Hotel CEOs talk security, technology and room service

2017 posed new and old challenges for the hotel industry. Issues of security emerged after a gunman opened fire on a crowd in Las Vegas from his hotel room. The number of international tourists to the U.S. dropped.

Disrupters such as Airbnb and HomeAway continued to provide competition. And many travelers continue to turn to online travel agencies such as Expedia and Booking.com and last-minute booking apps to look for deals rather than going straight to the hotels.

There were bright spots, though. Hotels continued to fill their rooms. And in-room technology improved.

USA TODAY assembled four top hotel executives at the Americas Lodging Investment Summit in Los Angeles in the L.A. Live JW Marriott hotel Jan. 24 to discuss challenges and opportunities facing the industry. Participating in our annual roundtable were: David Kong, chief executive officer of Best Western Hotels and Resorts; Elie Maalouf, CEO for the Americas at InterContinental Hotels Group; Patrick Pacious, president and CEO of Choice Hotels International; and Jamie Sabatier, CEO of Two Roads Hospitality.

USA TODAY’s Nancy Trejos moderated the discussion. The text has been edited for clarity and length.

Question: The number of international visitors has been decreasing. How has that affected your hotels, and what are you doing to address it?

IHG’s Malouf: Corporate travel is about 10% of global GDP. Three percent of U.S. GDP supports 15 million jobs in this country. So, it’s very important for us. Last year, we saw a bit of a dip. It’s hard to attribute these factors to a single element. Regardless of the source and the cause, we should be alert as an industry. We are working with the American Hotel and Lodging Association to make sure the policies and the rules are great for security.  We don’t want the bad guys getting into the country, but we also want to be open to people who are coming here with friendly intent.

Two Roads’ Jamie Sabatier: Only two countries are seeing visitation go down. That’s the USA and Turkey. Given the strength of the global economy, you would expect it would be stronger. We’re losing international market share, and hopefully, we can be more welcoming. There’s a sense that for some visitors, we are not.

Best Western’s Kong: We actually haven’t seen that decline. On the contrary, we’ve seen a pretty healthy increase in international arrivals into our hotels. Having said that, if you compare what we spent on marketing for our country compared to some of the other countries, we pale by comparison. We have to step up our marketing efforts in the USA. We also need to work on making our country more welcoming in the sense that the visa process sometimes takes way too long. The rhetoric from Washington should be more welcoming and more supportive.

Choice’s Pacious: We haven’t seen that decline, but when you look at the global economy, it’s not just in the USA, but around the world, all economies are doing well, so you would expect there would be more demand, not less.  In our markets outside of the USA, we are seeing increased occupancy and increased demand.  But I agree that the rhetoric is going too far. It isn’t helpful.

Q: We’ve seen hotel companies, such as Disney and Hilton, change their policies on “Do Not Disturb” signs.  What kinds of conversations have you been having about this?  And how do you balance privacy with security?

Sabatier:Las Vegas brought this square to the fore, but it’s something that we’ve been dealing with as an industry for a lot longer than just the last couple months. We clearly have stepped up what we’re doing from a security standpoint, making sure that we’re fully engaged in the different policies and processes that we had in place before but maybe weren’t quite as focused on. We’ve also taken a more aggressive approach in terms of “Do Not Disturb.” We’ve shortened the period of time that we would allow a “Do Not Disturb” sign to be out on a room.

Kong: Despite the “Do Not Disturb” sign, the hotel ultimately has the right to look into the room. It’s only prudent that you do that. I don’t think it’s wise to not go look into a room for a period of time, like a few days. The “Do Not Disturb” sign is just a way that we communicate with the guests, that they don’t have a false impression that nobody’s going to look into the room. You can achieve that through a statement on the registration card or whatever way you want to communicate with the guest that somebody will be looking into the room periodically just to check on the safety and welfare of the guest.

Q: Some hotels are creating these “connected” rooms, with a mobile app controlling the television, temperature, lighting, even digital art. The Wynn Las Vegas says it’s going to put an Amazon Echo in its rooms. Is this the future of the hotel room? 

