How to Maximize Hotel Profitability in a Changing Market. TSHS – 118 - The Social Hotelier

Episode Transcript
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(00:01):
You are listening to the Social Hotelier Show,
a podcast that inspires hoteliers to create meaningful
and memorable experiences
for their customers
in pursuit of their passion.
We share our views and experiences experiences relating
to hospitality,
technological trends, and also relating to humanity.
Here is your host, Sam Eric Rutman.

(00:25):
Hi, everyone. Welcome back to the Social Hotelier
podcast with me, Sam Eric Rutman.
HotStats is a leading provider of hotel financial
intelligence,
offering in-depth performance benchmarking
beyond traditional metrics like RevPAR.
Their data driven insights help hoteliers, investors, and
financial stakeholders
optimize profitability by analyzing revenues,

(00:48):
costs, and operational efficiencies.
My guest today is Michael Grove, chief executive
officer of HotStats.
Prior to joining HotStats,
Michael held multiple operational and financial roles at,
hotel and corporate level for over sixteen years.
He's a regular conference speaker and guest lecturer
at universities
and hotel schools around the world. So Michael

(01:10):
brings,
unparalleled expertise in hospitality analytics.
In this episode, he shares exclusive industry trends,
financial strategies, and market shifts that every hotelier
need to know.
If If you want to stay ahead in
the evolving industry, understand the power of data,
boost your bottom line, this conversation is must
listen. So welcome, Michael. Thanks for joining us

(01:31):
today. Pleasure to be here. Nice to see
you again.
Yes.
Well, could you just talk about I mean,
you have a background in in in hospitality
and as a hotelier and and the finance
aspect.
Can you talk about your experience and also
how this relates to now from hotelier point
of view on hot stats?
Yeah. Sure. I mean, what,

(01:51):
I guess, is a is a way of
intro for people who don't really know what,
who HotStats are and what we do, specifically.
So our our HotStats actually collects monthly p
and l's from hotels all around the world.
We,
we help hoteliers with benchmarking services,
so as part of the the kind of
the back and forth they provide the the

(02:12):
data, we provide benchmarking services after normalizing the
data into a kind of central chart of
accounts so it's comparable.
And then also that data is also they're
utilized in kind of investment community in the
the non operational side of the business.
I actually come from the operational side of
the business. So as you said in your,
your intro there, I spent most of my

(02:33):
career in hotel operations, hotel finance.
I actually
the typical,
British hotelier story of, started on the bar,
worked my way through the ranks, through f
and b, in the front office. And then,
when I, I wanted better hours, better work
and outfits, so I moved into finance because
I saw they were nines or fivers.

(02:54):
And actually really got a buzz for it
because what I realized in finance was that
I was able to kind of get an,
a good handle on what was going on
in all parts of the hotel, pretty much
everything channeled through through finance.
So I then held both of all financial
controller roles.
And, you know, one thing I was keen
on because I came from operations, I wasn't
an accountant by any means.

(03:16):
I had a passion for hotels and a
passion for operations
and a passion for helping, you know, people
who necessarily didn't get to to look at
the financials or interpret the financials in the
way that I got to do it. So,
I actually really enjoyed
bringing the hotel you know, the other head
heads of department into,
into the conversation,

(03:38):
kind of explaining to them how financials work,
but also how to how to improve their
performance without,
you know, the kind of top down approach,
but really working with them on a on
a daily basis.
And as part of that, you know, we
as as things progressed, I'd always use some
kind of benchmarking
as part of the, you know, reviewing any

(03:58):
kind of results because I think it's fundamental,
you know, and and hotels have over the
years kind
of managed that and and become very good
at it, certainly from a rooms perspective.
But I just felt like the I looked
across and the revenue team had this access
to this great data, you know, this kind
of daily analysis of top line metrics, and
they would use that and then the sales

(04:19):
guys would have some kind of performance benchmarking
on,
what was coming in through the various channels,
GDS, etcetera, for for the corporate world.
And we didn't really have very much at
all in in the way, from finance perspective.
And then
one one day, the, I was lucky I
worked for a company in The UK that,
the head of finance was a big fan

(04:39):
of the company called HotStats who had, you
know, I guess, recently emerged at that point.
And he got HotStats to come and present
to us. And when I saw it first
of all, I was like, this is such
a great concept.
I just really had some questions around how
comparable that data could really be because we
knew that, you know, from a financial perspective,
there's there's so many variances in the way
we did things. But the great advantage, so

(05:01):
I could get my head around how how
the company was dealing with the, the comparability,
was how effective it could be on property
when I was able to actually utilize some
kind of benchmarking myself from a financial perspective,
but also bring the the other heads of
departments in. They could also get a part
of the p and l that was specific
to them, and they could benchmark how they
were performing against the market. So when

(05:25):
trying to set a strategy or trying to
assess the success of their strategy,
it added an extra dynamic. And for me,
that was, that was a really early sign.
And then the late later down in the
line when I I got corporate roles,
you know,
helping a a a kind of senior level
overseeing a, you know, group of hotels,
that analysis became also

(05:46):
quite different because then you made management decisions
as a
business,
you know, as a as a company,
on on the on the way that we
were operating, whether it was the focus on
the top line metrics or or, even the
middle of the p and l. But, ultimately,
again, everyone around the same thing, which was
a profit metric. And that is really what
HotSats is about, was just the having a

(06:08):
holistic approach to benchmarking the the your your
hotel business,
and the the the bottom line being the
thing that's actually benchmarked at the end of
it all.
Yeah. Well, that's
okay. That's fantastic. I mean, this has been
a an area which
many hotels are
are focusing on very limited amount of, KPIs.

(06:30):
And I think that, I'm I'm quite familiar
with the hot stats, and I I found
it very, very helpful and useful during my
my years in in
in, with hotel companies and so on.
I noticed you'll be already speaking at the
various hospitality and investments events. I mean, last
year, I mean, you must be speaking many
events. And then already this year, you've been
I think you were in Milan, if I'm

(06:51):
not mistaken, or Madrid.
And, could you share some takeaways about the
mood now and what issues people are worried
about that keep them up at night? Not
necessarily what happened last night or yesterday in
the world, but maybe just sort of the
hospitality
side of things where what they are the
what are they are thinking about now? Are
they positive or cautious, or how how are
they what is the mood?

