Somebody asked me a while ago; “Marco if you would go back into the Hotel business, what would you change”?
Wow, tough question I thought and I had to think about this for a while, as I do not pretend to know the Real Estate nor the Retail business in depth, but here are my biggest learnings…
1. Remain relevant (change is constant).
2. Be fast in all the new initiatives you do.
3. Get to know your guests in detail.
4. Engage with the right people who can spot trends and the changing in behaviours.
5. Be on the shop floor and be in the boardroom.
6. Look at your competition every day.
7. Focus on the return per square metre.
My induction into the Retail business was quick and fast, like the retail industry itself. It behaves and moves so much faster than the hotel industry! If you are not relevant in 3 – 6 months, you can be out of business in no time. The biggest learning being; “You have to be and remain relevant” for your guests, i.e. our clients. One of the most important achievements was for me to change In the company I work for now, to call our ‘consumer/ clients’ or ‘client’ to ‘guest’.
Are we fast in the hotel industry? A hotel is renovated every how many years? (I think the average is, something like, 15 years). We maybe change a menu every three months, but as for a different concept and a different style, I don’t think so! In the retail business you have to change at least every 3 months, if not sooner, as the styles, trends, seasons, brand designs and guest desires/ likes & dislikes change rapidly.
Speed is of the essence in the retail business. Guest preferences and style change so fast based on different influences, i.e. the Social Media (the word of mouth of today’s age) and the digital speed in which the retail brands communicate. When you have an idea, implement and fail forward. Adjust but change now and change fast, that is how you can set yourself aside from the competition.
Retail has many, many guests every day, sometimes 100 times more than a hotel and they always will try to get the know the likes, dislikes, spending behaviours, geographical basis, method of transportation, dwell time etc of our the guests. Retail has to do this in the shortest period of time, sometimes within minutes. And they do! Maybe not in the depth they want, but they make an effort. In the hotel business we have them eat, drink and sleep with us. Dwell time is rather long, compared to retail, at least an overnight or a few hours for dinner. In the hotel business we need to be able to get more guest information and start communicating with them based on the information gained. The hotel business is in the best position to do this as “The guest sleeps with you”!
Retail is in the business of staying relevant through spotting new trends and identifying future guest behaviours based on the new styles & trends. Like I said in one of my first paragraphs, if you are not relevant you are out of business in no time. Spotting trends is a skill set and the retail business always tries to be ahead of the trends that are forth coming. They hire, engage, spend time with people who are way ahead of the masses, “Constantly”. Not through conferences and trade shows, but through one-on-one meetings with our guests, the fashion brands, key opinion Leaders, the stylists and personal shoppers who are in daily contact with guests. They know what is coming and it is up to us to be in touch with them.
The business of Retail is the same when it comes to the Hotel industry in terms of ‘being on the shop floor’. That is where the guests are and that is where the money is made. Sounds familiar? Never-the-less, I found it more and more difficult to see Management of hotels actually in the lobby, in the bar or in the restaurant greeting and engaging with their guests. Sad, as the hotel business is a people business by definition. The Retail Management team is constantly on the floor, engaging mostly with the brands in store to see what is happening with the guests, identifying behaviours and opportunities at all times. The Hotel business can learn from the Retail Managers. “Be in the boardroom”, that is a tough one, but an essential one. The brand management teams change so fast, that if we (as Retailers) are not in constant touch on a board level, we will not stay ahead of the curve. Brands are fickle as they change direction frequently and in direction we cannot always predict. These changes are based on change in ownerships, on CEO or designer. These changes are profound to the business. The Hotel business should remain in the boardroom with its major suppliers of rooms and revenues, as well as their major suppliers in terms of goods as the purchasing cycles can change rapidly and you can be left standing, surprised. Surprises in Retail are never good, unless it is for our guests!
Competition can be fierce in any business, but the competition’s USP can put you out of business in the Retail business if you are not able to react instantly. In the Hotel business we look, we realize and ‘eventually’ change. The guest will change behavior very fast and possibly their loyalty also as we know that loyalty is no longer guaranteed. In Retail we get our inspiration from everywhere - museums, department stores, concept stores, hotels and resorts, cruise lines, art and exhibitions. Again, this is how we in Retail try to stay relevant.
The return per square metre is not necessarily a Retail KPI, but more of a Real Estate one. That is where we in the Hotel industry have something in common. We look at REVPAR and in the Retail business we look at YIELD PER SQUARE METER” – the same and not the same, as in Retail this KPI is looked at every day, day in day out, to make sure that the revenue lines stay on course. In the Hotel business we do this maybe monthly or quarterly and then again it is the owner’s concern and not always the management company’s concern. Again, return on the Real Estate space you give out to a brand is important and should be looked at much more frequently. In the Retail business you try to gain every square meter of scalable space to make more revenue and in Hotels we still have lobbies and wide, wide corridors because it ‘feels’ and ‘looks’ good. Every hotel General Manager should follow an Asset Management of Real Estate course, in order to understand the return on the Real Estate they manage better and create a more level discussion with your owner.
I think I could write an entire book about this so condensing into 2 pages is never enough, but I would love to start a communication on this through LinkedIn and I promise to engage.