Why 'hotels with meaning' will flourish in a post-coronavirus world

‘Zombie hotel brands’ were surviving on their name alone during a market slowdown and will gradually disappear, said Radisson CEO

Radisson Resort Dubai Palm Jumeirah.

Just like the hottest fires forge the strongest steel, the hotel industry has emerged from the pandemic leaner but stronger with quality hotel brands getting the recognition they deserve, according to Federico J. González is the CEO of Radisson Hotel Group.

Meanwhile, hotels which have been riding on their names and assets alone, without the quality of service and experience to back it up – what González called “empty brands” – will gradually disappear in the increasingly competitive and demanding post-coronavirus market.

“In 2019, many of [hotel] companies were having issues but they kept growing, not because they were doing something right but because the markets were distressed. So I think when the market recovers, consumers and owners will recognise the companies who are doing good work and who adapted to the market situation,” said González.

“There are brands that were good ten years ago, based on their assets, but when those assets have not been renovated [all this time], those brands are dying. They are zombie brands which will disappear and you will see downgrading of pricing as they do so,” said González.

“Also, there are some brands that will never take off. Some companies have come up with an empty brand just to satisfy an owner’s request to have their name on a hotel. But that’s an empty name and if there is no investment or experience behind it, the consumer will not go there for long,�� he continued.

The reason why some hotel operators fall in the zombie hotel trap is that they follow a business model which is driven by increasing the number of franchises the brand operates, disregarding how the quality would be impacted, explained González.

“That is driven by a business model which only cares about how many franchises it has under its belt without regards to the level of customer satisfaction,” he said.

Federico J. González is the CEO of Radisson Hotel Group.

Laying the groundwork

Having undergone re-engineering to its IT and revenue management system in 2018/2019, Radisson Hotel Group is well-positioned to meet future challenges, said González.

Asked about his forecast and expectations for 2022, González said: “I have a dual approach to this. One is internally where I think we need to be prudent when we plan. If you look too closely, I think the revenues of the markets and what we’ll do next year on average will still be minus 20 to 25 percent – that’s what I am planning for.”

“Then, I’m very enthusiastic. We had some serious hands-on work in 2019 so we are ready after 2021 to leverage that. When the recovery comes, I think we’re going to benefit much more from what we have done,” he continued.

The consumer landscape has changed with the pandemic and the recovery will be different than what the market was in 2019, said González.

Mansard Riyadh, a Radisson Collection Hotel & Residences.

“Consumer behaviour and expectations have changed, as we have seen during this summer. Many people are dying to travel and enjoy normal life, even if it costs them more. They’re also more demanding – because once you pay more, you expect more – and are asking for more variety, for example in the type of breakfast served (buffet or individual),” he explained.

“We need to adapt to those changing demands and be able to deliver a more complex experience to satisfy different behaviours, because those behaviours have and will continue to change,” continued González.

Part of adapting to these demands requires employee-training and recruiting the right talents while giving them the tools they need to succeed in different areas of the industry, explained González.

“I think business consumers will be the same in the sense that they’re going to be asking for more solutions, more flexibility and more plan Bs. In return, you have to develop a plan A, B and C and try to make sure that it works so I think it’s going to be more complex [to operate],” he said.

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