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In the second of this special two-part feature series on the future of hospitality, we talk industry disruption with Jonathan Humphries, who heads the specializations in International Hotel Development and Finance for both the Bachelor’s and Master’s Programs at Glion.

A recent visit to ITB Berlin, the international travel trade fair, gave Jonathan Humphries all the proof he needed that the world of hospitality has become a very different place.

“The fair incorporates a large exhibition hall and, in the past, this would be full of hotel brands demonstrating their latest room or F&B concepts,” he explains.

“This year, that same hall was almost entirely made up of technology companies. These ranged from global players such as Google through to a host of smaller players and start-ups. They were showing automated concierge services, property management systems, consumer measurement interfaces, and so on. The possibilities for hotel owners and guests to interface with technology today seem almost endless.”

For the established hotel operators, already dealing with disruption from homesharing and online travel agents (OTAs), this represents another significant challenge in the in-tray.

“Everyone is trying to take a slice of the customer journey, whether it’s before property, on property or after property,” says Jonathan. “If the traditional hotel players don’t move fast and don’t adjust, they are going to see their business taken away from them piece by piece.”

In the words of Arne Sorenson, President and CEO of Marriott International, it is “absolute war for who owns the customer”.

WeDisrupt

Adding to this mix is the inexorable rise of co-working/co-living concepts, a global charge led by WeWork. Still less than 10 years old, WeWork now boasts 425 international properties and counting, with the company quoting a total occupancy rate of 90%. WeWork is reported to have filed for a stock exchange listing in the United States, and it was recently valued at close to $50 billion by one of its key backers, Japan’s SoftBank.

Not content with ‘owning’ the co-working space, WeWork has also launched a co-living brand, WeLive. This offers fully furnished apartments and flexible rentals, with the promise: “All you have to do is show up with your suitcase”.

“I think what we are seeing here plays to a broader evolution within the global real estate sector – one that’s being driven by consumer trends,” says Jonathan. “There’s historically been a division between hotels, offices, residential and retail, with different investor groups connected with those assets.”

“What’s happening now, though, is a growing appetite for mixed-use ‘community’ developments; where inside one building you will have a blend of hotels, retail, micro-living, co-working, serviced apartments and so on.”

“The key anchor for all this is a service ethic and offering which should be second nature to a hospitality operator. And this represents a huge opportunity for the hospitality industry, to take charge of offering hospitality services into this mixed real estate environment.”

Hospitality giants fight back… by their own rules

Faced by the twin disruptions of digital technology and changing market dynamics, the major hospitality operators are fighting their corner. Intriguingly, each is following its own path and applying its own corporate ethos to these efforts.

Hilton, for example, is focusing on its strengths in ‘fulfilment’. As CEO Christopher Nassetta recently told the travel portal Skift, “We’re not trying to compete with Google, Amazon and Apple. Our view is that we’re on the fulfillment side, that we’re the experience. We’re the hearts and souls that make that stay different, and we make sure that product is right, along with the amenities and the service delivery.”

Which is not to say that Hilton is neglecting the call of technology. The company is investing heavily in its Connected Room application, which allows guests to manage room functions through their mobile device. According to Christopher Nassetta, it will allow the hotel guest to “imagine a world where the room knows you, and you know your room”.

For its part, Accor is choosing to fight on opposition turf, using its scale and resources to make inroads into the co-working and lifestyle hospitality spaces. This has been characterized by stake-building in brands such as Mama Shelter and 25Hours Hotels, together with an accelerated rollout of co-working brand Wojo (formerly Nextdoor) with the stated aim of becoming Europe’s leader in this market.

Jonathan recently led a Glion BBA student field trip to visit Accor, which included a stay at its new co-living concept, JO&JOE. “Accor is saying ‘we don’t just want to be about hospitality, but also lifestyle; about the way people live and work’. Their positioning is to offer services and hospitality to the community at large, as well as solving challenges that the community might have around services,” he notes.

“We met with the Accor team which created JO&JOE and they told the students about how they perceive these consumer trends going forwards. They also gave us a fascinating insight into their concepts that will cater for the desires of future consumers to better integrate and connect with the surrounding community.

Marriott International has, to Jonathan’s eyes, made its play on capturing the essence of travel; moving beyond being a pure-play hotel company. He feels this is all about creating the most compelling consumer proposition, through the combination of scale and market power as well as a breadth of offering that plays to every consumer segment.

He says, “While Marriott has made important acquisitions in the hotel industry, most notably Starwood, it has also done things in the OTA space, as well as in homesharing, branded residences and extended stay.

This added scale and broader appeal certainly helps when it comes to negotiations with OTAs. For example, Marriott and Expedia recently concluded a major contract renewal, which both sides are saying is a win: win deal.

Be bold – and the world is yours

What does all this mean for present and future hospitality students? Jonathan thinks the opportunities are potentially greater than ever, but so is the need to evolve.

“We’ve got all kinds of technology companies getting into the hospitality space, alongside property companies looking for hospitality solutions. It’s a fantastic time for graduates to be coming out of hospitality schools with the skills to take advantage of this.

“I also think we will see hospitality education itself evolving. In future we will need to look at the industry more holistically, in terms of all the service offerings that will require the core skills and strengths a hospitality graduate brings.

“The hospitality industry has a history of being a little slow to cotton on to new trends, but we need to get our act together. Because if we don’t create the new concepts and service lines outside our core, then someone else will.

“We have the skills and the talent, the social interactions and the knowledge. It’s all there – we need to be bold and take advantage.”

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About the author

Glion Institute of Higher Education
Glion Institute of Higher Education is a private Swiss institution offering bachelor’s and master’s degrees in hospitality, luxury and event management to an international student body across three campuses in Switzerland and London, UK.
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