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November 2019, Amsterdam
Louvre moves to transform, innovate and add revenue in unsettled times
Pamela Whitby chatted to Louvre Hotel Group’s chief strategy officer who argues that the formula for success is not what it used to be
If the fall of Thomas Cook has shown us anything, it is that the formula for business success is not what it used to be.
Quang Thai, Chief Strategy Officer, Louvre Hotels Group, puts it like this: “Previously, if you wanted to capture the market with a new business model it would take 30 years to become a leader. Even Amazon took 15 years. But nowadays it is very different,” he says.
In fact, today a company can go from being an unknown start up to a disruptive force-to-be-reckoned within as little as three years. In the hospitality space, Airbnb is an obvious example of how this has played out but the phenomenal growth of the Indian hotel company OYO is another. It launched in 2013, is now valued at $10-billion and is still growing, comments Thai, a keynoter at the upcoming Revenue Optimisation and Growth Summit, (Amsterdam, Nov 27-28). There are many reasons for this; among these accelerating shifts in consumer behaviour, digitisation and the move from centralised to specialist ecosystem-based business models.
Building a successful company today requires a rather different approach, and a different skillset. For Thai, a company, and its employees, should be three things – product centric, people centric, and business driven. “Ultimately the product is your baby and you need to love it, but you also need to be business driven and customer focused. That’s a profile that is quite difficult to find.”
You need to act fast. The worst thing you can do is nothing. Because in the movement you create energy and in the energy you create dynamism
With this in mind, how should traditional hotel groups like Louvre, which was taken into the fold of Shanghai-based Jin Jiang International Hotels in 2015, respond? Thai who has a degree in applied mathematics from Ecole Polytechnic in France, and has dabbled in everything from systems development and trading to risk management, a start-up launch and management consultancy, doesn’t have all the answers. However, what he does know is that gone are the days of top-heavy, centralised companies that are slow to execute decisions. He says: “In today’s environment, you need to move. You need to act fast. The worst thing you can do is nothing. Because in the movement you create energy and in the energy you create dynamism.”
Having said that, he acknowledges that the hospitality industry is not exactly renowned for innovation. “Until very recently it has been protected, and so there hasn’t been the need to transform,” he says. There are some obvious reasons for this. For one, the industry has a long history addressing one of the few irreplaceable human needs - ‘a night away from home’. Secondly, it is one of the few that over the past 30 years has continued on a global growth trajectory, and where demand still exceeds supply. And importantly, he adds that even if it might be slowing, it remains profitable.
All hospitality companies must rethink their business models to understand how to become more competitive and profitable
Of course, there has been disruption to the hotel value chain, first from the online travel agents (OTAs) like Expedia and Booking.com. Then along came metasearch, and in particular Google’s hotel offering, which has undermined both the business of OTAs, as well as hotels’ search engine optimisation efforts (SEO). The third wave of disruption has come from rise of peer-to-peer home sharing offerings from the likes of Airbnb (now an OTA too), and innovative tech-led hotel companies like OYO.
However, Thai acknowledges the positive role that these firms have played too. The OTAs, for example, have helped hotels reach customers they could never have reached before, while Airbnb has created fresh demand. But, with hotel margins increasingly stretched, he is clear: “All hospitality companies must rethink their business models to understand how to become more competitive and profitable.”
A two-pronged approach
There are two axes to how Louvre is rethinking its approach. The first is the transformation of the group’s traditional businesses, which involves adding new success factors such as agility and customer centricity to its core strengths. “It’s a continuous process and one important condition, says Thai, is to achieve small victories and communicate about these every three months. Digital tools are a fantastic way to fulfil this transformation.
The second axis is the anticipation and creation of new businesses and different ways to drive incremental revenues. A recent achievement, which is currently going live, is WeBoost, an intermediary incubated by Louvre that taps into the growing start-up ecosystem delivering services to consumers. For example, platforms that connect drivers to available parking spaces in a busy city can now access spare hotel parking capacity via the WeBoost platform. Today, WeBoost has hundreds of hotel garages connected, and the platform will not be limited to Louvre Hotels’ own properties. Concierge services like the ability to book luggage storage, is another example of how this might play out.
Says Thai: “The value proposition of WeBoost is obvious for hotels and start-ups. For hotels is about getting additional revenues without operational constraints and without costs. For start-ups it’s all about accelerating market penetration and, as a consequence, market share.
In his role as chief strategy officer at Louvre, Thai, who is speaking in Amsterdam, is focused on three things:
Stakeholder satisfaction: As a franchisor, Louvre provides services to people, and one key focus has been how to improve satisfaction of all stakeholders - both investors in Louvre and customers booking rooms. Thai notes that nowadays investors are less loyal to brands and will quickly make a leap for various reasons. For this reason, the group has established dedicated measures to handle this.
Agility, and speed to market: Today, it is crucial that hotel companies act quickly following market changes and begin to anticipate the future. For this reason, Louvre is harnessing data, analytics and machine learning tools to give business teams the right insights. Some of these tools are built in house, but the company is also working with external providers because the technology is moving so quickly. Thai is quick to stress, however, that these are partnerships: “We are building solutions together.”
Flexibility and future proofing: Until recently hospitality companies were held hostage to closed legacy systems of companies and dated technology. But this is changing, driven by new players entering the market, which have helped propel a shift in the protectionist approach of big tech firms. As Klaus Kohlmayr, the chief evangelist of technology firm IDeaS Revenue Solutions, recently told EyeforTravel: “There is a new generation of systems and market places emerging, and we could soon even be able to download a PMS or CRS from something like an Apple app store and trial it, and then switch if it doesn’t work out.” Thai agrees. “We are moving towards being more agile and flexible, towards breaking things down into smaller pieces, and implementing changes in the system in a snap of the fingers,” he says. For example, a hotel could sell an hour by the poolside, something that is impossible today. “This is where the future lies,” he stresses.
Ramping up R&D
When it comes to research and development in hospitality there is plenty of opportunity. One particularly exciting area is within the hotel itself, and Thai argues that as a first step, “we could work on, improving the efficiency of staff in the hotel”. He adds: “Most hotels still work as they used to 20 years ago. And, although the systems, technologies and salaries have changed, the operating model has remained the same. That could become more efficient!”
Most hotels still work as they used to 20 years ago
CitizenM’s connected operating model, which ensures that a broken fridge is to be reported to the relevant intermediary before the guest has had a chance to complain, is an example, of some moves already underway.
Another area that is ripe for innovation is in optimising hotel assets by reducing, say, energy consumption. This is a hugely important issue in a climate where environmental issues are top of mind.
Sticking his neck out in a bid to predict the future, Thai wonders if autonomous vehicles could the next big threat to the hotel room. After all, if you need to travel somewhere by car, and many people do, why not sleep in it?
Join us in Amsterdam for the Revenue Optimisation & Growth Summit (Nov 27-28) to hear more from Louvre’s Quang Thai and other leading travel brands including Booking.com, Yotel, Lufthansa, Lastminute, Kempinski Hotels & Resorts, Yoteland Costa Cruises