Recovery Plans: Looking To The Future
After what has been an extremely challenging time for us all, sector pioneers came together at the Independent Hotel Show Summit, sponsored by Gira, to discuss the road to recovery and planning effectively for the future. Expect real talk on capacity expectations, staff, new concepts, and growth areas as well as the changed traveller and some much-needed positivity!
Moderator: Sander Allegro, Owner, Allegro INNovations Hospitality Consultancy
Marco Lemmers, CEO, Conscious Hotels
After completing a Masters’ degree in Business Economics, I had a successful career in banking and finance. The lack of passion for the core product of this industry led me to a big career change. Together with a good friend I started working in the hospitality industry advising chains in merger and acquisition related matters.
Being unhappy as an advisor, I felt I needed to create my own hotel business; hotels with style, personal connection, lots of humour, and leading sustainability standards. Living according to sustainable principles with my wife and after becoming a father, my ambition to help save the planet for future generations was the reason why Conscious Hotels was born.
Conscious Hotels are attractive, funny and quirky and consist of 4 hotels, 2 restaurants and 2 cafés, all in Amsterdam. They are hard core sustainable in everything they do. But without shouting it into people’s faces. They take care of the planet, quietly in the background. No fuss. In other words: Eco-Sexy. Big Smiles.
Sander Allegro to Marco Lemmers: “When do you expect us to be back at pre-corona trading levels?”
Marco Lemmers: “I’ve been using McKinsey & Company information to carve a path out of this misery we are in. It has been forecast that in the year 2023/24 we will be back at the revenue levels we had in 2019. At the moment, I feel it will more likely be 2024. We are already a little bit below budgeted expectations for this year, however the good news about having such a low prognosis, is that if you lose a few extra % it does not hurt any more as the prediction is already so low. I am concerned about the second half of this year when we expect to have some rooms revenue again, hopefully we will be ok again and return to comfortable guest numbers once the vaccine starts to roll out, but this is not going to be a profitable year, not at all.”
Larissa Esser, Senior Advisor, Hera HRI B.V.
I am an operational real estate and hospitality expert, with over a decade of capital market and real estate investment banking experience. I founded my own advisory firm Esser Advisory in 2020 and I am Senior Advisor at Hera Hospitality Real Estate and Investments – a fully-integrated owner, asset-manager, and operator of hotel assets. Over the years I’ve been involved in a range of noteworthy transactions in the Netherlands including American Hotel Amsterdam, Pulitzer Amsterdam, Bilderberg Hotels and Restaurants, Apollo Hotels, Kimpton de Witt Amsterdam and DoubleTree by Hilton Amsterdam. I have a deep understanding of global capital markets coupled with profound knowledge of operational real estate and hotel operating fundamentals, a unique and valuable perspective.
Sander Allegro to Larissa Esser: “You told me in a previous conversation that this is a big crisis, but this is not a financial crisis and there is still a lot of money out there. What is your take on the predictions and forecasts we have heard from previous speakers?”
Larissa Esser: “With Hera we foresee that despite the current situation there is a tremendous amount of capital very interested in still looking at the sector and there is also evidence of this by a recent trade odyssey which is effectively a hotel policing platform which was acquired by an investor from the UK called Activum. They took over that platform and stated they ‘still have tremendous confidence in the sector and expect a full recovery. Some things may change but it doesn’t change our appetite to invest in hotels.’ Activum is not the only party that is interested to deploy capital in this sector, so in that respect this is a very positive thing to note.”
Floris Kemper, General Manager, Château St Gerlach
I started at 16 years old as a school dropout at my first hotel job (Hotel de Bilderberg) where I fell in love with the industry. I combined working there with the hotel management school and got promoted to manager, but after 1 year I went on another adventure at Nijmegen University – where I received my master’s in Business Administration in 2013. I went to Amsterdam for my first 5* hotel experience and spent 6 years with NH Hotel Group in various roles/projects.
In January 2019 I became GM at Kruisheren hotel Maastricht from Camille Oostwegel and moved to Limburg. As of December 2020, I am the new GM at Château St Gerlach in Houthem, also part of Oostwegel Collection.
Sander Allegro to Floris Kemper: “What are the changes you have experienced as I believe your market will have moved much more towards leisure? Do you expect that this will be a long-term path beyond just this Covid-19 period?”