(07:12):
Yeah. I mean, I'm
incredibly lucky, as you said, to, to be
in the various forms around the world. We
did 72 events as a company last year,
which sounds incredible for pretty much anyone, but
we are obviously a global business.
This year, I've done nine already,
which is, again, a mix of operator forums
and investment conferences.

(07:33):
And the reason I mentioned that is because,
obviously, they come from two very different angles
often. You have with the investors looking at
the outlook,
from a supply and demand perspective,
you know, transaction volumes, you know, challenges around
financing.
And then from an operator's perspective, it's generally,
you know, much more on the ground operational.
The the challenges are actually hitting hotels.

(07:55):
And where they meet in the middle,
is is around the the kind of profitability,
part of it because,
you know, really, that's the the central interest
for,
for for all parties.
And I think that these conferences have a
real mixed bag because,
as you as you look around the world,
there are various different challenges and very, you
know, various different tailwinds as well, actually, some

(08:16):
real interest in trends in the industry, which
maybe we'll get into.
But the common headache, to be honest, is,
is around,
anything that's gonna slow the revenue growth. And
that sounds like an obvious thing to say,
but in the good times where costs were
kind of rising in line with with fairly
minimal inflation,

(08:37):
and
the top line was, you know, really driven
by a mix of supply and demand and
and global,
global travel patterns.
Now there are so many other nuances
to that discussion. Hotels of various different types,
are are going through various different parts of
the cycle.
There are various different political challenges in the

(08:58):
world, which I think are fairly unprecedented
certainly in the last twenty odd years.
And I think a lot of that, you
know, does scare hoteliers because if we see
a slowdown of revenue and demand,
the one thing that's certainly not slowing
at the speed that we need it to
are areas like labor costs,
and and some of the, you know, the

(09:19):
on ongoing costs of of doing business in
hotels.
So I think there any type of revenue
growth,
slowdown,
and, you know, just if I looked at
the numbers this morning, we were looking at
a presentation for The United States, for instance,
where in December,
The US saw pretty flat growth. It was

(09:39):
the Trevpa was almost flat, but profitability was
negative 6.5%.
So, you know, it's profit profit for available
room. So the story is not flat. The
story is actually negative 6.5 because doesn't you
can't really bank the, you know, the the
flat top line growth.
So that's an that's a sign, and it's
been a pattern kind of coming into 2025.

(10:00):
Now in as we said, we've presented in
Madrid and Spain, but the Spanish market's been
very different. Spanish market's a hot market. Southern
Europe in general is is a pretty hot
market, so we've seen pretty substantial growth. Those
cost challenges have not really been the same
there even with the size of energy cost
increases we've seen in Europe. They've been able
to offset a lot of it through pretty
good revenue growth.

(10:22):
So the challenge is different in different parts
of the world, but the common headache is
if you see the revenue slowdown, profitability is
gonna be a key challenge.
Yeah. Yeah.
You mentioned that the industry has evolved past
focusing solely on RevPAR and occupancy rates. What
are the most overlooked metrics that hotel hoteliers
should be

(10:42):
now prioritizing today?
So I think that's an interesting question that
I get a lot,
because, obviously, we're flying the flag for,
I don't know. Certainly not saying get away
from RevPro occupancy and rate their key metrics.
We sell hotel bedrooms at the end of
the day.
But the challenge is that you you kind
of
you spend a lot of time just focusing

(11:03):
on those things. That's why we're really good
at selling bedrooms, but we also,
have other revenue streams in the building to
consider, whether that's in operation or in development.
So, you know, at the early stage of
building a hotel.
And then you have the the various cost
basis that come come with the various operating
models. So there's so many things to consider.

(11:24):
And just looking at how well we sell
bedrooms is really just not it's just not
enough.
I would go as far as saying there's
no kind of individual metrics that really I
mean, I'd say profit is the ultimate kind
of,
you know, everything centers around profit when you
when you get to the bottom of it.
Yeah. But, you know, there's correlations,

(11:45):
I think, is the thing that we're now
able to do that we've never been able
to do. I if I was gonna say
to her, you know, if I was back
in hotel operations,
who knows where that'll end up one day.
I know I'd have a real passion for
scorecarding
and and the things that kind of,
we now have access to that we couldn't
do before. Correlation between,
I I pull this lever in my operations,
so I do this thing different here. That's

(12:07):
the impact it has on my profitability versus
the competitors. So this is how I gonna
be for every line of the p and
l for every area of your business. If
I spend this extra money on marketing, this
is the difference that will make to my
room's cost of sales and my ultimate net
RevPAR.
But it for me, that's more important. It's
not necessarily individual metrics. Obviously, for me, looking

(12:29):
further than just rooms revenue, so total revenue
per available room, I think, is a key
part of revenue management. I actually think that
we've built the industry in a way
where, you know, certainly, the the the revenue,
the verticals
in hotels, so the revenue managers, the, you
know, the the directors of sales and marketing,
the general managers, etcetera, they they're they're often

(12:51):
incentivized on RGI or or, you know, rooms
index.
And then you'll have maybe the sales team,
the the CMB sales team or the in
office sales teams will be focused on,
the sale of CMB, right, for instance, or
other revenues. And then you have the FMB
guys focused on that. So it's all in
isolation, and, actually, they they interlink so much

(13:13):
that that doesn't really make a massive amount
of sense.
And the focus needs to get more on
the total revenue management, which is,
in the ability to be able to pull
this lever to increase occupancy by doing something
different, and that will have knock on effects
on,
on on the other areas of your business.
Or maybe not. And maybe the actual the

(13:34):
the levers are different in the fact that
you can actually
you can you can grow your rate
by adding additional services in other parts of
the building.
So
I think there's more to it than just
I I looking at individual metrics, I think
it's the correlation. It's how the metrics,
kind of interlink that is the is the
new way of looking at it and, hence,

(13:55):
so much focus on business intelligence and, and
companies like ours who've obviously come to the
forefront because we, you know, we're very much
focused on looking at the holistic picture.
Yeah. Now just the the the I had
a discussion, just a couple of days ago
with a
operator who wants to enter into the finish
or the Arctic Lapland market. And so they

(14:15):
asked me the obvious questions. How is the
performance there? And as my answer was, well,
there there's a lot of, sort of bulk
travel, but then there are some individual,
hotels,
which are quite creative, and they,
they go beyond of selling rooms. So they
started to offer these kind

(14:36):
of, services like,
swimming in the ice, you know, or in
a in a lake where they they break
their ice, and then you have a chance
to swim for for an hour. And they
offer them all kinds of hot towels and
so on.
And I asked them, can you imagine how
much people are prepared to pay for that
experience? I said, no. Well, 500,
euro.