Maalouf:The first thing that our guests really are interested in is mobile connectivity. Last year, we passed over $1 billion in mobile bookings. That’s four times what it was three years before. We are experimenting with room controls through mobile. The next thing we’re experimenting with is bringing your own entertainment and casting it onto our devices without any cables. But we also have to remember that technology is only one aspect of what our guests are looking for. It’s giving them the choice to reach out to us to get the technology when they want the technology, but also enabling and freeing up our colleagues to give them the human experience when they want it.

Kong: As technology becomes more a part of our lives, people expect to see that in the hotel industry. We are thinking more comprehensively and realistically about the entire customer journey from the time they research the hotel, to when they arrive, and then the stay experience until the time they leave. For example, the virtual reality experience that we have when people are researching hotels becomes very important. We’ve been testing this chat bar for a long time, this SMS platform. We’ve seen that it’s increased the overall experience ratings significantly by seven or eight points. And we are now evolving into Amazon Dot, similar to Echo, and I expect that to have an amazing effect, also.

Q: A lot of hotels are moving away from the traditional front desk. What is your ideal front desk or check-in area?

Kong: Years ago, when I started in the business, it was a requirement. But today, you don’t need that. You have self check-in kiosks. You’ve got mobile check-in, mobile keys. So, what is the purpose of a front desk? But what do you do to instruct people that don’t want to use the kiosk or don’t want to use mobile check-in and ask you where to go? You’ve got to have someone in the lobby that can help them.  To me, the ideal lobby experience is a lot like what Kimpton has done very successfully. A lot of their lobbies have restaurants and bars.  Because what is a lobby?  It’s supposed to be a gathering place. When you walk in that hotel, if it’s empty and nobody’s hanging around, then, automatically, it’s going to be a boring experience. Some of the old hotels that still have the front desk but are cramped for space should think about blowing out the whole front desk and taking that office behind it and opening the whole thing up and having some kind of a social experience.

Pacious:When a guest walks in, we want them to feel like they’re walking into a place that’s alive and vibrant. So we’re expanding that open space between the bar area and then the breakfast area, opening that whole space up. There isn’t a one size fits all. When you go to our Cambria hotel in New Orleans or the one we just opened in Nashville, you’ll see an entertainment stage. That’s what the guest wants to see.

Q: Many companies are getting into the lifestyle hotel space. Without using any jargon, describe what a lifestyle hotel is and why travelers should consider one.

Sabatier:It’s a very popular word these days. Lifestyle, to me, is about experiences. It’s about feeling a sense of place. It’s what travelers want more and more, and it’s experiences that they can’t get. More importantly, it gets them to where they can feel, not like a tourist, but a traveler in that locale.  So, ultimately, being able to deliver those immersive experiences is what lifestyle is all about. I don’t see it as a fad.

Maalouf: We begin every Kimpton project-hotel with a muse of a person, of a personality, he or she.  We name this person. We identify the brands that they select in their life. What job do they have? How much do they make? What is their lifestyle? Where do they live? What do they prefer? And then, we design the hotel experience around this muse.  We began every Hotel Indigo project with the neighborhood and how we want to create an image in this hotel with the local neighborhood.  We designed the EVEN Hotel around the lifestyle of the wellness-minded traveler. Now, we wanted to give you the choice to extend that wellness lifestyle when you travel at a valuable price, at a price you can afford. So it’s really reinforcing that real and aspirational self-identity. That’s when we get the lifestyle hotel right.

Q: Millennials, the younger generation of travelers, are traveling a lot these days, and they will be in the future. How have you changed your services or facilities to appeal to them?

Pacious:You’ve got to balance this question of is it trendy or is it timeless? Real estate investors who are building these hotels, they don’t want to have to rip out the design that was trendy three years ago and have to replace it.  We really looked to make the design more timeless. The other thing that not just Millennials but everybody wants today is something immediately.  Millennials and everybody today — Boomers, Gen Xers — are impatient. So when we redesigned our loyalty program, one of the key insights we had is that people want rewards immediately, not after I stay 20 nights at your hotel. They don’t have to be big rewards. They need to be something that’s tailored to that individual guest. It could be a Starbucks gift card. It could be 10 cents off a gallon of gas, things that matter to them.