Floris Kemper: “There’s a big difference if you look at last year, between our area in the Netherlands in relation to the Cities. What we already saw last year is a big move into the leisure market although Château St Gerlach is also focused on the meetings, we have a big meetings space which was unfortunately empty for most of the year. We did have months with record high revenues which is quite a surprise and some of the months were really booming. If you look at our average daily rate over 2020 it's higher than any other years. At the same time obviously, we did not make a profit due to the months in which we were missing out. Looking forward, we anticipate that as soon as it is possible for people to go out again, there will be another boom in our location as the Dutch have been asked to stay in the Netherlands and this drove many people to these more rural areas last year and so we are preparing for a busy summer period.”
Annemoon Geurts, Founder and Creative Director, Kazerne
Following my graduation from the world-famous Design Academy Eindhoven, I established my own corporate design agency. In context of Dutch Design Week 2006, Koen (my husband) and I organized our first “Eat Drink Design” event, a pop-up restaurant, which was open for nine days, where guests dined amongst various design works. At the 2007 pop-up, we initiated a project in which we paired Eindhoven designers with local restaurants to work on a joint project to see whether designers could help support the restaurants and vice versa. Their presentations generated a lot of very positive reaction and feedback which caused us to consider if we could take it further to offer guests inspiration while at the same time doing something for the local creative industries. So, we decided to establish a platform, a permanent location where people can meet, eat, drink and sleep, surrounded by design and get connected to a community that gives to grow. On December 7th 2007, we approached the city to ask if they had a venue for us, in October 2014 we opened the first 1.000 square meter exhibition space with a restaurant and two meeting spaces in the industrial part of the heritage. Since March 2019, the other 1.000 square meters in the monumental part is operational as well. Now the concept is complete and growing every day.
Sander Allegro to Annemoon: “You are relatively new to the industry. Please tell us about your experience. How are you coping with your beautifully designed hotel in this crisis?”
Annemoon Geurts: “We opened the hotel in March 2019, so we were just growing and then Covid-19 happened, and we needed to shut down. We have survived with the help of the Government but also with our community, people who make Kazerne possible with their wisdom, work or wealth. We have very generous landlords which we are grateful for. From our design perspective and from constantly living in the future in our heads, we are always looking for new opportunities and what we can do short-term or long-term, trying to be as flexible as possible. At the same time, we have been preparing our team and welcoming a new operational director to make sure we are ready for when things reopen.”
Sander Allegro: “The theme of today is that we look forward. What are we going to take forward with us in the post-COVID-19 era?”
Floris Kemper: “My feeling is that our guests are really looking forward to being welcomed and indulged again by the staff. Our hotels are in historic buildings, so the electronic robots and hi-technology does not really sit within our hotel experience. However, our staff requirements will change, especially if the business makes changes and we move more and more to leisure bookings. This requires more personal attention and so we will need to make certain processes automated or we will never find enough people to do the work.”
Sander Allegro: “There are parts of the industry which may not be suitable for robots and such hi-tech, but there are other areas where you can apply more technology. What is your take on this from a design perspective Annemoon?”
Annemoon Geurts: “I see a lot of changes in the world of technology, but I also feel the urge to have more and more personal contact. We need to find ways to be less materialistic and be more personal and ensure guests have a nice ‘personal’ experience. The sector will need to diversify to embrace the right technology but maintain the core of what hospitality is.”
Sander Allegro: “Marco what is your take on the new conscious traveller. How do you define the conscious and unconscious travellers?”
Marco Lemmers: “In a crisis, people tend to overreact; we are people, and we love to connect, and travel, and a lot will have changed for us. I believe travel will pick up again, but it will be more local and less international. It is important for hotels to be sustainable which is positive for the planet and will make a difference, especially as more guests demand this of a hotel. It is important to be working from a concept, whether that’s design or wellbeing etc, a nice logo with a bed won’t cut it anymore, you need to be more than that. And going forward, I think it is important that hoteliers connect with the locals. In Amsterdam, we’ve been successful in developing a lot of hotels, but people feel that the centre is very overcrowded, and I think tourism has been mismanaged over here.”
Sander Allegro: “Larissa, Chris Sanderson of The Future Laboratory said that wealthy investors are currently moving away from highly populated areas like cities and looking at more rural areas. Do you see a similar path for hotel investors?”
Larissa Esser: “Cities are definitely still hot, but they will take a bit longer to come back. What the crisis has done is pushed hotel owners to re-think their offering. There may be a perception within the investor world that now is the time to acquire what is effectively a great piece of real estate at a discount with a conviction that the industry will fully recover. It may be an opportunity for investors to acquire an asset whereas pre-covid they wouldn’t have been able to acquire or step in and help recapitalise a hotel. Travel will come back and whilst it may take a little bit longer for cities, I think that investors have a strong confidence in the industry and will continue to look at hotels in cities too.”
