Threats, Challenges and Disruption to top IHIF 2016 programme

This year’s IHIF (International Hotel Investment Forum), to be held on 7-9 March in Berlin, will highlight the challenges facing the hotel industry in the coming months and years. The sector has enjoyed a good run in terms of gains in occupancy and rates over the last couple of years. Mergers and acquisitions reached a fever pitch during 2015 with the announcement of several mega-mergers, including: Jin Jiang’s purchase of Plateno, the operator of China’s biggest budget hotel chain; Marriott International’s merger with Starwood Hotels and Resorts to form the world’s largest hotel group; and AccorHotels’ acquisition of the luxury hotel operator, FRHI, which owns the Fairmont, Raffles and Swissôtel chains.

A more difficult environment

Now, however, there are clouds forming on the horizon and it appears that the hotel sector may be entering a more difficult phase. First of all, security has moved to the fore as a growing concern for hoteliers, not only from the point of view of physical safety, but cyber security as well. Otherwise, disruption to the traditional hotel business model is seen as a growing challenge for the industry.

Cyber-attacks on the agenda

In light of recent attacks in Paris, as well as in tourist destinations around the world, operators are forced to re-examine protocols to ensure guest safety in a time of crisis, not to mention establish alternative operational models should such events result in decreased reservations, excessive loss of revenue or even forced closure. What’s more, in recent months, there have been a series of high-profile cyber-attacks on hotels managed by Hyatt Hotels, Hilton Worldwide and the Trump Hotel Collection, which have been centred on point-of-sales systems. In late September 2015, Hilton conducted an internal investigation following a report from an independent expert that the chain had been victimised by a credit card breach at cash registers in gift shops and restaurants at several of its US-based properties and franchises. Hyatt discovered malware on its payment-processing network in late November 2015 and has now identified 250 hotels that were affected. However, one of the biggest cyber security risks at hotels may come from guests’ mobile devices which are linked to hotel company apps.

Dealing with disruption

Over the last two decades, online travel intermediaries, notably OTAs (online travel agents), have succeeded in driving a wedge between hoteliers and their clients resulting in climbing distribution costs, and hotels are now obliged to pay commissions of 15% to 25% for bookings via OTAs. More recently, the industry has faced disruption from online accommodation rental platforms like Airbnb and VBRO which have created huge additional transient lodging capacity in key urban markets, putting downward pressure on hotel rates.

These and many other topics relating to the current state of the hotel industry will be discussed at the upcoming International Hotel Investment Forum, 7-9 March, at the Hotel InterContinental, Berlin and will feature over 180 speakers, including the CEOs of major chains, such as: Geoff Ballotti, President & CEO, Wyndham Hotel Group; Chris Nassetta, President & CEO, Hilton Worldwide; Wolfgang Neumann, President & CEO, The Rezidor Hotel Group; and Richard Solomons, Chief Executive Officer & Executive Director, InterContinental Hotels Group.