(14:57):
And, that's already booked into other income.
Yeah. So that actually should and and the
cost basically is just the labor to,
to break the ice and and whatever the
drinks are and the and and the and
the manpower, whatever. So there is highly profitable.
So they're being becoming very creative up in
in Lapland in providing all these kind of,
services that we didn't think of before. We

(15:18):
took it as a normal thing,
in in in the sauna culture in Finland
that we go after the sauna to dip
in the hot in cold water. But now
tourists are willing to pay all kinds of
money for that once in a life experience
that they can have this brag effect when
they see that they survive this kind of
experience, and they're still paid 500. So, financially,
it's a quite a good,

(15:39):
creative way how to make some additional money.
And and, Simon, I'm quite passionate about this
because, because, again, you know, at this stage,
I'm a data guy. Right? So I only
look at it from from the data point
of view and, of course, the conversations I
have in the various forums I'm looking up
to be in.
And I think what you're saying is amazing
because we didn't even discuss this, before. It's
exactly the topic on the ground. It's exactly
the flag I'm playing right now is that,

(16:00):
you know, as revenue starts to slow down,
I'm not sure that we have that many
levers in order to be able to reduce
costs without really,
hindering the the guest experience, certainly in Northern
Europe and in and in, The
US, because the cost base is already fairly
lean. Right? It's it's already we've already gone
through that exercise some, you know, some time

(16:21):
ago as we've gone through the various different
prices.
So it's really about driving that, you know,
the that top line and and how we're
gonna get creative. And And the and the
various forms, like, I mean, that go all
the way from, like, luxury portfolios,
you know, like you said, resort style where
they have the ability to pull, actually. They
can start coming up with new,

(16:42):
concepts of, you know, horse riding and things
that they never used to do before that
is, like, no longer partway. And then somebody
else say, okay. But I'm I'm a limited
service hotel in the city center.
You know, what what do I do? Right?
And, of course, I don't have necessarily the
answer for that, but I can certainly
pull reference from what I've seen from, from
other areas. And for for many of them,
it's as small as doing what,

(17:05):
and again, I hate to refer back to
it because I think the hotelier general don't
like the the concept of it. But, you
know, I'm not against the airline model,
of, you know, you kind of have your
package, you have your, you know, you you
you pay for your, your room
and then
or your seat on the airline. And when
I get close to the day, it's so
connected
that it's kind of selling me all of

(17:25):
those extra services, those extra bolt on services.
Do I wanna upgrade? Do I do I
need extra are you sure you've got your
own insurance? Are you sure you're not gonna
need to hire a car? You know? It
kind of like before you know it, you've
got a ride then. Then it's like, do
you wanna pay £20 extra to get a
meal deal on the on the flight or
whatever it is? Yeah. And, actually, as I'm
getting closer to it, you know, even if
I've paid let's say I've paid I mean,

(17:46):
it's cheap as £50 for,
you know, for a for a seat on
a Ryanair flight or something.
And then, like, say, oh, do you wanna
pay an extra £10 to get yourself a
nice seat at the front?
I'm like, well, yeah. It's £10.
I've but, actually, I paid 20% extra. Right?
I paid 20%
extra for that seat.
And and I think hotels have the ability

(18:07):
to pull other, you know, other area other
levers, it's late checkout, early check-in, upgraded room,
small little package in the room, you know,
all those things, probably, obviously, it's not new,
we we did this before, but
the focus has become less on that because
we're so conscious of costs.
And it costs more to do that. It
costs more to serve room service. It costs
more to, you know, to to upsell.
And I think that, you know, that's really

(18:30):
the the the connected journey with the guest,
understanding what the guest needs are and being
able to upsell to those things.
I get super impressed when I go to
a hotel, and they remember,
you know, what I what I liked from
my previous stay and try to upsell that
to me. Right? That is, I think, pretty,
you know that that that's impressive, and it's
also really good from a revenue generating point

(18:50):
of view. So I totally agree. The other
just before we finish on that point, the
other thing for consideration is,
you know, hotels
over the last fifteen years or so,
you know, we had other,
upselling
items that we we I guess we don't
really have anymore. So, you know, simple things,
we used to make commission on foreign foreign
exchange,
transaction at front desk,
telephone charges, I mean, they were incredibly lucrative

(19:13):
actually when you look back on it.
You know, you had, you had Internet charges.
Right? We were charged to for the the
additional cost on a guest day for Internet
charges.
So they were all, like, bolt on revenue
channels that we could almost upsell during the
guest day, and they don't really exist anymore.
You know, we've we've lost quite a few
of those, as part of, you know, as
part of technology improvements and and and guest

(19:36):
needs. So we we haven't really replaced those,
and I think as we go forward, those
kind of things that we've you know, we
know that room selling rooms is just not
gonna be enough.
You can only drive that so much and
actually those additional revenues are what are gonna
help you offset the cost increases because they
are certainly in in areas like Northern Europe.
They are gonna continue to increase everywhere. Right?

(19:56):
So Yeah.
Yeah. That's interesting. I mean, it's a it's
a conversation I enjoy having about what are
how you can be audacious and come up
with some new ideas and and listening to
what will,
what, the travel will appreciate.
And even if you can find out before
they arrive even better, and then you can
actually surprise me in a very pleasant way.

