There is a new wind blowing – perhaps a cold breeze of change?

It looks like a new era is fast approaching in the hotel industry and this has worrying implications for professional hoteliers, General Managers in particular…

The purchase and acquisition of a number of medium sized international hotel companies by the industry megaliths over the past 18 months has resulted in an unprecedented consolidation in the global hotel industry. The most notable of these transactions being the Marriott acquisition of Starwood and the Accor purchase of Fairmont-Raffles & Mantra Group (Australia).

To date, this consolidation has received remarkably little interest from the media, travel industry and the public in general, but potentially could have a significant effect on the industry.

These new mega hotel companies continue to disguise their market dominance by creating a myriad of ‘soft brands’ to give consumers the illusion of choice, for example Marriott list more than 30 different brands on their website, whilst Accor has 23 (without the integration of Mantra at time of writing) and these continue to grow.

However, with such large sums of money expended to make the purchases, it is inevitable that they will use their market dominance to recoup costs and attempt to increase profit & return to shareholders.

Who will suffer from this change you ask?

Well, consumers and employees are the obvious and initial ‘low hanging fruit’.

With reduced competition, consumers will inevitably see prices rise and service fall over time, but from an industry centric perspective, the impact on employees could be more serious, as the pressure to reduce overheads intensifies.

First to feel the impact has been the various specialist and regional head offices roles such as senior marketing, sales, operations & finance positions, as offices are centralised and reduced. This process has commenced, but is far from over, as it takes time to increase influence over regions and markets.

Next will be the inevitable clustering of positions in areas that have multiple hotels/brands. First to go will be the expensive roles. A hotel with a General Manager will be eliminated and become a thing of the past, with Operations Managers, Resident Managers or Hotel Managers reporting to a Regional Director or Regional GM. These roles will have the same day to day responsibilities as that of a GM, but of course with less pay, perks and authority to make business decisions.

Next will be senior sales, finance, culinary and operations positions, following the same pattern of clustering & reduced manning.

This development commenced quite some years ago in Europe and Australia, and with the “McDonaldisation” of the hotel industry, it is likely to gain momentum as the months and years progress.

What will property owners make of these management changes? Well, as long as their financial returns continue to grow they probably won’t say much at all… How it will work in the long term when one company operates (too) many properties in a city remains to be seen.

Returning to GM’s, we have started to see a number of long serving professionals let go just recently. These are people that have been around for many years and had a certain seniority with their old employer, but sadly, this seniority means nothing with management companies focused on financial matters rather than industry knowledge, skill and the ability to deliver high levels of customer service.

Are we to follow the US standard where you carry your own bags, pick up your ice at the end of the corridor and get fresh bedsheets every 3 days?

Observing how many professional hoteliers have been without work for many months, despite a largely positive looking hotel market, it is with a mixed feeling that we look into the future, particularly in Asia and the Middle East.

The question arises, where will the industry go in the next decade or two considering the changes in the past 20-30 years?

How will all these new large hotel companies respond to crisis situations? For all we know the next global financial crisis could be just around the corner; the stock market could disintegrate, or a war break out in a region that depends very much on tourism and travel. Extreme events illicit extreme responses, and hotel workers are regularly the first to suffer.

There is much to consider and current leaders of our industry (and countries) would be wise to take account of these issues when planning the future of their companies (or economies). We live in the now, but that does not mean we shouldn’t have learned from the past and make sure that a vital employment sector is protected when difficult times arrive.

Foresight, social consciousness and a good dose of common sense will never go astray in good times and ultimately make sure we are safe in bad times.

Then again, if some reports are to be believed, hotel staff are soon to be replaced by robots in any case…

 

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