One of my favorite songs from Radiohead has a verse that reads “Dinosaurs roam the earth” and funny enough (even though we thought they became extinct millions of years ago), dinosaurs do indeed still roam the earth.
These lyrics took on a new meaning recently while I was attending an event with several other hospitality professionals and where an interesting discussion unfolded about the new roles that technology plays in the distribution channels used by hotels to sell their inventory.
As in any of these professional events, when you gather people from all nationalities, backgrounds and ages, you end up with an interesting mixture of opinions. Never could this be truer than when you mix beach hotels, Spanish attendees and technology into one discussion.
After listening to the thoughts of my fellow attendees, I confirmed to myself once again, that the hospitality industry is still a place where young professionals (no matter their experience and knowledge) often times still have to prove their value twice as much as they would if they had salt and pepper hair or, as we will call them here, the dinosaurs.
Unfortunately, the dinosaurs still do not listen to the signs of the fast-approaching meteorite and this became starkly clear from a discussion raised by the manager of a particular beach hotel. This colleague brought up a case where a tour operator was making a fuss about another tour operator having been offered a net rate that was two cents (literally) under the net rate they were given. Now, I’m sorry, but if we are competing for a meager two cents then I don’t want to be a part of antiquated business models that are evidently nearing extinction. What if I have to fill 1500 rooms? Some might argue that in this case, those two cents make a difference. No disrespect, but if the only way of differentiating my hotel from the competition is over a couple of cents, then there is something that we all are doing wrong.
Obviously, as hoteliers, we all have to pay salaries. If my hotel does not renew a contract with a particular tour operator, then you can be assured that some other hotel will be glad to. Herein lies the problem. Thus, the moment we enter a price war, we give away our power to the consumer, to distributors and to whoever will take it from us. Why does this happen? Well, one of the reasons is that the offer amongst the competition is definitely higher than the demand, but there is more to it than this age old problem.
So, is this beach hotel sector really competitive then? Or is the shadow of the meteorite hanging over us? What if the product that comprises those hotels near the beach, that only offer a bed and a terrace near a “chiringuito”, are a product in decline? What do you do with a product in decline? First of all, admit you have one.
You can compete for a few cents for a while, but at the same time you must plan for the future and embrace innovative business models that will set your hotel apart from others. With a fresh vision of the future, you may find unforeseen options to capitalize on. And maybe, avoid going the route of the dinosaurs who will see no option other than to close their doors because clients are no longer interested in their antiquated product. It might be harsh, but this is the direction many of the dinosaurs will take because they continue to wander around blinded by the fear of change or fear of taking risks.
And on top of it, we are caught up in what I call the “sandwich” of a developed economy: as consumers, we are constantly looking for better prices, as employees we are looking for higher salaries and, as managers or owners of a company, we are constantly looking for higher margins of profit. Although this sandwich is not likely to go away any time soon, it is not sustainable unless we consider we live in a global economy. Therefore, our competition and our customers are not just across the street anymore. We cannot continue to take for granted that they will want the same product, but instead will demand an ever-changing and diverse product that adapts to their own evolving needs.
Many economists have mentioned that from now on, economic and financial crises will be ever more frequent. Other economists have said that this crisis occurred because the capitalism model is used up and a new economic model is needed. I say that this crisis is the new “meteorite” that is pushing the old dinosaurs towards their inevitable extinction. We can avoid the ensuing ice age if the younger generation is prepared to take over and is given the opportunity now to innovate. This is the key to remodeling the hospitality industry for the future and at Les Roches Marbella we encourage creative ideas as a means to this end when training future hospitality leaders.