(20:16):
And then the the cost is not the
factor. It's just that they they just got
what exactly they were
expecting even though that they didn't ask for
it. So that's kind of a Well, I
think it's more I think for for the
international travel, I do I can tell you
it doesn't happen everywhere. Right? The Middle East
is a really good example, I think, for
for for hospitality, and I certainly would, you
know, obviously point to somewhere like Dubai as

(20:38):
the obvious one. I'm a I'm a regular.
I go five, six times a year. I
stay at, you know, probably two or three,
different hotels there.
And, you know, I arrived recently at a
at a hotel there.
I gave a shout out actually to the
Address Beach Resort,
because I thought it was absolutely incredible,
experience there. One thing I thought they did
really amazingly there was I went the night

(20:59):
before because we were organizing an event.
I went to the bar,
after organize you know, after doing the,
doing a bit of a debrief with my
colleague, and
I ordered a an old fashioned, which is
my my late night drink. She'd she'd ordered
herself a a Prosecco,
and then, yeah, that was it. She left.
I went to I went to bed. We'll
go the next morning, went to the pool.

(21:20):
And I'd like it must be, like, 10AM.
I've sat next to the pool and the
the waiter came over and he said, good
morning, mister Grob. Would you, would you like
it old fashioned? And I was blown away
by it because it's kind of like what
a brilliant number one, from an experience point
of view, it was really personalized. He recognized
me knew what I, you know, what I
drank that might be for me, so I

(21:40):
call it connected state.
But actually then from an upselling point of
view, I was not gonna have an old
fashioned at 10:30 in the morning. But, you
know, I treated myself because of the, the
the prompt. And I I you know, this
again, it's a,
I think that's a really nice example of
those,
of the of the opportunity.
Yeah. Yeah.

(22:01):
People talk about automation and AI,
versus a human touch. I just want to
get your feel with this rise of automation
in hospitality.
Do you think hotels risk losing the essence
of personalized service?
Where should, hotel draw the line between tech
efficiency and the human connection? What's your
view on that? I mean, I can tell

(22:21):
you that the
from the operator conferences
and one, the investment conferences more directly where
it's kind of,
a forum where the, you know, there's press
there, etcetera. So the the themes generally are,
you know, people are they're careful about how
they talk about it, I think, in some
ways, and and maybe I have the ability
to be more candid about how I feel
about, automation and certainly the implementation of AI.

(22:44):
I think there are like, for those that
do it well, for those who have this
kind of focus not just on how can
AI, you know, squeeze the bottom line or
squeeze the cost lines for me a little
bit further,
I think there has been quite a lot
of talk, quite a lot of negative talk
around
how AI,
will impact
people and impact the, you know, hotel guest
experience as an example there.

(23:07):
I I actually have a really mixed view
on on AI because I feel like
automation in general
allows you to do some of those things
we were talking about, like connected journey. We
finally have the tools.
We have the data.
We have the the the kind of,
the infrastructure.

(23:28):
But the thing we have, though, everything's disjointed.
So you have some of the data here.
You have the tech stack in hotel. Generally,
it's over complicated because it's been vaulted on
over years and years and years.
There's often some of it's cloud based, some
of it's, you know, sat sat on-site. There's
there's lots of different nuances.
And, actually, this automation allows you to pull
a lot of that together. Right? So going

(23:48):
back to my point on correlating the data,
which,
you know, I think is the is a
big deal for, for for certainly in the
world I'm in,
from a hotel operational perspective and from a
guest
experience
point of view,
automation can help us join a lot of
those docs. It can help us automate the
way that we look at preferences and push

(24:09):
them to guests.
Some of the soft timing for even the
hot stats, I mean, we're looking at using
automation
to reach in our customers to do the
things that we know that they don't wanna
speak to us when they're doing. Right? We
want they won't get regular information on, you
know, with in their market, which new hotels
we've added or,
you know, what's the latest
trend in that market from a data point

(24:30):
of view, and they don't want you know,
they don't wait for us or have to
ask us for it. The idea that we
can use automation to kind of push
some of that to them is something we're
exploring right now and and hopefully we'll we'll
achieve this year.
But there are, like, of course,
on the other side, there's there's some opportunities
from a cost perspective.
And I think a lot of those,

(24:52):
are around trying
to help you isolate where in the hotel
you have holes in the operation.
So hopefully, back of house consumption, for instance,
energy consumption. You can imagine what AI could
do to help us deal with the energy
consumption issue. You know, looking at the way
that humans can't really look at it. When
are we not using it? Can we tune
it on and off when when it's not

(25:12):
needed using automation? I mean, not saying we
haven't had,
these kind of business controls before, but certainly
not to the level where AI is is
able to really drive that, that kind of
stuff. So spotting inefficiencies in areas that don't
affect staff and don't affect guests is the
obvious place to go. Right? And I'm I've
always been a a huge advocate for that.

(25:34):
And then there are things that at the
moment I know I know about you.
I can talk on behalf of lots of
my friends in the industry. We're totally overwhelmed
with with admin and work. Right? We're totally
overwhelmed with areas
that
should never have really you know, as we
as we stripped out the hotel,
operating structures,

(25:54):
and, you know, even companies like ours, we
keep, you know, we keep the,
the workforce fairly lean,
in certainly in comparison to what probably would
have happened twenty years ago.
You know, you you you end up overwhelmed
with a lot of things that you kind
of need to do on a daily basis.
Right? You're gonna keep on top of all
of these different things,
and I am I'm really enjoying and exploring

(26:15):
the automation options for, you know, for doing
these, you know, these these mundane tasks, these
things that really, you know, I'm I'm I
I much better using my time for other
things. And I think many Yeah. Hoteliers will
find the same thing. So is a waiter
better off,
you know, spending their time with the customer
upselling and actually talking and making that experience
really good, or are they better off in

(26:37):
the back doing the reconciliation of the various
checks from the night and the you know?
It really makes sense for a wake you
know what I mean? Like, does that make
sense? Same with the receptionist.
If you look at the, the things the
receptionist have to go through, that checklist, that
never ending checklist
for a receptionist on a daily basis.
Nightfall hooded. You know, there's so many different
areas of hotels. You're not gonna lose the

(26:59):
people need to be people wanna see people.
Right? There's only there's things that still humans
will always have to do because I cannot
ever imagine a bot being able to do
what humans could do from a,
from a a personal touch point of view.
Yeah. So I mean, it's it's about three
of them up. Just like Yeah. I I
also in point of,
during the years I was a general manager,

(27:20):
I mean, we spent
starting from the morning briefing until 4PM. There
was continuous meetings, and I I'm sure there
are so many ways you can actually streamline
all this that you can reduce that administration
part, the kind of the heavy duty
administration side that has been existence in our
industry for such a long time and that
you actually spend that the time you spend

(27:42):
is with your
customers,
your who are in the hotel or the
customers who you want to bring to the
hotel and also with your team. And I
I'm all for whatever I can use in
terms of automation to,
to reduce my time in in
in in the office is much, much better.
And I'm sure there's a lot of colleagues
that I that I agree on this point.

