Keeping tabs on hotels
The International Hotel Association (IHA)
The IHA's mission is to be the voice of the world hotel industry, with a global role in representing, protecting and informing the industry to enable members to achieve their objectives.
The association represents over 300,000 establishments in 147 countries. Among its members are 32 national associations, 50 national and international hotel chains, independent hoteliers, industry suppliers and more than 130 hotel schools.
The IHA strategic plan, Focus 2000, was established by the Executive Board in 1995 and determined three strategic priorities for the association:
The IHA protects the industry, in particular independent and corporate hotels, from laws or regulations that stand to jeopardise its profitability and productivity. With the support of industry experts, the IHA represents the industry's point of view before lawmakers and lobbies for positive recognition of the industry's economic contribution.
Visioning the future
The IHA is currently developing a capacity to anticipate trends and issues that will shape the industry's future, so that of competitive strategies can be aligned accordingly. The IHA White Paper on the Global Hospitality Industry is an example of how we are fulfilling this objective.
Last year saw the launch of the IHA Think Tank programme, 'meeting of minds', from within the industry and related sectors, which assesses the impact of key industry issues on industry development, such as human resources, technology and marketing. The outcome of each of these seminars is a set of recommendations to the industry on how to respond to these.
To ensure that the information we gather reaches the industry players who need it, when they need it, the IHA is expanding its information dissemination capacity to position itself as the foremost authority on and for the hotel industry. The publication of newsletters, reports and research on the latest industry development is a major focus of the association's activities.
'Into the New Millennium'
The International Hotel Association's White Paper on the Global Hospitality Industry has been described as 'the most comprehensive report on the future for hotels - a combination of reliable statistics and strategic appraisal that provides an invaluable perspective on a fast changing industry."
The IHA White Paper on the Global Hospitality Industry
It represents the first study of its kind to:
- define the size and scope of the global hotel industry;
- identify the issues shaping the hotel industry over the next five to ten years;
- analyse the competitive methods of multinational hotel chains over the last decade;
- provide background information on key political issues impacting the global hotel industry.
For industry players seeking survival strategies for the 21st century it is compulsory reading.
The White Paper was compiled under the leadership of Professor Michael Olsen of Virginia Polytechnic Institute and State University. In an effort to gain as much insight as possible a series of 'Visioning the Future Workshops' was held in different regions of the globe. Participants included top-level representatives from the industry and related sectors who gave their views on the development of the lodging industry over the next five to ten years.
One of the White Paper's most important achievements is the definition - for the first time - of the contribution the hotel industry makes to the world economy in terms of revenue generation and job creation. Statistics were compiled from data gathered from over 170 countries and territories.
According to the White Paper, the hotel industry worldwide generated over US$247 billion in revenue in 1994. Further key findings include the following:
The White Paper demonstrates the important role the industry plays in job creation and providing employment for those seeking entry in to the job market. It foresees significant growth opportunities in the markets of Asia, the Middle East and South America. With the expansion of free market economies and democracy in these regions, the prospects for hotel development are encouraging as the political risk associated with investment declines.
- there are 307,600 hotels worldwide, the highest concentration occurring on the European and North American continents, but considerable growth taking place in regions with developing economies;
- the estimated total number of hotel rooms worldwide is 11,333,199, of which 70 per cent are in Europe and North America;
- there is about one employee for every hotel room in the world. Hotels employ more than 11 million people worldwide. More than four million of these are employed in the Americas, with over 2.5 million employed in Europe;
- there are actually more hotels on the European continent than in the Americas (167,000 compared to just over 82,000), but the hotel industry in Europe, being primarily a small family-owned and managed business, employs far fewer people per hotel than in the Americas;
- it is estimated that a hotel room requires from as little as $15,000 to as much as $300,000 to build. When multiplied by the total number of rooms worldwide this yields and estimated total asset value for the industry ranging from $170 billion to $128 trillion.
One of the main sections of the IHA White Paper is devoted to identifying the forces of change and key influences on the hospitality industry. Five areas have been pinpointed as having major implications for hotel development:
Capacity control - the impact of distribution networks on the sale of the inventories of hotel rooms (as well as airline seats, car rentals tickets to attractions and seats in restaurants);
Traveller safety and security - terrorist threats, political conflict and health risks; how hospitality providers can meet these challenges in order to reassure both guests and investors;
Assets and capital availability - the implications of a shortage of capital to meet existing development needs and fund future growth;
Technology - 'the most significant competitive advantage hospitality firms can have throughout the remainder of the 1990s and beyond'. The need for hotel managers to learn to navigate the information superhighway to market their products and services successfully.
New management - the qualifications needed by the next generation of hotel manager to survive in the increasingly complex and volatile business of hospitality.
Of these five, technology is clearly the dominating force and has an impact on all the other areas. Will the hotel if the future be technology driven? Is it likely to be more dependent on the technology to attract and retain customers? The White Paper seeks to provide answers to these and many other questions on the nature of the hotel business in the years to come.
And what of hotel managers? The White Paper predicts that a talent for forecasting and long-term strategic management will be a must for the managers of the future. In addition, the challenging business environment will require managers who can balance perfect service and product delivery with the demands of owners or investors for an optimum return on investment.
A principal challenge managers will have to face in future is the marketing of their products and services. How will the evolution of the information superhighway affect the work of hotel managers? Are they likely to be more involved in direct-to-consumer marketing? A likely development is that managers will have to learn how to evaluate and maintain all forms of strategic alliances, in an increasingly interdependent and complex marketing environment.
It will be interesting to come back in five or ten years time and assess the accuracy of these predictions. But based on current developments, they are likely to become a reality.
Identifying the issues set to shape the industry in future the IHA White Paper emphasises the importance of the need for a new approach. It asks the reader to 'step out of the box of tradition' and think afresh. Events referred to in the White Paper are not fantasy - they are being experienced now. If hotel companies are to survive, the White Paper cautions, these changes must be incorporated into long-term business strategy.