Are you the customer?

The current Facebook whistleblower, um, event has reminded us all of Douglas Rushkoff’s words that “we are not the customers of Facebook, we are the product”. It also reminds us that we shouldn’t look for morals in a website which started life as a way to rate women and was someone else’s idea anyway.

But away from why large corporations should pay tax and back to confusion over our roles in the capitalist tree. And this from someone who just took their dog to a dog café this week, where the role was made more than clear.

The confusion is ongoing in the hotel sector. During Marriott’s Q3 earnings chit chat, Tony Capuano, CEO, told analysts: “We’re close to completing an extensive review of our brand standards and are already implementing numerous changes intended to help reduce into our operating expenses while improving flexibility based on customer needs as occupancies rise”.

This can be taken a number of ways, and that number is two. On first view, the mention of flexibility leads one to think that the customer is the guest – the guest that is being rapidly trained to demand flexibility on booking and is getting it. And if they don’t get it, they’ll likely go to the OTAs for it and then the direct booking jig will be up.

Then that mention of operating expenses and brand standards makes one think of the owner, where there has been much in the way of clamouring for lower costs, as the hit from labour, food, fuel, just about everything else is on the rise. The pandemic has seen the owner raise their voice and look for greater alignment, as we saw first with the Great Summer of Travelodge, and this week with Hetherley Capital Partners’ launch of its value recovery model (with, of course, a former Travelodge). 

Charles Scudamore, CEO & founder, HCP, said: “The pandemic saw many owners drawn closer to hotel operations than they were comfortable with. We are offering them the chance to step back while we take care of the day-to-day issues of hotel ownership, but with the shared goal of recovering both profits and value. 

“There are a number of owners who may have decided to stick with a brand while the sector was locked down, but who are now feeling more confident in the market and reconsidering, looking for an alternative which fits in with their investment targets. 

“Institutional investors came to the sector looking for an attractive hedge for the other asset classes in their portfolios, without having to participate in the minutiae of hotels and we can offer them a return to that reassurance.”

The ‘who is the customer?’ question is the ongoing issue for the branded hotel sector, once which hasn’t changed no matter how many shocks the system gets. It’s not clear who the hotel is serving. Which is a shame, because if the hotel serves the guest, it serves the owner. The brands are seeking to get in between that message – albeit not intentionally – by trying to create loyalty a new-fangled way, with programmes. Thing is, there are no short cuts. That is slowly being realised. 

Elsewhere at Marriott much of the conversation was around the return of business travel and use of the word ‘resilience’. It came up three times in the prepared comments, so Capuano must really mean it. Resilience in Marriott’s case was aided greatly by the group’s credit cards and other seeming side projects. 

The company saw credit card branding fees of $113m, up 11% compared to the 2019 third quarter, on the back of strong new account acquisitions and “robust” global card spending. Residential branding fees also had another strong quarter totalling $18m.

It all goes to show that diversification really is a thing, as those large investors have been telling us for a while.

But for real delight you can’t go wrong with a massive deal. Hyatt was most chipper at its Q3 results, reporting 6.9% NUG (against Marriott’s forecast 3.5% for this year), a new $2bn commitment for additional asset sales by the end of 2024 and plans for earnings to reach approximately 80% fee-based by year end 2024.  What was driving this? The purchase of Apple Leisure. 

President & CEO Mark Hoplamazian said: “This acquisition significantly expands our leisure offerings and positions Hyatt as a leader in the fast-growing luxury all-inclusive resort segment.” Hoplamazian was also confident about the return of business travel, but for Hyatt, the future is not about a return to 2019’s corporate guest focus, but one of balance. Owners are hoping for much the same. 

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