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New Zealand Hotel Industry Conference 2009: Opportunities in challenging times

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The co-hosts of the NZ Hotel Industry Conference 2009would like to thank the Conference sponsors for their generous support

 

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TOURISM BUSINESS MAGAZINE: NZ HOTEL INDUSTRY CONFERENCE

www.tourismbusinessmag.co.nz NZHIC 3

Normal now is not what normal was

ESPITE the many gloomy stories in the New Zealand media, there’s room for optimism about our economy as a whole, and the hotel industry in particular.

That’s the news from BNZ head of research Stephen Toplis. But he tempers it with a warning that we need to be ‘realistic’ about what to expect in the future.

Toplis told the 250 attendees at the NZ Hotel Industry Conference in May that our economy "in an absolute sense" looks "awful". But when compared to the rest of the world it’s "not so bad."

“If New Zealand looks ‘soggy’, just think about the rest of the world.”

Toplis says that in the past couple of months in the United States for example, 47 percent of all house sales were mortgagee sales.

Here in New Zealand, in macro-economic terms, the worst may be over, he says. But unemployment is only just starting to rise and it will continue to climb "substantially" over the next 12 months.

“Economists,” he predicts, “will start talking about a recovery way before people start to see it.”

For the New Zealand tourism sector it’s a very ugly picture, he says. “Even in 1981/82 and 1991/92 it wasn’t as bad as it is now. But the good news is that if you can survive this, you can survive anything.”

He urges tourism operators to reframe their thinking about the local economy.

New Zealand’s economy is fundamentally good, he advises. Our mon-etary policy remains orthodox. We have fiscal possibilities "aplenty"and a sound banking system.

"But we need to rethink. Normal now is not what normal was."We must get used to annual growth rates of 2 percent to 2.5 percent

[in GDP] as the "new normal" for New Zealand, he says.

The one day conference concluded with a six-point action plan for the hotel industry. This was based on feedback from conference delegates.

1. Retain good staff and maintain service levels.

2. Hold and / or lift aDRs.

3. ensure short-term viability and sustainability.

4. increase international marketing: including into emerging markets.

5. lift sales and marketing into the australian market.

6. Maintain product quality.

The action plan

While the New Zealand economy doesn’t look good, compared to the rest of the world we aren’t doing too badly. And, says economist Stephen Toplis, if you can survive this, you can survive anything. By RUTH LE PLA.

Right round the world, we must rethink our expectations for the lon-ger term. “Don’t kid yourselves that the world in the next 10 years will be the same as it was in the past 10 years,” he says. “The pace of growth just won’t be the same.”

Some 250 delegates attended the 2009 NZ Hotel Industry Conference held at SKYCITY Convention Centre.

ARl Hagaman, co-owner of the Scenic Hotel Group (formally Scenic Circle Hotels), was named as the inaugural winner of the New Zealand Hotel

Industry Achievement Award at the NZ Hotel Industry Conference dinner in May.

The award recognises Hagaman’s contribu-tion both to the industry and the wider com-munity.

The award was presented at the conference by New Zealand Hotel Council chairperson, Jennie langley, who says Earl Hagaman epito-mises everything the new award stands for.

“The award gives us the opportunity to recognise somebody who has not only made an outstanding contribution to our hotel indus-try but has also played a positive role in the wider community.

“In the last 29 years Earl has founded and developed what is today New Zealand’s only 100 percent owned and operated chain of hotels and has thrown his energy and enthusi-asm behind many community activities particu-larly in the South Island.”

earl Hagaman wins inaugural awardDespite the ups and downs the company is

now a chain of 18 properties stretching from Paihia to Queenstown with up to 800 people on the staff in the high tourist season. e

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The Prime Minister has a big vision for tour-ism. This vision includes a contestable fund for good ideas; making the most of the Rugby World Cup and positioning New Zealand as a higher-value destination. By RUTH LE PLA

RIME Minister, and Minister of Tourism, John Key outlined his vision for tourism at the New Zealand Hotel Industry Conference held in Auckland in May, saying the country has much to gain if the tourism sector can keep lifting its game.

Key’s vision is founded on making the most of our competitive advantages and seizing the opportunities they provide.

His thinking follows five main strands. First, he aims to firmly position New Zealand as a higher-value destination.

“To do this, we need to improve the quality of the products and experiences we offer, and we need to develop new products that attract higher-value visitors,” he says.

“When wealthier tourists decide where to spend their holiday, they make a choice that is based less on price, and more on quality. So we need to become more conscious of the expectations higher-value tour-ists have for the products and experiences we offer.

“We must also live up to our environmental responsibilities.”As part of such thinking, Key announced at the conference that the

Budget will allocate $50 million over three years for the New Zealand Cycleway Project.