(28:02):
Yeah. You can imagine the modeling for chefs
on orders, for instance, being another example, menu
engineering and and, and and ordering. You can
imagine how that could be totally simplified so
chefs actually spend their time on quality of
food, quality of meeting guests, having a, you
know, strategic discussion.
I think this that is really exciting. Right?
For me, this it makes a lot of

(28:22):
sense. I don't know about you, but I
I utilize these,
note takers. Right? The the automated note takers,
the
AI generated ones. And what I found, I
didn't know it did this until I started
using it, was it jumped into meetings where
I was invited
as optional, which obviously in my business is
is quite a lot.
But I don't go to every single meeting.
I drop in every time to them, but

(28:44):
there's people who are, you know, responsible for
those areas. So I don't need to be
there, but I'm interested.
And this thing sends me, like, a three,
four minute highlight reel of the key items
that came out of that meeting, a video
or in in the way of a transcript.
And I can quickly just get a quick
scan of what happened in the meeting. I
can pull me in if there's something I
was interested in, but I don't need to
join all of those meetings, which makes me

(29:05):
more operational. That's a really small and quite
obvious,
you know,
improvement
in in the upper in the way that
we operate just by having that one area,
you know, more advanced.
Marketing's gonna be the other one, because we
know that that's probably the area. Hoteliers have
taken years to get their heads around marketing.
The best way to go to market, you

(29:27):
know, whether it's,
SEO or, you know, these online spotlights or
whether it's, you know, how how the which
channels are the right ones, who would be,
you know, trying to identify the target audience.
All those things have been you know, we
I think we've managed to get our heads
around it, and hoteliers have managed to master
the keywords and the algorithms, all that stuff.
And then AI comes along,

(29:47):
and, you know, everything just gets thrown up
in the air because it's no the the
the methods that the hotel is using to
reach audiences
change. And, of course, no. That's that's currently
could be perceived as a threat, but, actually,
it prints everything back into your hands. It's
not in the hands of,
you know, of the institutions that have been

(30:08):
there until now. It's in, you know, it's
in it's in your hands again. Right? You
can kind of you can probably get to
the forefront of that now,
and and take, advantage over your competitors
in a way you couldn't necessarily,
maybe do before.
So
I think you can look at each one
of them as a kind of maybe a
slight risk, but certainly on on the flip

(30:28):
side, it's coming, and it could definitely be
the thing that separates you from the rest.
Yeah. One of my favorite stories I just
recently heard, and I I was talking to
a chef who has to start his own
company.
And what he does is that he they
realize there are certain
slow periods in the in the hotel restaurant,

(30:49):
which they have
after breakfast between breakfast and lunch, after lunch,
before the dinner. And those hours, they try
to figure out how can we make most
out of this time. So he came up
with the idea. He start to create these
concepts of
restaurant brands
and that and then provided those,
and he realized in the community where the

(31:10):
hotel was located, there are people ordering takeaway
or or the delivery orders. So he started
to put 25 different brands of different sandwiches,
kebabs, or whatnot, which are popular anyway. And
the hotel restaurant
and the chef could so when people are
ordering, they're ordering online, but they don't actually
know where it's being cooked. It's been actually

(31:32):
cooked in the hotel kitchen. Yeah. And so
so they have the recipes, everything. So, of
course, they are make sure that they get
the recipe consistently right every time. And then
there is the your, friendly delivery guy comes
with his electric,
bicycle and picks up to order and deliver
it to somebody's home. But the person who
ordered only knew from a website,

(31:52):
which has nothing to nothing to do with
the hotel at all, nothing to do with
hotel restaurant, only knows the your
kebab or whatnot. And then and it is
delivered to their home because it's quite close
where the hotel is. So I thought that
was a kind of a brilliant way how
to use,
manpower that you have already, and then you
can do something else on the time when

(32:13):
things are slow. Yeah. A %. And I
think there's the creativity, I mean, some of
it seems a bit wild. It could even
feel a little bit scary, I think,
you know, some of the strategies you see
in the industry. But, actually, you know, again,
you have to be creative. You have to
look at the business model you're in. Obviously,
the data helps drive a lot of that.
In Sweden, I'll give you an example. In
The UK, for instance, food and beverage trends,

(32:34):
you know, certainly in all day dine in
standard hotel outlet FNB outlets are,
you know, I've seen a a real downward
trajectory. This, guest spend has slowed down,
and in some ways decreased.
Profitability has become a huge challenge. If you're
a standalone bar and restaurant right now, you
know, that that's that's really quite a challenge.
We're lucky in hotels, obviously, the bedrooms are

(32:55):
highly profitable, so you can you can offset
some of this. But, you know, for the
beverage, profitability has become it was a bigger
issue than the energy cost challenge during the
last couple of years, but, you know, that's
that's a statistic fact.
So
there's been all sorts of different ways that
this has kinda come together. On the one
hand, you've got, yes, guests wanna order from
outside, so you have the the flip side

(33:15):
to what you're saying is that you have
the guests who are staying in the bedrooms
or ordering from the restaurants outside. Right?
And hotels either
try to fight that and try to come
up with their own concepts or if they
are a certain type of hotel that that
works for them, and I've seen examples of
this, they cut a deal with the delivery
companies.
And they just accept that someone like me,

(33:36):
honestly, when I stay at a hotel, might
have room service. But if the room service
menu is boring, I don't wanna sit in
their all day dining restaurants, I'm quite likely
to order from the local Wagamama. So it's
something that I'm I'm pretty likely to do
it.
And and, you know, so so I can
because it's, you know, I'm a,
you know, every every guest has their own

(33:57):
preferences and does their own thing. So
why wouldn't
and I've seen this, the hotel chain in
The UK who did it and used their
restaurant, closed their restaurant, closed their stores, you
know,
went through a real change in the way
they do it. They have a co working
space concept,
QR codes, you can scan,
you can get to,
one of the online delivery companies, you can

