|ALEXANDRIA, VA – February 5, 2002 – Members of the International Society
of Hospitality Consultants recently released its annual Top Ten Issues
and Challenges for 2002.
Each year, the ISHC polls its members as to the issues and challenges most relevant to the hospitality industry in the coming year. Once individual members have submitted their ideas, a “ballot” is circulated to the membership listing all of the current submissions as well as the Top Ten from the prior year. Each member can vote for ten issues, finally resulting in the identification and ranking of the current Top Ten.
Not surprisingly, the Top Ten for 2002 showed radical change from the 2001 list. Only two of 2001’s issues rolled over to this year’s list:
ISHC’s Top Ten Issues and Challenges for 2002
#1 Survival in a Down Cycle
Relatively few managers have seen a down cycle as severe as the present one. Until recently, cost containment wasn’t much of an issue, as even badly managed properties earned their mortgage payments. The current economy/disaster combination proved that even well managed properties could be devastated.
#2 Building Travel is THE Critical Issue Facing the Industry
To fill vacant hotel rooms, it is critical that people be encouraged to resume traveling. But “travel” may not be the same after 9/11. There may well be a permanent shift away from air travel and toward other forms of transportation such as rail, bus and automobile. Understanding changed attitudes and travel patterns, and perhaps repositioning hotels to meet changed needs, are key steps in removing barriers to travel.
#3 The Balance Between Profitability and Service
After September 11, there have been numerous layoffs in the hospitality industry. For an industry that is based on "service", how will employee layoffs impact the guest experience? In an industry where quality of service is already an issue, will guests notice a service reduction? While hotels must be able to pay their bills, managers must be careful not to impact the guest experience. Guests who are not satisfied do not return, having an adverse impact on the hotel over a much longer time frame.
#4 Rampant Discounting is a Long Term Threat to the Industry
While hotel industry occupancy may recover relatively quickly, the prospects for average daily rate recovery and growth are dimmer due to:
Money for new development is virtually non-existent and construction will slow considerably. This will benefit existing hotels by limiting new supply. Capital, however, is also difficult to obtain for existing properties that will need capital to renovate and remain competitive or to refinance upcoming loan maturities.
#6 Development of Better Key Indicators and Analysis Tools
In light of the financial challenges that many hotels are currently facing, it is critical that hotels develop a better ability to monitor and analyze key performance indicators and trends to support their strategic decision-making.
Three of these indicators are:
A key issue in the current environment is the whole process of remaining solvent. Whether it is managing a workout process, restructuring loans with lenders, threatening or conducting a foreclosure or bankruptcy process--all of these potential outcomes/processes will keep hotel owners, lenders, investors and consultants busy in 2002. How the process plays out in the courtrooms and conference rooms will certainly affect the ownership and financial structure of the industry for the foreseeable future.
#8 Finding, Training, Motivating, and Retaining Capable Employees
With unemployment at or near all-time lows the management and hourly pool from which the hospitality industry draws employees has many choices. If we compete for them as we have in the past (i.e. – do not improve the appeal of our industry), we are unlikely to attract and retain employees who can and will deliver the service message we expect.
#9 Brand Impact As Hotel Companies Become Increasingly Multi-Branded
As markets become saturated and hotel companies seek new development opportunities for themselves and their franchisees, the classic issue of impact arises. The issue has grown now due to the expansion of concepts and sub-brands which fall under the same corporate identity. Also, through mergers and acquisitions, multiple brands are now clustered in the same corporate structure (i.e., Starwood, Hilton, etc), and they are utilizing the same reservation systems. How will existing franchisees (pre-merger or acquisition) be handled, how will the brands be distinguished, how will impact be measured, and how will existing geographical brand exclusivity be preserved? How will franchisees be ensured that their rights and benefits are protected from inside competition?
#10 Hotel Value Decline
The poor economy and events of September 11th will likely mean a sharp decline in hotel values and a sharp increase in “distress sales”.
ISHC members’ clients include domestic and international, public and private hotel owners and investors, many leading financial institutions, Fortune 500 companies, universities, state, national and international convention, hospitality travel and tourism bureaus.
|Also See||Hotel Investments: Challenges and Opportunities / Lori Raleigh / Feb 1999|