Tough Talk: Where are the innovators?

Mike Scully

Without innovation, hotels run the risk of becoming boring bed factories, asserts Seven Tides Hospitality managing director Mike Scully. As owners demand creativity across every square foot of their development, Hotelier asks industry experts to respond to the challenge

As we come to the end of what has been a challenging year for the industry, it is time to ask: what are we going to be doing about innovating our hotel product in the future?

Let’s start with construction and development: I believe that the future of hotel development will be in the creation of multi-use buildings; buildings that will operate any number of functions, a little like today’s shopping centres with a hotel attached. Multi-use can cover the combination of either one or all products including:

• Office
• Residential
• Shopping
• Water parks
• Themed areas
• Kids’ zones
• Virtual reality centres
• Sports facilities
• Amusement arcades
• Space stations

Another area of development will be strategic partnering of services and facilities as well as multi-brand and multi-serviced buildings. I envisage that we will find that owners will partner with the likes of IT companies, MEP contractors and interior design and fit-out specialists.

Their services will be bought on a lease basis, which will mean that the developer will in future probably only need to raise 50% of the capital that is required as all other services will be leased.

I also see the advent of operators concentrating more on their systems and loyalty programmes, enhancing further distribution without the responsibility and risk involved in filling too many rooms.

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We will begin to find innovation in signing management contracts. We are finding increasingly that the operator confines his innovation to any ideas which build its own brand to drive customers to its booking engine. Their ability to innovate on a property-by-property basis is diminishing by the week and that is why we are seeing the business formula of strategic partnering becoming even more prevalent.

Creativity drives cash

What we are looking for now as hotel owners and developers is innovation and creativity that drives cash into our buildings. We are looking for innovation that takes every square foot of our development into consideration so that they become revenue centres of their own. This has fundamentally developed from a situation where high land prices and cost of construction are forcing owners to look at the development as a whole, where they cannot get a return on investment or room rate only, which in the past they were able to do. If an owner employs an operator that’s too rooms-focused with few other revenue streams, his room rate will be out priced on a competitive market basis.

But let’s not lose sight of the need for innovation on ground level, as this is where the customer is looking for the opportunity of spending, where he will get the most satisfaction, enjoyment and value for money. We want entertainment in our properties which transgresses race, age and sex. We want innovative entertainment centres where the entire family can enjoy themselves. We only have to look at how the shopping mall concept has developed over the last 20 years to see the demand for this — they have gone from being boring unimaginative shopping malls to vibrant dynamic centres, where the family can spend a day and they can shop, eat, go to the ski slope, watch a film, enjoy activity centres and kids’ zones; the ultimate in all-day entertainment.

Hotels, on the other hand, have gone from being the centre of attraction in the 50s, 60s and 70s, to ultimately being very boring bed factories in the 21st century .

We are now ready for change and innovation, which can only be achieved by a shift in culture.

Mike Scully has worked for some of the leading hotel management companies worldwide — Sun International, Holiday Inn, Accor and Starwood — as well as developing and managing properties for the Dubai Government. He is currently managing director of Seven Tides — Hospitality, which will be opening four luxury properties in Dubai within the next 12 months and which also owns Dukes Hotel in London.