(34:18):
order your food in, they will give you
the crockery and the cutlery for your, for
your meal. They'll even serve you a drink
to go with it.
And they make their money off the drink
first before and after,
and the rest of it, they've taken a
commission cut with the, you know, the the
online delivery companies.
And you see that kind of, I'm not
sure that's really what, you know, what would

(34:39):
work for for my business. Maybe,
you know, there are there are other ways
of looking at it as those high street
chains
have struggled over the last few years. And,
again, you know, this is pattern around Europe,
but definitely in The UK.
Big change like TGI Fridays looking at closing
down is really quite sad. You know? I
use the example of Wickbread, biggest operator of

(34:59):
hotels and f and b in The UK,
who
have have now decided to close some of
their traditional,
beef eater restaurants and turn them into bedrooms
or bring them into the hotel. They used
to sit outside of the hotel.
But, actually, that concept is kind of amazing.
Right? Because you think, well, as they're struggling
on the high street because offices are, you
know, are still not back to capacity,

(35:22):
the retail the high street is struggling from
a retail point of view.
Maybe hotels can become the the center of
the community again. Maybe the, you know, those
high street brands,
the shops and the restaurants move inside of
hotels like you find them in many parts
of the world.
Residence is next door. So hotels become that

(35:42):
kind of, you know, the community hubs again.
Yeah. And I think that's quite an exciting
concept. Right? So it could be really negative
right now and there's lots of challenges with
hotels to consider, but if we look at
the trends and we look at the way
things are going, you know, hotels are the
place to go for wellness, like hotels are
the place to go for, you know, for
experiences
and guests, and golf and all of this
kind of stuff. So maybe hotels will become

(36:04):
the place to go again for,
guests.
Yeah. Very good. So, I mean, you're you're
traveling around the world. I would be interested
to to learn a little bit of to
hear your views. I mean, the areas where
which is booming, let's say, maybe The Middle
East and India, Vietnam,
and and and, what areas of, Europe. So
maybe we can start with The Middle East.

(36:24):
I mean, I I see that how Dubai
and Saudi Arabia are having experiencing
a unprecedented unprecedented hospitality
growth.
What is your views? Is that the sustainable,
expansion, or is there a risk of over
saturation? How do you see it, that area
part of the world? Well, I I mean,
look. This I lived in The Middle East
for a while. I'm I'm a regular visitor

(36:45):
to the, to The UAE,
and and many of the GCC countries.
This year alone, buy back next week. I
fly to Dubai,
and I and I head on to India,
which again is another market I think we
should talk about, in a bit more detail
in a moment. But,
but the one thing I've learned over the
years is never bet against,
the the well, certainly Saudi and The UAE.

(37:07):
I I just never like, just when you
think that The UAE has kind of done
everything it possibly can do,
there's a whole new level of surprise where
there's a whole new level of of demand
that arise. Supply into into Dubai, in particular,
has been absolutely incredible for the last kind
of fifteen, twenty years,
and demand has kept up. Right? So we've

(37:30):
continued to see, you know, the the levels
of growth in that market
that,
I just don't think you can really compare
to many places in the world.
But I would separate the two stories because
Saudi Arabia and UAE have very different,
you know, they have very different makeups of
the of the segmentation,
and they have different fundamentals in in in

(37:52):
the way that, they're they're kind of planning
for the future.
But The UAE, like I said, demand has
kept up with supply. So there's been no,
you know, the
that
I think and we say UAE purposely because
actually,
just going back to your point there, Dubai
has seen very much a slowdown over the
last twelve months. So Dubai, you know, on
on the back of some record levels, years.

(38:13):
I mean, we saw just under 10 percentage
points increase in GOP margin since pre COVID
in Dubai. Right? Just to give you an
example of the level of,
incredible change, in that in that market.
But year on year, it's it's slowed, and,
actually, profitability has slightly dropped off. It's stabilizing
at 43, 40 four percent. Right? So it's,
you know, it's pretty pretty amazing profit levels.

(38:37):
But the other the tertiary Emirates and the
secondary Emirates, so Abu Dhabi is, I think,
the number one market in the world right
now from a a growth point of view,
Yaronje.
You've got,
you know, the Russell came up, what's happening
there, the, you know, implementation of casinos and
and things that are, you know, kind of,
again, unprecedented. We keep using that word, but
that that that that market, you know, really

(38:57):
does do those kind of things. And, you
know, they can hold such huge events like
the expo, you know, the they've had,
some of these these, huge events that went
into the markets and, you know, again, what
we call unprecedented. And then the following year,
we replaced them with something else. And it's
like that. That just continues to happen. I
think Saudi Arabia,

(39:18):
has a, you know, obviously, it's a it's
a huge country and has lots of different
parts to they're planning for the future. They're
hedging their bets on their on their tourism
strategy.
You
know, tourism into Saudi Arabia outside of religious
travel,
is pretty minimal.
Yeah. And therefore, you know, diversifying
and focusing on,

(39:40):
on tourism in particular,
I think, you know,
considering the outstanding beauty of parts of that
that country and actually outstanding hospitality,
if, if, anyone who gets to experience it
can definitely vouch for.
So culturally, it has a lot of things
to offer, but, you know, when it comes
to actually mez from a scientific point of

(40:01):
view, you're adding this extra supply into the
market,
build it and they will come mentality.
You know, there are obviously some some risks
and some, you know, some considerations
in that. However,
religious travel continues to grow so that, again,
some of that fundamental business,
is, you know, is gonna be important. They're
a big player in the region,

(40:22):
that's very stable country from a, you know,
political perspective. And then moving into, you know,
opening up their, the rate c and the
amazing gig of projects,
I think is,
is is, you know, is pretty,
exciting. The thing I'd say is that, you
know, I was at a JLL event yesterday
in London where they were talking about,
you know, the cost of building in The

(40:43):
Middle East,
where, you know, in in some circumstances, it's
more than doubled the the cost of, building
supplies,
and therefore,
you know, the cost of doing this
pretty
unbelievable
scale of a project
becomes much more expensive. So I think there
is a bit of you know, there there
might be some slower of of supply of

(41:05):
you know, and and and that will obviously
help from a hotel performance perspective.
So I think it's a a mixed bag
there. The other things we do in The
Middle East outside of The UAE and Saudi
Arabia is some of those countries that are
not their currency is, is not necessarily pegged
to the dollar.
So countries like Egypt, Lebanon, Turkey have seen
incredible fluctuations in currency.

