Kirk Kinsell, InterContinental Hotels Group's president for Europe, Middle East & Africa, explains why smart brands invest despite the slump in business demand.
"In the toughest year on record, people are travelling less and looking for real value, driving room rates down. There has been a huge slump in business demand and our franchisees are hit hard by the downturn and having to deal with increased regulation like the Carbon Reduction Commitment. Realistically, it could be two years before people are travelling as much as they were pre-recession.
Despite all this, the industry's long-term future looks strong. At InterContinental Hotels Group, we're planning and shaping our business for the recovery when it comes. We're opening a new hotel a day around the world, meaning we have the industry's largest hotel pipeline.
There is a lot of pressure on our franchisees, many of which are small- and medium-sized businesses. We need to work as a partner to support them.
So, how do hotels survive? Focus on the guest experience or reduce costs? The solution is straightforward - they must do both.
You can't sacrifice quality by cutting costs. In tough times, smart brands invest. In spite of the recession, we're pushing ahead with the relaunch of more than 3,200 Holiday Inn and Holiday Inn Express hotels around the world. Relaunched hotels are already reaping the benefits with a revenue per available room (revpar) outperformance of more than 5% and improved levels of guest satisfaction.
So how do you reduce costs without impacting the guest experience? This year we rolled out Green Engage to help our hotel owners measure, manage and reduce energy consumption. We already have 900 hotels signed up to Green Engage. We expect to save an average hotel up to a quarter of their energy use - helping the hotel save money and helping the environment.
At the same time, guest satisfaction scores are on the rise. We are also working with our owners to look at cost of sales in revenue production to deliver better margins. Recovery will come quickest to the hotels that can deliver a better guest experience and reduce costs."