing, complimentary shoe shine, overnight laundry, complimentary children’s programmes – all of the services we provide add up to a valuable support system allowing our guests to  spend their time with us effectively. Every travel experience matters and nothing can be left to chance.

“It’s been reported that many hotel companies are cutting services and amenities to cope with this challenging business environment. This is something we will never do. It is the promise behind our brand name.”

Jean-Claude Messant Directeur Général, Hôtel de Crillon, Paris

“The reservations pattern is changing and there are  far more bookings at the last minute. Guests are ready to take a gamble. This means that loyalty trends are
changing compared to two to four years ago. I am not saying that customers have no loyalty now, but the majority will shop around – both leisure and business clients.

“Our sources of business are changing too; some, like the American express FHR programme, are adapting quicker and show increase. Others with a more ‘old-style’ approach are in danger of losing out if they don not adapt to new trends, flexibility and new customers’ expectations.

“The recession is accelerating the shift from the ‘old-style’ model towards the increasing importance of technology and online bookings. The crisis has hit all levels from one-star to five-star establishments, and the pattern is emerging towards far more direct bookings. Where it was previously about 8-10%, it is now 15-25%.

“In terms of pricing, we are not dropping our rates but seeking to add value, such as providing free airport pickup, internet service free of charge or offering a free mini-bar. However, eventually rates will reduce across the entire industry. A corporate traveller who was paying €350 per night might now only want to pay €280-€300 per night. Whether we agree or disagree, the industry has driven rates upwards. The customers are now in the driving seat.

“While price is important, so is value for money. There are still customers, but they are picking and choosing, so managing expectations is paramount.”

Marcus van der Wal General Manager, Kempinski Hotel Corvinus, Budapest

“The world of business is changing here. Hungary as a destination is changing and there are different sensitivities to take into account. However, the recession has had its positive aspects because it forces people to think differently where they may not have been willing to do so before – and now we can try new concepts.

“We have adapted the structure of our hotel to a more Western style of operations, using fewer staff and less food and beverage, while introducing more outsourcing. Previously this would have been impossible; now hotel owners are willing to take on these ideas and adapt to meet client wishes. It has been a wake-up call. During the past two to four years there has been more segmentation in the five-star market in Hungary because we have had to cope with needs of business people.

“Revenues are down between 30-40% in Hungary, so the recession has hit hard, but there is an opportunity to change. Looking to the long term,  e have seen large groups and conference markets disappear completely this year, while those who do come have been distributed between existing hotels.

“In addition, Eastern European countries such as Hungary have challenges with both economic and political stability, which impacts the industry. Individual corporate clients will still need to travel. There is only so much teleconferencing or emailing you can do; it does not replace face-to-face communications. We see smaller  group bookings and leisure customers returning, though we predict they will be extremely price-sensitive.

“In some instances I am hearing that it is possible to get a five-star hotel for less than €100 per night. It’s  very difficult to run an operation like a five-star traditional hotel for this type of cost. On the other hand, people will just go elsewhere. Due to the low prices available, Budapest as a destination should be able to compete with Europe’s other capitals.”