(41:26):
And, if you think we've seen inflation in
Europe and The US, you should have a
look at these countries because they, you know,
they've really had challenges over the last few
years, and, of course, that's had all sorts
of impact on hotel performance.
Moving over to Asia.
I mean, I spent,
time last year in Vietnam.
I did a couple of trips to to

(41:46):
Thailand,
and, obviously, I've been presenting a lot on,
on certainly on India, Australia, Singapore,
Hong Kong, Japan.
Some real exciting stuff going on in in
in that part of the world for sure.
And there is still you know, if you
look at a market like India in fact,
India and Vietnam, I think, were the the

(42:07):
two that kind of came out the the
back end of my last presentation.
Having very quite different dynamics, India,
you know,
very,
very much domestic business,
so still very domestic market, very heavily weighted
towards corporate.
And

(42:28):
the tick up of
of leisure travel in the,
in
going with the, the increase in in population
and the increase of the middle class or
the the growing proportion of the middle class
in that market,
and still fairly limited supply in the scale
of things,
means that India's performance has been, I mean,

(42:48):
absolutely outstanding.
And there's still so many more levels to
it because to my point,
there are, you know,
there's there's still much more international business to
go into, India and international
travel, international tourism, right, international leisure travel,
into a into a region that has all
sorts of things to offer for for international

(43:09):
guests.
Vietnam is quite different because Vietnam does have
pretty you know, I mean, 25%
of the segmentation is corporate. So it, you
know, it does have a significant corporate
base,
but, of course, it's very much an international
leisure destination. Right? So there there is, certainly
now.
So the Thailand sorry. Vietnam has so many

(43:31):
things to offer and so many parts of
the country to,
to offer,
international guests and, of course, international guests spending,
you know, significant amounts of money,
in a in a country where the cost
of goods, the cost of labor,
is still relatively low,
in compart in comparison to other parts of
the world. So from a hotel performance perspective,

(43:53):
that really, really helps. Just to throw out
some adult numbers, I mean, India's,
labor cost as a percentage of revenue is
just under 17 percent
of total
revenue. And if you compare that to, you
know, somewhere like The US, for instance, that
is just under the, the the 40% mark,
you know, there there's a there's a stark
gap between and knowing that that the the

(44:15):
pricing in India can only get, you know,
it only continue to grow,
as more international guests come in and, of
course, the the growing middle class,
the increase of luxury, the luxury segment. So
so much more that can happen there. And
in Vietnam, I think it's a really exciting
time. The infrastructure is, you know, is has
come on so much over over the last

(44:35):
few years and it's probably my favorite place
to visit in the world right now.
I think
many people who visit Vietnam would say the
same thing. So I think,
yeah, that's my, my summary of of some
of those those amazing places in, in Asia
in particular.
Okay.
I
I've been looking at what's happening in The

(44:56):
US, and I was just looked, read saw
one report that, well, the wind expects a
stronger performance for this year.
They maybe they talk about the leisure travel
pickup,
by booking time by 4% and average length
stays up by 2%. I'm not sure if
that's our our exciting numbers, but they're they
tend to try to talk about that there

(45:16):
has been, like, a 1,000,000,000,000
trillion US dollar in infrastructure in 02/2024,
so they start to see some,
impact on those. Do you any just an
o kind of a overall view?
You mentioned that,
US quite flat. You still there's a light
at the end of the tunnel,
because Wyndham is was quite
positive about, how they are doing and also

(45:39):
how the market might be performing. Like, I
mean, Wyndham is the the biggest hotel company
in the world. They,
they obviously have incredible expertise there, so who
am I to argue with Wyndham? Yeah. But,
what I would say is that, you know,
just on the the the recent trends, the
economy segment has been the hardest hit in
The US for sure, you know, where the
growth has come it's come in the top

(46:00):
end segments.
There's been an incredible amount of supply going
to that,
to the
the the economy segment.
And also,
there's been a real uptick. I mean, apparently,
in 2025,
it's predicted The US will become the number
one,
outbound,
traveler in the in in the world now.

(46:20):
So I think for,
as a as a source
country, you know, US will will go number
one. There's a big reason for that. Obviously,
the dollar is is incredibly strong compared to
the certainly the euro and the, the pound,
etcetera. So you your Americans traveling to Europe
is a is a pretty big deal.
But I think many predict that that actually

(46:41):
more hits the higher ended segments because the
people staying in the economy hotels in The
US are not necessarily the people who are,
you know, looking to travel to Europe.
So instead of spending their money in The
US, they'd still spend their money in Europe
to get, you know, they're gonna get significantly
more for it right now.
So I think there could be, you know,
we have seen the recent trends had been,

(47:02):
challenges for the economy segment,
but, obviously, that has to normalize at some
point. If you look at the year on
year impact, maybe, you know, some uptick in
the lower end segments,
you know, is is something that you could
predict. There is obviously more infrastructure. Windham
are much more,
you know, focused. They obviously, a significant chunk
of their hotels are

(47:22):
roadside and,
you know, interstate, etcetera. So, you know, I
think they
they'll be a mixed bag for various different
operators. The one thing I would say is
that
any kind of growth that we're talking about,
if you go back to my the what
I said about December sorry.
We're gonna need more than,

(47:43):
you know, just a a couple of percent
growth on the top line to offset these
costs.
And we know that there are so many
other things going on in The US that,
you know, makes it quite unpredictable for for
2025 and beyond for sure.
Yeah. Yeah.
COVID is kind of still in the back
of my memory and many people's memory,

(48:03):
and, it reshaped the the hospitality overnight.
In your view,
any thoughts on what could be the next
big big disruptor that hoteliers
are aren't preparing for?
Well,
you have a crystal ball? Or No. I
just think it's a it's a very,
yeah, it's a very difficult one, isn't it?
Because you kind of don't wanna be doom

(48:24):
and gloomy.
I'm so sorry, but,
I'm just overcoming some man flu, so it's,
no. The I think the,
the the reality is
that at the moment, the thing that is
probably worrying people the most is the, obviously,
the political situation,
and not necessarily,

