2009 Happenings and 2010 Opportunities

"There were plenty of good things that happened in 2009, mostly in the makeup of the culture of the company," said Eric Danziger, president and CEO of the Wyndham Hotel group. "Because it was such a tough year, it forced companies to listen, to learn, to learn how to react and to learn how to work more closely as a team." Danziger pointed out that during the good times, companies don't really spend as much time working hard―really hard―to find the right answers.

Mark Hoplamazian, president and CEO of Hyatt Hotels Corp., explained how in January 2009 the company focused its goals on what he called "relative measures" such as high-level engagement with employees, elevated customer satisfaction and market share. He also noted that the company set two corporate goals: Growing and expanding its presence in other places; and establishing a capital base that would allow it to survive any scenario. The good news, he said, is that Hyatt Hotels made a lot of progress on the relative measures. Going forward, Hoplamazian said that that Hyatt will continue with its current strategy and transition from building a new capital base to trying to deploy it.

The two main objectives or strategies for 2010, according to Hubert Joly, president and CEO of Carlson, are to continue to "enhance and clarify the positioning of our brands, and to continue to invest in our brands and in our flagship properties in key US cities."

Stephen Joyce, president and CEO of Choice Hotels International, said that 2009 was actually a pretty good year. While the revenues did have an impact, it was more of a "year of opportunity," he said. "The sense of value orientation for the consumer has changed dramatically and our brands are positioned in the moderate tier or below and it worked well for us." The interesting thing now, Joyce said, is that Choice Hotels International needs to be able to tell the story on the upside of why "we are an attractive company in a non-defensive environment." He says going forward, the company is looking to growth, looking to move its brands forward, and take advantage of opportunities.

Management Company Model

On the management company side, it seems like everyone wants to pursue the management company model, said Weissenberg, but he asked panelists if there is a difference in terms of their focus on management in terms of company versus a franchise company?

"It is good to manage some hotels because it keeps you hands-on and gives you a sense of what is required from a brand standpoint," said Danziger. "It keeps you fresh and it gives you a sense in what you are asking franchisees to do."

Domestically, with the exception of big brands and big boxes, Joyce said, people are looking for the flag and not the management. "The reality is, the domestic management contract business is an incredibly competitive and tough business to be in."

New Brands and the Customer

Weissenberg pointed out that there have been many new brands revealed over the past few years and he was curious about their success. Joly was first up to take on the question, noting that it will be hard for new brands to take off it there is not a lot of ground being broken. Physically and financially, there is difficulty, he said.

Hoplamazian, who introduced a new brand a couple of years ago, noted that the key to the success of a new brand is to identify a customer base that is actually distinctive enough to build a brand around and can it be taken globally. "If your answer is yes, then there is a good chance that it will be successful." He added that if those conditions are met and if innovation occurs, a new brand can be and will be material and successful, but it takes time.

The key for any brand to be successful, according to Joyce, is distribution. "Distribution creates awareness and a sense a whether or not you have new customer proposition that makes sense." He added that the "companies behind those newly launched brands need to stay behind and invest in their brands will be the ones that get somewhere and the ones that don't will be short changed."

Pricing, Rates

According to Hoplamazian, "the macro backdrop for whether you are going to start to see increases in occupancy—ultimately leading to pricing increase—is all driven by economic activity." He added that he is focused on helping to determine where pricing is headed and where business investment, employment and housing currently stand and where they are headed.

Corporate travel is on the rebound, Joly said, "which is an encouraging point."

Joyce noted that "We are so strongly correlated with employment" and the concern he has is that "if we are going to have a jobless recovery, we aren't going to get pricing back, so tell me where jobs are going and I will tell you where we are going."

Instant Insights /

Hotel Leaders Focus on Strategy, Lessons from 2009

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