The travel and tourism industry has outperformed the global economy in 2012 – growing faster than manufacturing, retail, financial services and communications and contributes 9% of total GDP, 5% of total investment and 5% of world exports.
The second day of the 16th International Hotel Investment Forum (IHIF) featured a session dedicated to Aligned Advocacy which was chaired by David Scowsill, President & CEO, World Travel & Tourism Council (WTTC) who was in conversation with Martin Craigs, Chief Executive Officer, Pacific Asia Travel Association (PATA), Paul Griffiths, Chief Executive Officer, Dubai Airports, Joseph McInerney, President & CEO, American Hotels and Lodging Association (AH&LA) and Thomas Windmuller, Corporate Secretary, International Air Transport Association (IATA). Craigs, who has been PATA’s CEO for 15 months, began by explaining that PATA, a global organisation with over 2,500 members comprising 42 member destinations and their airlines, hotel groups, tour operators and travel agents, stands for aligned advocacy. Craigs believes we need to “show governments we speak with a single voice” and we must convince them that we are not a “fluffy industry”. Paul Griffiths warned that “the threat from lack of growth in the airport sector will have an impact on the entire travel industry, including hotel development”.
All panellists agreed on the interconnectivity throughout the travel and tourism sector and the significance of the sector to the economy. The travel and tourism industry has outperformed the global economy in 2012 – growing faster than manufacturing, retail, financial services and communications (WTTC) and contributes 9% of total GDP, 5% of total investment and 5% of world exports. There remain obstacles to the future growth of our industry though and these are;
- Restrictive visa regimes
- Punitive taxation levels
- Connectivity (infrastructure and open skies).
In an attempt to combat the above, a global travel and tourism coalition was formed in November 2011 to focus on these issues and work towards a solution. Tom Windmuller urged authorities to make it as easy as possible for people to travel. Paul Griffiths pointed out that visas originated out of a need for national security. This objective clearly still remains but needs to combine with automated systems to speed up the application process for individuals. The conversation turned to some government’s argument that by altering the existing visa regulations, countries are put at increased risks of terror threats. Scowsill pointed out that the majority of terror threats are home grown and this argument is a convenient smoke screen for authorities to hide behind. Joseph McInerney pointed out the need to lobby congress, senators and administrations as Presidents and Prime Ministers will only be around for four years. Paul Griffiths asked whether we may be missing a trick by being too nice and maybe there is a need to unsettle people to this problem. “Bad news has big impact and we, as an industry, need to vocalise the negative impacts being put upon the travel and tourism industry”.
Joseph McInerney finished off the session by pointing out that the widespread use of social media will force the policy makers to sit up and listen. He observed that social media mobilises voters and policy makers and politicians listen to voters as they ultimately effect whether they will still be in their seats in four years time.
The CEOs’ perspective on the global challenges facing the hotel industry was moderated by Nick van Marken, Global Head – Advisory – Travel, Hospitality & Leisure Industry Group, Deloitte LLP. He was joined by Chris Nassetta, President & CEO, Hilton Worldwide, Richard Solomons, Chief Executive Officer, IHG, Arne Sorenson, President & CEO, Marriott International, Inc and Frits van Paasschen, President & CEO, Starwood Hotels & Resorts Worldwide, Inc.
Sorenson responded to the initial question of whether enough governments “get” travel and tourism as part of trade; “they are getting it. It’s important for them not just to view travel and tourism as an export but as easy economic growth”. He also said that people always want to travel to the most compelling destinations which is good news for Europe’s future. Van Marken asked Nassetta how the hotel industry gets the governments attention and he stated that the long term goal was smarter visa regulations with a move towards a global visa policy but that “it was a game of inches” and small changes so have important impact on the industry. Solomons believes that the UK government are “listening but not hearing” and agreed that whilst London was still a desirable destination, visitor numbers weren’t reflecting this. He is disappointed by the progress of the UK government. Van Paasschen agreed that travel and tourism is an easy way for governments to improve employment numbers in countries and referenced the good work that has been done in Thailand, Morocco and Mexico in achieving this. Van Marken observed that “”travel and tourism industry saves the world” seems to be the message here”. Arne Sorenson calculated that between the four brands on the panel there were approximately a million people wearing a brand badge every day and if all these people loved their jobs and vocalised this then that was a great message to share. He felt their role was to ensure they did enjoy their jobs and to do this they, as employers, need to ensure they are well paid and receive good training and support. Van Paasschen said there were important issues from a political and fiscal stand point that Europe needs to decide on and whilst there has been some progress, there are big decisions still to be made. Starwood’s position was that there is nowhere better than the key European cities to be. He also observed that when hotels are empty, that is the time for capital investment and he is sceptical that 2013 will be the year that Europe solves all its problems.
Turning to Asia, Solomons believes the “pendulum of global activity is swinging East” and IHG remain very bullish in the mid to long term in China. He believes that infrastructure development remains important in creating urbanisation for hotel development to thrive. Sorenson sees the key to Marriott’s success as “people, people, people” and there is a deliberate move within Marriott to move the “rules and power” outside the corporate headquarters in the USA. When asked how he deals with uncertainty, van Paasschen replied that “increased risk occurs in tandem with many other things” and he believes we are “on the cusp of a golden age of travel”. Hotel companies must focus on technology and connectivity as this is what the guests want. All panellists concluded the session on a positive forecast for the future of the hotel industry, in particular Nassetta who said “the next 10-20 years are going to be spectacular for our industry”.
Other news from day two at IHIF includes:
- Marriott International launched, at IHIF Berlin, a new brand called MOXY HOTELS. The hotels are being built by Inter Hospitality Holding – an arm of the IKEA group. Moxy Hotels will debut in Italy, with the first Moxy Hotel expected to open in Milan in May 2014. Moxy Hotels is Marriott International’s first entry into the economy, 3-star hospitality segment in Europe. Marriott plans to add 150 franchised Moxy Hotels in Europe over the next 10 years, aiming for locations in Germany, Austria, United Kingdom, Ireland, Belgium, Italy, The Netherlands, Denmark, Finland, Norway, and Sweden. The new brand will fuel Marriott’s companywide growth in the region, which is expected to reach 80,000 rooms by 2015.
- InterContinental Hotels Group (IHG) has signed a franchise multiple development agreement (MDA) with Regional Hotel Chain, a portfolio company of VIY Management to develop 15 new hotels in Russia by 2019, which, when opened will double the size of IHG’s estate in Russia and introduce the Holiday Inn Express brand to the region for the first time.
- Hilton Worldwide today announced they are set to open 10 new hotels in Central Europe through a strategic development agreement with hotel specialists, Foremost Hospitality Management GmbH (Foremost). The hotels will join under the economy and mid-market brands Hampton by Hilton and Hilton Garden Inn.
- Yoo Hotels launched two design-led hotel brands for smarter travellers; yoo and yoo Collection, at IHIF Berlin. With the launch of these brands, yoo brings a complete hotel offering to the market.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
