Supply and Demand Policy: The Destination Alone will Decide
October 17, 2017 1:55pm
By Georges Panayotis
We are entering a prosperous period, let’s not miss it! France's calendar is filling up with major events such as the Olympics 2024 and perhaps Expo 2025. Economic growth is taking off in Europe and finally in France as well; the time is right to take advantage of this favorable period to align our accommodations supply with customer expectations.
As we have already mentioned, new technologies, new services and changes in mentalities in the management of human resources will all play important roles in renewal; but that is not all. It is also essential to revitalize investments in the sector to develop a coherent and attractive offer.
For a few years now, the profitability of our industry has been shrinking for a number of reasons including heavy taxation on a sector that, in 2015, represented more than 7.2% of French GDP (transport, accommodations, catering). The second is that the hotel business benefits from a speculative bubble linked to real estate and very high initial investment levels. If you respect the 1000th scale rule, the prices that ought to be set are much higher than what the client is willing to spend, and all the more so since the development of alternative accommodations offers that are priced much more competitively than traditional hotels. With more and more competitors in the starting blocks it is time to redouble our efforts to achieve consistently competitive performances and stay on the podium.
The decline in productivity combined with very high prices directly impacts occupancy rates and the competitiveness of our hotels. The rise of new destinations on the world stage increases the pressure on prices and encourages operators, owners and investors to postpone their capital expenditures. This renewal and repositioning of supply is vital for the sector, yet the absence of inflation and the lack of tax incentives are major obstacles. The sector lacks dynamism and only has its margins to carry out renovations and / or launch more attractive and competitive new concepts.
If the government and public authorities need to offer any incentive, it must be reasoned and coherent in order to level the playing field between investments in the hotel industry and those in industry which are currently being widely favored. It is important to encourage more new projects and to have a medium- and long-term vision of the French hotel market by focusing on destinations with real development potential and a real need for new accommodations to absorb demand that is truly destined to develop. It is no longer a question of satisfying the political ambitions of elected officials who wish to meet the expectations of their constituents but to check who is performing well and why, and where will growth really be in the future.
The destinations where investment is needed are currently undergoing major changes and benefit - or will soon benefit - from a coherent strategy in tune with customer expectations to maximize their appeal to potential tourists. Easy and competitive access, differentiating and comprehensive services and leisure offers, quality accommodations, well positioned communication in connection with the assets of the territory ... It is not renovating outdated properties that are unsuited to current service quality or environmental quality standards for the umpteenth time that will resolve the lack of competitiveness of destinations in France. Doping is not a viable solution for the French hotel industry. Some destinations were strong in the past but are no longer or will not be competitive, it will be necessary to redirect investments where there is real potential.
In order to truly reach the benchmark of 100 million tourists in 2020 and take full advantage of the opportunity offered by the Olympic Games in 2024, as London did with the Olympics in 2012, it is necessary to ask the right questions and adopt the right strategies. It is not through the work of operators that the competitiveness of accommodations will return but through promoting the development of intelligent destinations that will become the locomotives of France in terms of tourist activity. To ensure that this opportunity benefits France and its entrepreneurs as much as possible, we are working as a team now and are building a medium and long-term winning strategy that is also profitable to make France a destination worthy of the global competition it will host in 2024. It is by detecting the potential of our young athletes that we can bring them to victory.
Tags: georges panayotis,
supply and demand,
hotel supply and demand
Georges Panayotis is President of MKG Consulting. Born in a family of hoteliers for three generations, Georges Panayotis, left Greece at the age of 18 to pursue his studies in Political Sciences and to obtain his Master in Management at the French University of Paris Dauphine. He then joined the Novotel chain, which will become the Accor Group, to manage the International Marketing Division. After developing specific marketing tools for the hotel industry, he left the group in 1986 to start his own company, MKG Conseil, now MKG Group. In twenty years, the group has become the European leader in studies and consulting for the Hospitality industry. The company employs over 70 people in four departments: marketing studies, database, quality control and trade press, with two publications HTR Magazine and Hotel Restaurant Weekly.
The company helped the development of over 2,000 hotels in France and in Europe, with offices in Paris, Cyprus and London. Georges Panyotis is the founder of the Worldwide Hospitality Awards and the Hotel Makers Forum, and the author of several publications on Marketing and Operations in the hotel business, He is a regular consultant for several television channels, among which Bloomberg Television, and radio networks.
Contact: Georges Panayotis
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