The second part of Key’s vision centres around ways in which New Zealand can respond to a changing world.

“We need to ensure our marketing efforts are focused on the right countries,” he says. “That means the markets that have traditionally generated many of our visitors, such as Australia and the United King-dom. But it also means developing newer markets with a growing num-ber of wealthy tourists, such as China.”

New Zealand also needs to boost the amount of money it spends promoting itself.

Key points out that tourism marketing hasn’t had a funding increase for about eight years.

“Don’t get the wrong message here. There won’t be a big boost in this year’s Budget. But I do expect that over the next few years the Gov-

ernment will put more into the pot.”Key’s third initiative is to get the tourism sector working better

together. He says he is keen to explore ways in which government can work more closely with businesses and regional tourism organisations.

“One idea that came out of the Job Summit was a tourism fund to provide contestable funding for good ideas in the sector,” he says. “It could work like this. We put in a certain amount of money. Then RTOs, businesses, and other tourism bodies can contest that money if they put in some of their own.”

Key’s fourth initiative revolves around improving the environment for business. This comprises a series of reforms, regulation reviews and the launch of the Small Business Relief Package. It will also look at ways to cut red tape at our national borders.

Finally, Key says we must make the most of opportunities from host-ing the Rugby World Cup 2011.

“Every single person in the tourism industry needs to realise that it may be some time until we get another opportunity as big as the World Cup.

“We need to remember that a large proportion of the people who travel to New Zealand for the World Cup won’t just come for the rugby. They will come for the festival atmosphere associated with the rugby – the wine and the food, the unique cultural experiences and our world-famous hospitality.

“We must make sure they get what they are looking for – and more.”

p

Seizing the opportunities

debate on the need to develop a new skill set for tomorrow’s hote-liers revealed a series of underlying issues.

Speakers shared concerns around the un-realistic career expectations of Gen Y new entrants to the hotel industry. As one person comments: “They assume they can do a three-year course and walk into a general manager’s role.”

There was also much questioning around

the ability of training institutions to keep up with the fast pace of change in the industry and to be able to reflect that in their course material.

Others argued that most courses contained a strong element of work experience which should ready students for the workforce and give them realistic expectations.

Another speaker said courses do not en-compass a series of very vital attributes for working in the hotel industry. These include resilience, tenacity, the ability to anticipate and forecast events, and a belief and faith in them-selves and others.

“We don’t give newcomers a clear indica-tion of how to transition in their careers.”

Others pointed out that the hotel industry

could look more at employing older people into the sector. “Many of these people have a pas-sion for their work.”

There are also opportunities to tap into the wave of ‘high-quality Kiwis’ who are coming back to this country looking for employment.

New Zealand Hotel Council chair, Jennie Langley chaired the session. Panelists were; Janet McBain, regional general manager, New Zealand, Mirvac Hotels and Resorts; Graeme Ham, director of HR, Accor Hospitality – New Zealand and South Pacific; Bill McCallum, man-aging director, Pacific International Hotel Man-agement School; and Hayden Porter, general manager of hotels, Galway Tourism Investment Group / Melview Developments.

Tomorrow’s hoteliersWhat does the industry want from the new generation of hoteliers?

TOURISM BUSINESS MAGAZINE: NZ HOTEL INDUSTRY CONFERENCE

4 NZHIC www.tourismbusinessmag.co.nz

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Tomorrow’s hoteliersWhat does the industry want from the new generation of hoteliers?

TOURISM BUSINESS MAGAZINE: NZ HOTEL INDUSTRY CONFERENCE

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Giving guests what they want It's not necessarily a lower price that your guests are looking for.

HE key to improving sales is giving guests what they really want. And they don’t necessarily want a lower price. That’s the mes-sage from John Berenyi, managing director of Melbourne-based Bergent Research.

Berenyi says hotels can generate sales and improve their brand image by truly understanding what motivates their guests.

“Guests say they want everything,” he says. “But if you give them everything it’ll cost you a fortune for no return.”

According to Berenyi, most guest satisfaction surveys don’t ask the right people for their opinions. The problem is further compounded by ‘the wrong people’ selecting to fill out hotel survey forms.

Berenyi believes surveys often draw a disproportionate number of re-sponses from three groups of people: guests who have a real problem – and are therefore highly motivated to complain to the hotel – the chil-dren of guests, and ‘survey junkies’.

Feedback can be antagonistic, too. “These are the sorts of comments we get, says Berenyi. “’Why should I help them with their ISO accredita-tion?’, ‘They should pay me for my opinion’, and ‘They haven’t helped me, why should I help them?’

“Even if people fill them in, most guest satisfaction surveys can’t work because they are designed to answer key operational performance indi-cators (KPIs) and not to uncover what guests really want.”

