Georges Panayotis: Tables have turned and the market righted

Life is an eternal new beginning, but the cycles follow one another with changes we may learn from. Forty years ago the advent of hotel chains and their economic model adapted to the 20th century cast a cloud over the community of independent hoteliers. With an innovative, standardized, secured, marketed product, hotel chains drew customers toward them that were looking for a good value for price and a pertinent location along communications axes and in business centers.

In order to provide countries with the modern hotel supply needed to assuage their ambitions for tourism, public authorities have facilitated development and provided subsidized loans while inflation equally lightened the cost of reimbursements.

The Poujadist reaction of so-called independent hoteliers was all the more vehement since the State no longer wanted to close an eye on a gray economy, fed by cash flows and arrangements with taxes and social charges. Through the transparency of their computerized management methods, chains seriously upset an ancestral model and also attracted a new clientèle that had never been tempted by commercial accommodations, due to a lack of means or desire.

Forty years later, a new revolution has upset a model that had gotten a little too big. The quest for optimum profitability, the increase real estate, fiscal and social charges, real estate speculation and many other independent factors of the market have led the hotel industry into an inflationary bubble that the "sharing" supply is painfully reabsorbing.

The pattern is comparable with newcomers that are appreciated by clients. These new actors shrewdly play on the rejection of a certain hotel supply that saw its price skyrocket with the supply shortage, whose quality was damaged by the absence of regular capex. The backlash is brutal and severe, but is it time for a war?

Legislators will always lag behind societal changes and, while it is necessary to guarantee fair competition, the State will dictate the behavior of and choices made by customers. Regulation is necessary and possible through the intelligent application of existing laws and regulations. Cooperation between all members of the Hospitality family will be more efficient and beneficial than rear guard action.

The essential marketing principal in which supply creates demand may also be applied to the New Economy of Hospitality. Not all AirBnB guests have been embezzled from conventional commercial accommodations, although the impact on occupancy rates is real. The cake has generally been growing over the years and the hotel industry must ask inquire as to why its relative market share is down.

Adjustments are underway and involve strategic considerations. We are already creating a trend among leading hotel groups that are focusing on the strength of their distribution, globalization of their presence and multiplication of management and franchise contracts to accumulate a maximum of fees. Those that will be outpaced in the race for size may opt for the niche market, by recovering what brings strength to the hotel trade through lifestyle, hybrid and avant-garde concepts. On the other hand, banality and mediocrity will have trouble finding takers.

New alliances should not be excluded, partnerships between old enemies are even desirable provided the customer finds what he wants. Because there is one truth that has not changed in the last forty years: the market will always have the final say.

Source: Hospitality On

GEORGES PANAYOTIS, PRESIDENT & CEO - MKG GROUP

Georges Panayotis is President of MKG Consulting. Born in a family of hoteliers for three generations, Georges Panayotis, 51, left Greece at the age of 18 to pursue his studies in Political Sciences and to obtain his Master in Management at the French University of Paris Dauphine. He then joined the Novotel chain, which will become the Accor Group, to manage the International Marketing Division. After developing specific marketing tools for the hotel industry, he left the group in 1986 to start his own company, MKG Conseil, now MKG Group. In twenty years, the group has become the European leader in studies and consulting for the Hospitality industry. The company employs over 100 people in four departments: marketing studies, database, quality control and trade press, with two publications HTR Magazine and Hotel Restaurant Weekly. The company helped the development of over 2,000 hotels in France and in Europe, with offices in Paris, Cyprus, London and Athens. Georges Panyotis is the founder of the Worldwide Hospitality Awards and the Hotel Makers Forum, and the author of several publications on Marketing and Operations in the hotel business, He is a regular consultant for several television channels, among which Bloomberg Television, and radio networks.