Georges Panayotis: Can't scare me!

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Can't scare me!

In the ongoing restructuring of the hotel landscape worldwide, three major models will coexist. Each is representative of a specific strategy that is part of the hotel industry’s recent history.

Historically the oldest, the Western model has evolved out of a blend of the three businesses of investor, operator and distributor that form the foundation of most groups. This division of activities, driven by the asset light strategy, resulted in global giants that primarily focus on operational management on behalf of investors and brand franchising.

With revenues sourced from oil and other primary materials, Middle Eastern sovereign funds have been seeking to diversify their investments as a guarantee, and focusing wholeheartedly on the finest trophy assets in the hotel industry. They thus kept collecting palaces and exceptional sites like so many carefully renovated treasures. At the same time they turned their micro-territories into testing grounds and a showcase for superlatives of luxury. These destinations are regional hubs that have practically risen out of the desert, resulting in a surprising blend of Disneyland and Star Wars.

More recently, Chinese hotel groups have realized the strength represented by a population that has reached the threshold of mass consumption. Growth and expansion, even relative, of a country that has more than a billion inhabitants sends statistics out of control and stimulates entrepreneurial spirits. After a period during which Western groups established their brands and operational services, Chinese hotel groups regained control over their local markets. They took over all the positions in the economy segment prior to investing in other segments today. They decided to follow the flow of Chinese travelers all around the globe by taking over foreign groups that are capable of hosting them. In doing so, they also recuperate all the know-how they were lacking in in order to achieve expertise in all segments.

Can cohabitation continue without resulting in a confrontation between the different strategies, ambitions, economic models? That is the question at hand. Until now, there were alliances, skill sharing, division of roles. Beyond their traditional schemes, based on real estate investors and franchisors, Western groups operated properties financed by sovereign funds that contented themselves with dividends and watching the value of their property rise again and again. But Middle Eastern players shifted from being real estate investors to being key shareholders in the major operators, while keeping a careful eye on business conduct. While the Chinese dragons, which were keeping quiet to avoid frightening their partners, are now spewing forth the cash they had been welling up for years in order to buy market shares.

Now masks have fallen, superficial smiles cannot hide global appetites. The power map is changing, relying as much on flows that circulate throughout each continent as on global traffic. Of the billion international trips last year, only 200 million were Chinese travelers. There are plenty left to fill the properties of Western groups that rely on real mastering of their respective local markets. But haven't they been weakened by lightening assets and focusing everything on operational know-how and the power of their brand? In fact, owners are regaining power, franchisees are questioning the added value of a brand, and online distributors are capturing a strong share of the digital economy.

Chinese groups have presented themselves as efficient partners, veritable white knights with a long-term view and considerable means of investment to offset speculative funds and predators seeking added value. But it is necessary to be clear and anticipate their priorities. The Western model has not said its last word in its self-examination. It is likely that will result in renewed offers and innovative services for new generations, and development of brands that should clearly identify themselves with a complete experience.

In the new landscape that is taking shape, the arbitrage between the models will be largely influenced by the weight of distribution, by the advent of veritable destination marketing addressing a variety of clientele, through the size of networks and power of brands. The competition is open and may the best win!

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.

RELATED TOPICS: GreeceGreek tourism newsTourism in GreeceGreek islandsHotels in GreeceTravel to GreeceGreek destinations Greek travel marketGreek tourism statisticsGreek tourism report

 

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