Surveys, says Berenyi, often ask the wrong questions.He cites a real-life example from a hotel questionnaire which gave a

yes/no tick box option for answering the three-part question: ‘Did our em-

ployees take care of you in a friendly, efficient and responsive manner?’Another hotel had four different forms for guests to fill in. Confus-

ingly, the forms were laid out to different designs. Annoyingly, some re-peated questions already asked in other surveys.

Yet another hotel appeared so keen to garner good feedback that its language had lost any trace of objectivity. “luxuriating in an ensemble of facilities we went out of our way to enliven your well-being,” it started one section of its questionnaire. “Share your experience.”

Berenyi asserts that hotels wanting honest feedback from guests, must ask the right questions, in the right way, at the right time.

“Give guests the freedom to tell you what they really want to say,” he says. “Give them the courtesy and respect they deserve. Reimburse them for their effort: especially higher end guests. Make them feel important. Don’t give them yet another bloody form.

“Needs and tastes change: so you need to test the market regularly,” he says. “Don’t spend too much money but get it done professionally.”

Ultimately, he says, hotels must give guests what they really want and differentiate themselves from their competitors.

T

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TOURISM BUSINESS MAGAZINE: NZ HOTEL INDUSTRY CONFERENCE

EY indicators from the global aviation market add up to depressing news for New Zealand’s hotel industry and the roll-on effect will hit the country’s

wider tourism market too.That’s the topline review from a panel of

hotel leaders in a discussion at the NZ Hotel Industry Conference headed by Horwath HTl, Australia managing director Vasso Zographou.

We are facing the worst downturn in avia-tion history. The world’s airlines are waging fare warfare. Previously a protected route, the trans-Pacific route is now making losses. The International Air Transport Association (IATA) describes 2009 as ‘grim’.

As Zographou puts it: “A significant recov-ery in 2010 requires more optimism than real-ism.”

The panel of speakers listed a range of critical issues impacting the New Zealand accommodation market from an operational

perspective in the next 12 months.Matt Taplin, vice-president operations for

Millennium Hotels and Resorts, names con-cerns around the troubled global economy and the subsequent decrease in international arriv-als to our shores.

David Shackleton is regional manager New Zealand and South Pacific, InterContinental Hotels Group, and general manager, InterCon-tinental Wellington. He lists questions around operators’ ability to hold and/or improve mar-gins, a lack of new investment in the sector and debt issues.

Paul Richardson, vice president New Zea-land and Fiji for Accor Hospitality, cites ner-vousness about the future and a consequent inability to spend. He also talks about the nega-tive effects of a slower economy accelerating changing travel habits, and shrinking local and

it’s a tough market out thereA panel of leading hoteliers set out to identify the critical issues impacting the New Zealand accommodation market from an operational perspective in the next 12 months.

K global economies.Brendan Taylor, managing director, Scenic

Hotel Group lists the negative global economic effect on the group wholesale market.

On a more sunny note, when asked for their thoughts on the opportunities in the current market and economic circumstances, the panel highlighted a range of positives.

Paul Richardson sees an upside to how sec-tor players are ‘rethinking and re-engineering’ business in preparation for an eventual upturn. He also says now is a good time for people to review their cost structures.

According to Taplin, the current tough times are accelerating change, notably in distribution channels. And Taylor sees opportunities to re-structure services to better cater to a changing client mix.

TOURISM BUSINESS MAGAZINE: NZ HOTEL INDUSTRY CONFERENCE

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OB Day, vice president and director of planning, for international architecture company Wimberley Allison Tong & Goo, treated delegates to a rapid run-

through of sustainable design ideas for hotels.One idea is the ‘Kinetic Corridor’ which

changes and reacts to guests walking its halls. “Through CO2 scanners and motion detectors, the corridor will change from its ‘idle’ position to active once occupied,” says Day.

“Truly recessed lights drop down and illu-minate like a wave. Sensors and illuminated signage direct guests to their door.”

Or how about hotels as power stations? These are designed to harness the energy expended by hotel guests walking, pulling lug-gage, breathing, working out or swimming.

He cites real-life examples of hotels carv-ing a niche for themselves in the sustainability space.

At The Grand Hyatt Kauai Resort & Spa, Hawaii, for example, hotel personnel have col-laborated with the design team, community leaders and government officials to address the issue of environmental responsibility.

More than that, they also make their work known to inter-ested guests by run-ning environmental education sessions for them. Many hotels are missing out on opportunities to share their environmental concerns with guests, says Day.

In Sri lanka, The Heritance Kandalama has a ‘green roof’ which reduces heat gain and serves as an outdoor gathering place for social functions.

Meanwhile, in Tanzania, the Sasakwa lodge, Serengeti, has supported the local community by providing materials and train-ing to the local villagers.

