Guests ‘no longer looking for a hotel experience that feels like a hospital’, says Global Hotel Alliance CEO

Dubai: Covid’s nearly out of the way, and the world’s hotels can – fingers crossed – look forward to a busy summer. Sure, business travel is not yet anywhere close to pre-Covid times, but that was something hotel operators were expecting anyway.

For now, hotels everywhere want to reclaim the holiday travellers, and which is why this summer is of particular importance. If worldwide occupancy levels can push into the high 60-70 per cent range, that would constitute a win. Anything higher than that would be the topping.

So, who among hotels is best placed to win them back – the big legacy operators or those independent/boutique names? Chris Hartley is CEO of Global Hotel Alliance, a grouping of mid-to small hotel brands, and he provides a few compelling reasons as to why standalone hotels can ride the wave as easily as the big ones.

It is said that the global hospitality chains recorded the faster turnaround - because they had the networks. How has the post-Covid bounce been for independent operators with just a few hotels?

Rather than the size of the hospitality chain, it has been the type of hotel that has driven the speed of recovery. With leisure travel resurging almost to pre-pandemic levels, resort hotels have been most in demand. With our mix of smaller independent brands – and leisure resorts such as Anantara, Outrigger, Nikki Beach, Viceroy etc., - we have arguably experienced a faster turnaround than the business hotels or mega-chains.

We saw a strong resurgence in Q1-2022 room revenues, showing increased momentum for travel recovery. The UAE and the Maldives dominated revenues during the first three months of the year, with GHA brands in these markets commanding average room revenue (ARR) per stay of US$1,270 and $8,530 respectively, compared to the global average of $670.

Ten hotels out of more than 500 globally in GHA Discovery, our loyalty programme, accounted for one-third of total Q1-2022 room revenues. Six out of those 10 were located in Dubai and the Maldives.

Following two years of travel restrictions and uncertainty, pent-up demand for leisure travel in particular has been unleashed and GHA hotel brands - with properties located in some of the world’s most desirable and open-for-business leisure destinations - are benefitting from the rebound.

Do such niche operators represent the majority of the GHA affiliations? Did they have to slash rates and pad up marketing costs to get noticed?

GHA provides services that are as suitable for independent brands with less than 10 hotels - Doyle Collection, Nikki Beach, Capella - but also much large brands, such as Kempinski (80 hotels) or Minor (with large brand footprints such as Anantara, Oaks or NH, which joins in June).

In terms of slashing rates, the short answer is no. With some destinations slower to reopen and lift travel restrictions, huge demand has been channeled into limited supply, and so rates have actually increased dramatically, in many cases significantly higher than pre-Covid.

While there were a lot of Covid-related safeguards during the height of the pandemic, customers are no longer looking for a hotel experience that feels like a hospital. And so, Covid safeguards are sensible, but discreet, and certainly not driving higher costs.

While during the pandemic many brands slashed marketing costs, GHA doubled down with an investment in a completely revamped and reimagined GHA DISCOVERY programme, which launched in December 2021.

Accelerated demand for luxury leisure travel, following two years of pandemic-related restrictions, generated phenomenal surges in spending.

Do you think there is space for niche operators? After two exhaustive years, wouldn’t many be thinking of selling to a bigger group?

With most of our hotels/brands being owner-operated, we are working with UHNW (ultra-high networth) owners who are fundamentally opposed to being part of a big chain, and the pandemic has not changed their view on that.

The big advantage of joining GHA is that we provide a solution for independent brands that helps them compete with the mega-loyalty platforms, such as Marriott Bonvoy or Hilton Honors, without losing operational control. Or their individual brand identity.

There are no annual fees or fixed fees to participate, and so hotels are only paying a low, variable performance fee, which makes our business model very attractive relative to the big chains and generates a high RoI for our member brands.

Is that a feedback you are hearing from GHA partners?

We are majority owned by our own member brands (Minor, Kempinski, Corinthia and Pan Pacific). So, our primary aim is to drive incremental revenues to their hotels, rather than maximise profit for the alliance, and again this makes our business model very attractive for independent brands.

They know we are owned by hoteliers who have an asset-owner mindset in the way they operate the alliance, and our economic model reflects that.

We relaunched GHA Discovery last December and introduced Discovery Dollars (D$), the industry’s first digital rewards currency, where members earn and spend D$ at any property in the GHA DISCOVERY portfolio. This ‘currency’ is more flexible for customers than the big chains’ points systems, and it is already proving popular with our customers after only five months since launch.

Firstly, D$ are driving what we call ‘cross-brand revenue’ – representing stays from members who enroll with one GHA brand and stay with another – and in Q1-2022, this was almost 2.5x higher than the same period in 2021.

Some 61 per cent of D$ redemptions during the first quarter of this year were made on cross-brand stays, proving the new currency is encouraging members to try new brands. At the same time, with members upping their spend, and hotel brands reporting higher-than-normal ADRs, the number of D$ issued has rocketed.

Will the next two to three years see limited new hotel capacity additions worldwide?

We certainly don’t see this with our brands, in fact, quite the opposite. In the first three months, we saw additional properties from our brands joining the alliance - such as Anantara World Islands Dubai Resort, and Avani Muscat - but also brands such as Outrigger, Tivoli, Capella and Kempinski are extending their reach with many new openings later this year and in 2023-24. NH Hotels will be joining GHA in June and is opening new hotels around the globe. Indeed, the first NH Hotel in Dubai will open at the end of this year.