CEOs pinpoint challenges, goals - 'Evolving Success in Today's Travel & Tourism Market: A New Model' panel

New York -- Several top lodging executives discussed challenges of the lodging industry and the plans for their companies for 2004 at a c.e.o. panel, "Evolving Success in Today's Travel & Tourism Market: A New Model," which was held during the International Hotel/Motel & Restaurant Show during November.

Steve Porter, president of The Americas for InterContinental Hotels Group, said the industry largely is made up of public companies, which has a huge impact on the way IHG operates.

Paul Whetsell, chairman and c.e.o. of MeriStar Hospitality Corp. and Interstate Hotels & Resorts--both publicly traded companies--said the travel industry is always changing and evolving and that hoteliers need to change their management styles to keep up with those changes. Whetsell said the biggest challenge of being an operator is balancing the financial objectives of the owner, the customers' wants and the brands' needs.

"We represent the owners, who face a lot of difficulties like discounting pressure on revenue and the need to drive as much as possible to the bottom line," he said. "Customers want more and more customization but want to pay less. But that's always the case. And brands, they feel pressure about how to hold on to their customers."

Dieter Huckestein, president of hotel operations for owned and managed hotels for Hilton Hotels Corp., said global peace will benefit the travel-and-tourism industry. Huckestein said Hilton is strategically complete because it has a brand in every segment.

"We're capturing guests at every price point," he said.

Huckestein also said it's important for a hotel company to understand the power of a great guest-loyalty program.

"Technology has given us the tools to develop great guest interactivity," he said. "The third-party [reservation] sites don't do that."

Steve Bartolin, president and c.e.o. of The Broadmoor resort in Colorado Springs, Colo., said there will be a 5-percent increase of cash flow to the hotel's bottom line compared with last year. Bartolin said the owners have a philosophy of investing in the property during down cycles to be ready for the upswing.

"We've figured out a way to win," he said. "Work harder, be more creative, know that experience counts and know that marketing counts.

Bartolin said the stability and continuity of the property's private ownership also contribute to its success. He said that since the hotel opened in 1918, there have been two owners and six presidents.

"The fundamentals don't change," he said. "It's all about people. Invest in people, and show them that you believe in them."

What's ahead

Porter said consolidation in the industry will continue, and Huckestein said there will be more consolidation in Europe.

Whetsell said MeriStar will be raising equity and will use that equity to upgrade the properties in its portfolio. He said the company hasn't bought a hotel since 1998.

Porter said IHG plans to continue to be involved with urban projects such as condo-hotels. Huckestein said it's appealing for people to live above a hotel in cities because they can take advantage of what the hotel has to offer.

Whetsell said extending the booking window is a matter of supply and demand, and it will increase when demand increases. He said the industry will be able to manage rates better when the booking window increases.

"But we'll still have some of the same problems because of transparency of rate," he said. "That's here to stay."

Huckestein said hoteliers need to make sure that the physical aspects of their hotels are up to snuff because of the competitive marketplace.

Whetsell said the dynamics of ownership have changed, and MeriStar has reshaped it's portfolio and has an aggressive divestiture strategy.

"We're going to see quite a bit of transactions in the next three years," he said.

Huckestein said Hilton's ideal property portfolio breakdown is 45 percent owned, 45 percent managed and franchised, and 10 percent timeshare.

Porter said IHG is a choice seller of properties, meaning it doesn't have to sell, it wants to sell. He said IHG has about $4 billion of real-estate.

"We want to own select properties and grow from franchising and management contracts," he said. jwalsh@advanstar.com

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