"They managed to build their own school and community centre," says Day. “Through its strategic location, the project also helped to put a halt to the massive problem of game poaching.”

The high end of sustainabilityFrom green roofs to kinetic corridors, hotels internationally are taking sustainability seriously.

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ED Sims, group general manager interna-tional airline, Air New Zealand, says his airline spends $100 million a year on promoting Des-tination New Zealand. “That is by far the single largest investment in promoting our country offshore,” he says. “Airlines are a dollar-inten-sive business.” Each lie-flat bed, for example, costs $99,630.

Air New Zealand has to balance its account-ability to two sets of stakeholders: to its 24,000 shareholders and to the New Zealand Govern-ment, says Sims. His comments prompted some discussion around the concept of contestable funding for the tourism sector and the possibil-ity of aggregating funds for organisations such as Tourism New Zealand, Air New Zealand and possibly hotels and airports.

Tourism Auckland chief executive officer Graeme Osborne suggested the country’s 30-odd Regional Tourism Organisations ‘create brand clutter’ and should be rationalised.

The airline perspective

ONY South, chief development offi-cer, InterContinental Hotels Group Asia Pacific, outlined the latest inter-national innovations and trends in

hotels.“One ongoing trend that continues, quite

rightfully, to escalate globally is the impor-tance placed on environmentally sustainable developments,” he says.

Branded boutique hotel concepts are also on the rise, according to South. “While this isn’t new, it’ll continue to be a successful formula into the future…. As brands become more powerful and the industry continues to consolidate, limited service branded opportu-nities, particularly in large domestic markets, will continue to grow.”

Expect, too, he says, to see more resorts designed with multiple psychographic demand segments in mind.

“Over the last few decades, resorts have been designed with one, or maybe two, demographics in mind – generally fami-lies and/or couples. If the current economic situation has showed us nothing else, it’s

demonstrated that assets that only appeal predominantly to one, or even two, market segments will be less insulated against the effects of the economic cycle.

“InterContinental Bali is a classic early adopter. It is spread over more than 30 acres of land, and with a completely separate Club product, caters equally well to the very spe-cific needs of families with children and hon-eymoon couples. Not many properties can today successfully do that.”

South predicts we will see more resorts designed with multiple markets in mind, where everything from the physical buildings, rooms and facilities, to the pathways and landscaping will cater to the multitude of needs of Gen X and Gen Y guests.

“They’ll also be more in tune with the unique and indigenous experiences offered by the destination, in line with the changing preferences of international travellers.”

South notes that travellers are not only booking differently, but they’re also shar-ing their experiences in new ways. He pre-dicts the trend toward online booking will

innovation in hotelsExpect to see more resorts designed with multiple market segments in mind and more branded boutique hotel concepts.

T continue to rise and outstrip other booking methods.

“Content aggregator sites such as Trip Advisor and You Tube have been around for a while,” he notes. “What continues to emerge in prominence however, is the glue that brings these sites together. The explosion in popularity of Twitter and Facebook in particular, has dem-onstrated the power of an individual who can create their own content, and proactively make it available to a multitude.

“As influencers, these channels are chang-ing the way hotel guests choose where to stay, and are providing a powerful, instant platform for people to praise or lambast a travel experi-ence." South says hotel operators will need to quickly adapt to, and adopt, these new chan-nels as they would any other form of market-ing.

Air NZ spends $100m a year promoting destination NZ.

The hospitality industry’s natural legal partner

for futher information, please contact:

Denis McNamara, Partner

Head of Hospitality Law Group

DDI: +64 9 977 5041

Email: denis.mcnamara@simpsongrierson.com

www.simpsongrierson.com

Horwath HTL knows Hotels, Tourism & Leisure Horwath HTL provides specialist

consulting services to clients in the hotel, tourism and leisure industry, and is affiliat-ed with other Horwath HTL consulting firms with offices in 12 cities throughout the Asia Pacific region, and throughout the world.

Horwath HTL has in-depth knowledge of the New Zealand hotel, tourism and leisure industry, including the challenges and opportunities operators, lenders and owners in the industry face.

Our services include strategic advice on existing and new-build hospitality developments, market demand and supply studies, financial feasibility studies, operating and financial projections, hotel operating reviews, independent expert advice, litigation support, operator selection and management agreement negotiations, pre-lending bank reviews, purchaser and vendor due diligence and asset management.

To discuss our services further, please contact Stephen Hamilton, Terry Ngan or James Parkinson (Directors).

Horwath HTL LimitedLevel 11, Forsyth Barr Tower55-65 Shortland StreetAuckland, New Zealand

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Telephone: +64 9 309 8898Facsimile: +64 9 309 8980Email: horwath.htl@horwath.co.nz

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Hotel Industry Conference