Innovation – why has the hotel industry missed the train?

Posted on July 6, 2010

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Interested about branding, my eyes always stop on articles about the great brands of this world. If you look at any chart, you will always find that all the brands listed are always brands that came up with great innovations. Whether it is 5 years ago, 20 years or 50 years ago. Each single one of them made a mark in their respective industries by creating something new or unique. It is true for Cocal Cola, Kodak, Apple, Starbucks or Fedex. No matter how great the logo looks, no matter how revolutionary the packaging has been built, a great brand is always a great and innovative product.

I often wonder why no hotel brand is ever listed on these charts. whether it is within the top 50 or top 100. They never make it to the list. Very surprising knowing that the well known hotel brands are in front of everyone’s eyes almost everyday and surely very intimate to any businessman traveling the world and often spending more time in these impersonal hotel rooms than in their own beds. Simply because a great brand comes with great innovation and, for the past 25 years, innovation has clearly not been part of the hospitality industry priorities. The big hotel chains have been busy conquering the world and increasing their market shares in all possible emerging markets. Conquering the world. Opening large luxury hotels in cities that are still struggling to deliver water to all inhabitants’ houses. On islands where permanent job is a very remote concept, in countries where democracy is only a word “from the west”. I guess opening a hotel and planting the flag is an achievement and innovation by itself.

Taking Accor as an example, during their first 15 years, from 1967 to say 1982, innovation was part of their every strategic move. They brought the motel concept into Europe and made it into an “industrialized” concept when they first launched the Novotel brand in France in 1967. Formula 1 where two rooms were sharing one bathroom in order to keep the room rate as low as possible was a revolution. Ibis was at the forefront of the economy sector. What happened to this great energy? Why Accor became one of the least innovative company of the industry?

Look around you!

If you notice, most of the great ideas which have transformed the world are coming from our daily lives. Right in front of us. It just took some clever guys to pick them up. I’m always saying there is nothing wrong about copying. Obviously I never mean to copy ideas from the same industry. Other industries are often a great source inspiration or at least a great source of questions. A simple one: Why does it take 20 minutes to make a hotel check-in with all the forms to fill-out and photocopy to make while it takes less than five minutes to check-in at the airport? Why a hotel lobby HAS to be such a waste of space while airports terminals around the world managed to create enjoyable experiences? Why shopping centers are full of innovative food and beverage concepts but we all have to bear the traditional coffee shops with white table cloths? Why do we have to be welcomed at a massive marble made front desk while all my information can have been recorded in the system during reservation? Why does my hairdresser is offering me a wide selection of magazines but I’m getting only a newspaper on a rack in the lobby? Why Kids Clubs have to be hidden in the basement while all parents are choosing holidays destination based on their kids desires?

What happened?

Anyone can wonder what happened. Was the risk too high?
Was it a too expensive exercise? No tangible added-value?
Who is today able to make the difference between a Hilton and a Hyatt? Between a Novotel and a Holiday Inn? Between a Fairmont and a Shangri-La? Who can say he/she is truly loyal to a hotel brand if it is not for the mileage collected or preferred corporate rates?

The reality is that there is actually no difference in the actual physical products. All senior executives or hotel managers are all coming from the same schools (well known Swiss hotel schools), all grew up with the same core principles, with the same rules and regulations. Reading the same school books. Having worked for the same companies and regularly swapping positions. People, religions, races are mixing. It is the natural evolution of our world. I feel the hospitality industry should also mix and welcome executives from other industries. For its own good. To evolve and grow. Or it will become dull like an old family setting up marriages all within the same class (or worse, the same family).
For sure there is a school book that says that the reception desk must be 1 meter 40 high and stuck against a wall about 50 meters from the hotel entrance. And until someone challenges this rule, any hotel experience will be identical from one another.

The other reason, and probably an impossible one to fix is that now-days, hotel chains are not in control anymore of their own destiny. Any global chain does not own any of their hotels but only manages them; That means any new idea has to go through the hands of either individual owners or property fund. So any Brand Vice-President will not have to only come up with a revolutionary bed, he will not have to only convince his CEO that this new bed will increase the company average room rate by 25%. He will have to convince all individual owners that this is the way forward and make them pay for it (as a reminder, Sheraton has nearly 500 hotels worldwide). Global hotel chains are unfortunately victims of their own success and have built a wonderful business model that makes any innovation or implementation of any great idea simply impossible.

Which means that the big hotel chain have not only setting up a unique business model enabling them to rapidly conquer the world, they have also put in place a formula that has jeopardized the chances of their own industry to evolve and innovate.

Out of curiosity, I have googled “hotel innovation”. The first result was a nicely made website by IHG (Intercontinental Hotel Group) about their new hotel concept based on sustainable development pretending to change the guest experiences. As often, some are mixing-up a great initiatives with great innovations. Note that the Twitter account has been functioning from March to November 2009. Silent ever since.

Is there a future?

I only hope It is only a matter of years until someone comes in and start challenging all of this. This person will need big guts (and big bucks) and go against an army of conservative executives that will do all they can for the venture to fail.
I’m waiting for someone to say “why?”. For someone to reject anything that has already been done before. No big success comes easily. For someone to realize that room rates will not increase unless a desire to book is created. Because we all pay the normal price for something that we need. But we are all ready to pay more for something that we need.

I often think that other industry brands would be the ones that should come in and reinvent the entire thing. Can you imagine how great it would be to have the Apple guys coming in and draw an integrated hotel concept? Having the LVMH brains defining what a French hospitality experience should be? To have the McDonald marketing department telling us what a kids friendly hotel should have and build it upside down? To have the Google geeks explaining what it means to keep it limited to what the client really needs? To have the Amazon system architects telling how a reservation engine should be designed?

In actual facts, all the answers are around us. We only have to pick and choose. And accept the fact that the Swiss hotel school books have been written 60 years ago and challenging them is only what the people who wrote them are now expecting. All it takes is to ask ourselves at every step of the way what the guests actually need, or actually want, before imposing a strict formula.

What is going to happen to the big global chains that are stuck with their existing networks? A market will always exist for them. They will keep growing using very predictable recipes and ignoring the need for innovation. Simply because they don’t have a choice.

Innovative brands will be created from scratch and probably will stay at a reasonable size (below 100 units). Some of them will be very successful. Some will fail. For the best of the industry.

Fabrice Burtin – May 2010

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