Maalouf: We’ve said repeatedly that we don’t design either individually or our whole portfolio around a particular demographic because people change.  And today’s Millennials will be tomorrow’s 50-year-old very successful travelers, too. We know that all demographics are more interested in personalization. They’re interested in technology. They’re interested in efficiency. They’re interested in experiences that are tailored to that stay’s occasion. When we designed Avid hotels, which we launched last September, it was designed for the everyday traveler that wants just the basics, but done very well. We spent days literally moving in with people, living with them, to understand what really mattered to them, what are the few things that they really wanted us to nail, to do exceptionally well, and things they just didn’t care about.

Kong: I like to think of Millennials as a group of disrupters, and they are an inspiration. If you look at the last five years in this particular industry, we’ve gone through a change in terms of how we look at design and technology, and we talk a lot about the local experience. Who fits in that? The Millennials have focused on the next generation of travel, so we’ve got to pay attention. Millennials are also driven by value.  We’ve done a lot of market research, and we found that value consistently ranked very, very high in what they’re looking for.  So, a loyalty program, for example, is something that they really want.

Q: There are many “disrupters” in the industry now. Airbnb is one. What concepts are you coming up with to combat that Airbnb threat, and is the competition more a matter of price or amenities? 

Sabatier:We’re seeing the impact at some of our urban hotels, but the reality is that what we’re providing from an amenity perspective and the service that we’re delivering, vs. what Airbnb is delivering, is pretty different. The customers that we have are looking for something more than what Airbnb provides. There are definitely some chinks in the armor that are developing on the short-term-stay side. People are realizing that, it is a very different choice. From a competitive standpoint — you talk about price vs. amenities — we just don’t see, at least at this point, a lot of competition in terms of what we’re delivering to our guests and what they want vs. what the short-term rental guys are providing.

Pacious:If you look at the growth of Airbnb and you look at the growth of the hotel segment in the last five years, we’re at record high occupancies as an industry. I don’t necessarily see them taking a share.  At this point, they’re a different level of accommodation. It’s always been there with people staying with friends. Now, it’s just on an online platform.  The research that we’ve done shows that about a third of the people who have tried it like it, a third are indifferent, and a third will never go back. The brand promise, the security and the confidence of a hotel stay is important. You want to make sure someone’s there to give you the key. If the heat doesn’t work, you want to have someone to talk to.

Q: Hotels are getting into partnerships with food delivery services such as Grubhub. Choice recently entered into one with delivery.com. Is this the beginning of the end of room service?

Maalouf: We realized that people want to not just eat in their room alone — they have that choice — but they’d rather be down in the living room. They’d rather be down in the open lobby. They’d rather be at the high tables, working, playing, watching. Even when they’re alone, they’d rather be in a community. So, we’ll continue to provide various alternatives, but we have to stay up with the times. We have introduced Grubhub and OpenTable on our platforms through our channels. You get loyalty points for booking through our platforms in a thousand hotels, in our limited-service hotels. But there’s always going to be a place, in some properties, for room service.

Pacious:We don’t have a lot of full-service hotels that have restaurants. Restaurants, in many cases, don’t make money for hotels, and so they have gone away from that. So, having the ability to tap into the local food options through the online app is something that really appeals to our owners and to our guests. The whole purpose of it is to take an amenity we don’t provide in our midservice hotels and allow our guests to actually tap into the local market and be able to have their food delivered to them.

Q: We saw Wyndham buying La Quinta Inn recently. Of course, last year Marriott International bought Starwood Hotels and Resorts. So who do you want to buy?  Are we going to continue to see the emerging consolidation of the industry?

Kong: Scale just gives you such tremendous advantages, and that’s why you see these consolidations going on.  But having said that, you look at the industry, how many brands are left to be bought? There aren’t that many.  So, just by that alone, you’re going to see some slowing down.

Sabatier:We’re the little guy at the table. That being said, we’ve doubled the size of our company with the merger. With the brands we have, they’re under-penetrated against our competitors. So we think organic growth for us is the way to go.  It doesn’t mean that we’re not talking, we’re not looking, but we’ve never had a stronger pipeline than sitting here today. We want to continue to focus on that strategy.