BTN Europe presents an overview of business travel and MICE predictions for this year
Virtual Event - 25-26 May 2021
Virtual Event - 9 June 2021
Thursday 9th September, JW Marriott Grosvenor House
ABTN speaks to Gebhard Rainer, managing director for Europe, Africa and the Middle East at Hyatt Hotels and Resorts, about the group's expansion plans, the rollout of the Hyatt Place brand and changes to its loyalty scheme
Where is Hyatt looking to expand at the moment?
The biggest areas for expansion for us are China and India, where we have substantial plans and good indications of strong growth not only in the major cities but in secondary and tertiary cities as well. When you look from a saturation and population point of view, those are the places where the greatest need for accommodation is. If you go to Mumbai or Bengaluru or Chennai you would have difficulty finding hotel rooms, there is such demand. Of course there is a building boom right now and a number of hotels being built, but when you look at the population intensity and the increasing wealth of a nation such as India, then demand is going to outstrip supply for a number of years to come.
What about in your own area?
Our focus here is specifically Africa, Eastern Europe and Russia, where we can see good potential growth opportunities coming up. In Russia and the former Soviet Union countries there is a pent-up demand that needs to be satisfied. They are coming out of their difficult days - they have had a huge setback with the economic crisis and it may take them a year or two more than some other areas [to recover], but there is large potential. The Hyatt Regency Rostov is under construction and is now scheduled to open in 2012, and we have a number of other properties under negotiation. The Grand Hyatt in Moscow is on hold because of the economic situation.
In Africa, we're looking at the eastern side, the southern areas and Nigeria. In the whole of the northern area starting from Morocco, where we are already, all the way over to Egypt, there are interesting places, such as Libya and Algeria. We have a Grand Hyatt in Lagos under construction and that is due to open in 2013. We also have a number of others under negotiation.
What about Western Europe?
That's not so much [focus], although in Europe there are interesting development opportunities coming up partially caused by the economic crisis. We are trying to be opportunistic in looking at locations. I think there is great potential in Western Europe for our limited service Hyatt Place brand, and we're working on a number of opportunities for that at the moment.
What are your plans for Hyatt Place?
At the moment Hyatt Place is just in North America. We have contracted a few in the Dubai, Abu Dhabi and a number of cities in India and they are under construction. We are very interested in taking the brand to Western Europe and the southern part of Africa. In Europe we're looking at the UK, France and potentially Spain. We also have some interest in Eastern Europe which we're following up.
Hyatt Place for us is a brand that to launch it properly it makes sense to do three or four in one go with a developer. We would not necessarily do just one property and look for another opportunity somewhere else. It's very important to get a certain volume going - so in the UK that could be Edinburgh, Manchester, Glasgow, Aberdeen and Birmingham as well as London. The rollout will be within the next three to five years.
Will they be located in city centres?
Not necessarily - they could be suburban sites, which has proven successful in the US. They could be part of a multi-purpose development such as a large shopping centre with offices and apartments attached. It's usually in an area where you have additional facilities and basic food and beverage supplies, be it fast-food chains or other restaurants nearby, because they offer limited services - they have a restaurant but not a full-service one.
Will the same offering that's in the US be rolled out to the other destinations?
Yes, pretty much the same. There are certain adjustments that we're making for cultural purposes, such as in India and the Middle East, but the basic principle will remain the same. In the Middle East and India there is a stronger requirement for service so we may implement a model there that has service in the restaurant or additional dishes that we would not normally consider. In India, for example, you have to have a variety of curries or tea service in the room because that's what people are used to.
Who does the brand cater for?
It caters to both sides - it's very convenient for leisure travellers passing through, but it's equally convenient for business travellers with a limited budget who are looking for a comfortable, efficient, technologically equipped room that they can use for work as well as relaxing.
Which of the other Hyatt brands are you pushing at the moment?
We are looking at any opportunity that's there from a development point of view and then we decide which brand would fit the location best - so it's not necessarily that we are pushing one brand more than another. By the pure nature of the economics, Hyatt Regency is much easier to distribute than a Park Hyatt, which needs to have a key gateway city and a "triple-A" location to really make it a Park and make it financially viable.
How is the Andaz brand going?
It's going very well. We have a second New York property opening on Fifth Avenue at the end of July/beginning of August. Then we have a number of others in the pipeline in different locations - Amsterdam and Delhi are coming and we have one in development in San Diego.
Why were the recent changes made to your loyalty scheme?
For us, we want to recognise that there is a differentiation in customers from a loyalty point of view as well as a spending perspective. So we're trying to analyse this in more detail and become more personalised in the approach, offering more flexibility but also rewarding the highest spenders and most loyal customers in a different and more appreciative way.
But it's disappointing for travellers who now need to redeem more points to stay in a certain hotel.
I don't think you can look at it only from that situation. We have some hotels where we have a very high demand on redemptions, which in the past we have underestimated. We may not have recognised the fact that in locations such as London or Paris, you have very high interest for redemptions while in other locations redemptions are not as interesting. That's the nature of the beast. I don't think it's only an issue of now having to spend more points in some locations to get a redemption night - there are additional benefits from a points-earning perspective that level this out and make it a fairer approach for both the customer and the hotels.
What would you say are your key challenges as a hotelier at the moment?
Rising operating costs, particularly in terms of energy costs. Payroll and labour costs versus declining room rates because specifically in the corporate sector the pressure is very strong from large corporate organisations to reduce rates, and that's always a big challenge.