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[ owners continue to ] allocate capital to us.”
EXPENSE LANE Brands, however, are not a panacea to profit-margin ills. It’ s no surprise that the largest expense line is still the hardest to overcome.“ Labor is labor,” Zelering said.“ People need to get paid. You need labor and you need to motivate people to work in our industry.”
The quest to make it more efficient is perpetual.“ We continue to find ways to be more efficient with the actual labor that exists in our hotels,” said Shah.“ Whether it’ s a midscale hotel with one full-time
TRANSACTIONS ARE NOT BEING DONE BECAUSE PEOPLE ARE HOLDING. WHY WOULD I BUY SOMETHING ELSE WHEN I LOVE WHAT’ S IN FRONT OF ME?
– SHAI ZELERING, MANAGING
PARTNER OF REAL ESTATE,
BROOKFIELD
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employee for every 10 rooms to a [ full-service hotel ], the model continues to get more efficient and allows hotels to be more profitable.”
Added Jacobs,“ If you want to have fewer people in the building, which we all do, then those people need to be empowered to make on-thespot decisions about the service they’ re going to provide; they need to be empowered to make decisions about problem resolution and recovery. You drive more loyalty from a customer having a problem and that problem being resolved to their satisfaction than you do if there never was a problem in the first place.”
Labor discussion is customarily complemented by talk of artificial intelligence and how it can be used to lower costs and manpower through automating some processes. AI is still, however, in its infancy in addressing some of these issues. Hilton’ s Jacobs said early on AI’ s usefulness has been in back-office practices related to finance, HR,“ transactional type stuff,” he called it. It’ s also becoming much more prevalent in the way customers interact with hotels in the research and bookings processes. Jacobs said that around 60 % of outbound communication with customers is with chat bots.“ There’ s a lot of efficiencies there,” he said, adding that AI will also revolutionize search.
Hilton has gone through a complete technology overhaul in the past few years, rolling out its Property Engagement Platform( PEP), a cloudbased
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system designed to streamline hotel operations and improve efficiency. The technology replaces OnQ, Hilton’ s previous on-premise technology.“ We redid our whole tech stack,” Jacobs said, but came short of calling it a new-and-improved property management system, referring to PMSs as " monolithic systems” that no longer run the entire property.“ It’ s not that anymore,” he said.“ It’ s a housekeeping API, it’ s a check-in API, it’ s a messaging API... it’ s all these tools that you use to run the hotel and communicate with customers.” Hilton’ s last tech piece is its connected room that runs the entire interface between the hotel and the guest through the TV.“ Once we’ re done with that, our tech stack is completely modernized,” Jacobs said.
ON BRAND One of the chief complaints leveled against hotel brands is saturation related to the launch of new brands that some believe are similar to present brands in amenities, services and price points, a way to increase net unit growth and even circumvent areas of protection. At one point during the discussion, Jacobs was challenged about the hospitality business and the notion that hotels were getting away from the true craft of hostelry. And though he didn’ t directly address the idea of brand saturation, his response was revealing.“ People ask us,‘ What’ s the biggest threat to your business?’ It’ s
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WE SEE MORE OPPORTUNITY OUTSIDE THE U. S.
– SCOTT TREBILCO, SENIOR
MANAGING DIRECTOR,
BLACKSTONE
commoditization. If there is no difference between a branded hotel and an unbranded hotel, or which brand it is, if it’ s just about your bot that knows the price that you’ re willing to pay to get close enough to where you want to be, then it’ s game over for us.”
Like any industry, without customers, there is no business. Consumer confidence across the U. S. and globally is waning over recession worries.“[ It ] matters now,” said Jacobs, allowing that there will be near-term choppiness and a [ potential ] recession, which he said are actually supposed to happen from time to time, and aren ' t out of the realm of possibility.“ But I wouldn’ t bet against lodging in the long-term and I wouldn’ t bet against the U. S. consumer over any period of time.”
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12 hotelsmag. com May / June 2025 |