(48:45):
you know, the direct impact on on people's
lives,
but the interconnectivity,
the the deglobalization,
I think is the, you know, is is
one thing that should could impact international
travel and and hotels in particular.
So
there's obviously been
sorry. Can you hear the noise in the

(49:05):
background?
Okay. Good.
I have a dog who's barking there.
So the the I think the
the challenge could be,
at the moment, we're very connected. We've had
really,
you know, amazing,
you know, twenty, thirty, forty years of of
international travel and connectivity traveling to every country,

(49:27):
and I think that's been you know, that's
obviously massive advantage for the Italians.
But
as we have more and more challenges
from a political perspective and it becomes more
fragmented, that could be, you know, a challenge
for for the industry
for us to prepare for.
Yep.
So looking at your journey,

(49:50):
I'm interested. If you had to distill your
career
lessons into one piece of advice for aspiring
hoteliers because I have several,
hotel school students around the world,
listening to my podcast. And so I also
interested to see what my guests could give
some little bit of advice,
and,
what piece of advice could you give to

(50:12):
some aspiring hoteliers? And then the second part
is what impact do you hope to leave
to leave on the industry?
Well,
so, actually, the first one, I'm I'm quite
lucky that I,
I similarly, I I speak at many of
the hotel schools around the world,
and my,
I started doing this thing where I basically
just present my career,

(50:34):
for the first five minutes.
And bit by bit, I was asked to
extend it further because my career,
you know, where I I basically didn't get
any, you know, educational qualifications, for instance.
I I worked my way through the ranks.
I did it the hard way.
I acted it the fun way, I believe.
But, you know, ultimately,

(50:54):
I think the
the the route for
me came from the fact that,
I although I probably, you know, have some
academic abilities, I didn't enjoy it at all.
I was just not someone who enjoyed school.
I was much more of a people person
and much more hands on.
So going to hotels was like a massive
flying for me, hotel operations specifically.

(51:17):
And, what I say to the students often
is number one, I don't dismiss education because
I think education, even though I didn't go
through that channel, I wish I could've because,
I think it would've given me a nice
head start going into the industry.
But many of the students now wanna bypass
operations. It's not the cool area of hotels

(51:38):
in their mindset. You know, marketing is cool.
Business development is cool. Feasibility,
real estate, they're cool.
Hotel operations is not really seen as cool.
And from my experience of twenty odd years
in hotels,
having done all of the roles and enjoyed
all of them in various different ways. Like,
telephoto operations is by far the most enjoyable

(52:00):
part of hotels
of this industry
and it's the,
it's the reason to be in this industry.
It's the main reason to be in this
industry. You can do marketing or business development
anywhere
else. Yeah. You know, you don't need to
be in hotels to do that, even real
estate. But
the thing about hotels that really is
different and,

(52:20):
separates, you know, people like me from, I
guess, many of my friends
is the fact that,
you know, I'm a I I really enjoy
dealing with people.
It's a it's a, you know, it's a
great place to be able to work up
through the ranks.
And the one thing that I think I
I kind of learned and I I've really
passed down to it to pretty much everyone

(52:42):
else now,
was
just finding
the finding the the the role, the career
path that suits your personality best. Not what
you wanna do, not what people other people
think you should do, but actually something that
really is gonna fit your personality type the
best because
then you'll really see the best version of

(53:02):
you.
And I think hotels allowed me to do
that because I I found it, and even
when I was in hotels, I worked through
all of the departments until I kind of
found the the thing that really was gonna,
accelerate my career.
And now I stepped out of hotels, I
stepped out of finance,
but now I work in data with hotels.

(53:22):
So I deal with hotelies on a daily
basis all around the industry,
and I I deal with finance people using
my finance skill set to talk about data.
So,
you know, I've I've managed to find my
sweet spot at the end of it whilst
trying all of those things, but operations was
the the central force in kind of,
in my career.

(53:42):
Mhmm. The impact I'd like to leave on
the industry, I think that's that's an interesting
one because I don't from a selfish
perspective,
I, you know, I think what I've what
I've already,
been quite a big part of in Hot
Stacks, I'll talk on behalf of Hot Stacks
rather than my my myself,
was to

(54:03):
kind of just move the industry one step
away from
kind
of narrow minded focus on,
a rev part and the top line metrics.
And look the way we look at the
business. Not necessarily just the metrics because the
boring part of it, but it's the the
way we look at our hotel business.
And I think what we've managed to do

(54:23):
is really get the industry to see another
way of looking at hotels,
and provided the forum and the the reliability
for people to be able to to actually
measure and and do something about it. So
pulling the operators and owners together, for instance,
into one area that they all care about,
which is, you know, profitability.

(54:44):
So that I think that,
and and honestly from a selfish level, I
I I I just I'd like to walk
away from the industry at some point and
and people kind of
look back at me fondly and say, you
know, he did things the the right way,
he did things with integrity, and he was
generally a nice guy who funds to be
around. Right? That's really what I care on

(55:05):
a personal level. But I think if I'm
talking from a business perspective, the, you know,
the the fact that we've managed to move
the, you know, the industry this direction, I
think, is a pretty heavy weight for us
to have, managed to carry.
Well, thank you very much, Michael. This has
been a very interesting disc conversation,
with you. And now if people want to
connect with you or to find out more

(55:26):
about HotStats,
where can they find you? Yeah. I mean,
obviously,
connect with me personally and HotStats on LinkedIn.
We do quite a lot of, or and
also on social media. In other channels, we,
we obviously post a lot of information there.
And if they're interested in learning more and,
wanna have a discussion,
you can find us on wwhotstats.com,

(55:49):
and the email address is, inquiries@hotstats.com.
Yeah. I look forward to talking more with
everybody.
Excellent.
Thank you for tuning into the Social Hotelier.
If you enjoy this episode, please take a
moment to leave us a review. Give it
a thumbs up, and don't forget to hit
the subscribe button to stay updated.
We have an incredible lineup of guests coming

(56:11):
your way, so stay tuned for more thought
provoking conversations.
Until next time, take care and keep exploring.

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How to Maximize Hotel Profitability in a Changing Market. TSHS – 118

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}How to Maximize Hotel Profitability in a Changing Market. TSHS – 118