Sander Allegro: “Marco you’ve made investments into your hotels and you’ve made some major changes in your financing structure because of the crisis. Do you feel that there are signs of money in the market willing to invest and does that filter through to your organisation?”
Marco Lemmers: “People who want to invest in the industry want to enter just before it picks up again and I have the feeling that they are still waiting. A signal in the Netherlands would be the level of bankruptcies and they have been quite low so I am not sure that the opportunistic investors are moving in yet but that may happen in the next quarter or next month.”
Sander Allegro: “We’ve just had the prediction that we won’t have a full recovery in cities like Amsterdam until 2024, but if we look at what we need for an optimum recovery, what do we need to organise and how do we need to prepare ourselves?”
Floris Kemper: “My main concern is staffing. Like everyone, we had to downscale a little bit and with business recovery we will have to increase staffing levels again. And what we are seeing is people in the industry starting to get bored and look elsewhere, so my biggest concern is how will we find the right people to employ when we return to business.”
Sander Allegro: “Annemoon, you have a very creative outlook in our industry, what would you like to see change? This is an opportunity for our industry to make a shift, what are you hoping that we will learn from this pandemic as an industry?”
Annemoon Geurts: “We have all been given a reset button and we are conscious of the fact that we need to do things differently and be more aware of all the assets we have in the world such as people, animals and the natural environment. I believe that we need to be flexible as I don’t think that the crisis will end at one point, I think there will be some bumps along the way and when you are flexible you can adapt with those bumps to survive. Hospitality is not going to survive just by embracing new technology; it is far more about the connection between people.”
Sander Allegro: “Looking ahead to the third quarter of this year, when we are hopeful of some recovery, what might the path of recovery look like? We know that it won’t be immediate but where do we expect the first guests and travellers to come from?”
Marco Lemmers: “My view is that we will see travel pick back up around May. It is going to be local business and we expect to experience people travelling within country borders, then perhaps neighbouring countries, then the EU and UK, and finally intercontinental. That is the most logical development path for the second half of this year. For summer in the Netherlands, I expect local travel with many staycations and hopefully some neighbouring countries adding some business.
Sander Allegro: “Larissa, do you already see investors changing their set of criteria to reflect these trends in their investment decisions? Are they looking for hotels which cater to staycations? Are they wanting hotels with more technology?”
Larissa Esser: “Different investors have different strategies. There was a transaction which took place during the pandemic whereby KPR (Keystone Property Reports) acquired a business called Roompot which is essentially a holiday park geared towards staycations and local leisure tourism. With technology and innovation, this leads to cost and energy savings which prepares for a more sustainable business and if the customer expectation and demand is for this technology, then this will be reflected within the investor community.”
Sander Allegro: “Let us go to five years from now, when we are looking back on this, have hopefully forgotten about the misery and are enjoying our restored wonderful industry. What are the lessons we have learned and what changes have we made to our hotels? Not just in sanitation but in infrastructure?”
Floris Kemper: “With this crisis we have really had to focus on local and conscious. Local tourism but also local produce, and I am hoping that we can stick to that and not jump back on the plane but focus on the great landscape of the Netherlands. I hope that we learn that you don’t have to go far to experience nice things.”
Sander Allegro: “In Martijn Langstraat’s presentation, he said that there is evidence that guests trust the hotels and direct bookings more than OTA’s, with more direct bookings being made than ever before. How can we capitalise on that?”
Marco Lemmers: “It is difficult to keep that direct link. Airbnb is not only apartments in cities, but hotels too, so the field may change but there will always be a strong OTA presence. I feel people will connect again with the hotel via an app and if travelling and frequency picks up again, it is quite convenient for travellers when apps like booking.com have this seal of approval so they will likely win back the customers. Will they be as strong as they have been in the past? I am not so sure, and hopefully there will be some pressure on pricing and the commissioning will be lowered. The playing field has changed but there is a serious place for OTA’s. We expect an active OTA role from Google in the future. It hasn’t happened yet but if it happens, I won’t be surprised.”
Floris Kemper: “Of course we want fewer bookings via OTA’s in terms of commission, but don’t forget that at the same time it is very labour intensive to get all the reservations in via phone and email. If we are to look at processes which can be less labour intensive, I would say that we look for technology which helps us compete with OTAs.”
View the other insights presented at the Independent Hotel Summit here.