Leaders discuss concerns, hopes at HICAP ANZ

From concerns about promoting purpose and leadership, as well as managing costs, to hopefulness about emerging partnerships and ongoing potential for growth post-COVID, panelists on Views from the Boardroom session last week at The BHN Group’s HICAP Australia, New Zealand ran the gamut of sharing recent experiences and expectations for the road ahead.

Moderated by Ashurst Partner Pauline Tan, panelists included Peng Sum Choe, CEO, Pan Pacific Hotels Group; Sarah Derry, CEO, Premium, Midscale & Economy, Accor Pacific; and David Mansfield, managing director, The Ascott Ltd., Australia. The conversation quickly turned to challenges and what keeps the group up at night and concluded with them sharing their hopes for the immediate future. In between, conversations centered on the state of competition, franchising in the region, sustainability and more. Here are highlights from the conversation.

Pauline Tan: What keeps you up at night?

David Mansfield: It’s really about everyone within my circle of influence delivering on our purpose in line with our brand belief and very much in line with our values.

Second, we are all susceptible and obviously have responsibility to protect data at all costs. So, we need to be ready for that.

The third and final concern is construction costs and managing the various stakeholders in our network, making sure that we make the right decisions in tandem to ensure that we grow responsibly, not just for the sake of growth, and to have sustainable businesses that are profitable. And we have to deliver for the customer with targeted services and amenities.

Sarah Derry: Within our hotels and our teams, we need to control the controllable – flex to the moment. So, whether it’s capacity, return of certain markets, ESG – those are outside of our control but we’re mindful of them. Things like cost of living, costs of operating business, foreign exchange – those are things that we spend most of our time talking about at the moment… Our job is to think about how we can we confidently step into our businesses and lead in a really clear way, driving as many efficiencies as we possibly can, and caring for people.

Peng Sum Choe: We’re part of a bank, and as with all Chinese P&Ls, if you do well this year, you better do better next year, and so on.

So, part of what keeps me awake is, of course, how to keep growing the next 18 months when we’ll be adding about 18 new properties. But it doesn’t stop there – it just has to continue.

We are really gearing up for growth and one of the brands in our collection is about sustainability, which is not cheap – it’s never cheap to go into sustainability. It’s not just about removing straws and plastic bottles. It’s about building a sustainable hotel, and hopefully, we’ll will continue to grow that portion.

Also, people are important, and it’s amazing that when you have a great team you can do so much. The culture and the glue that goes with it is something that I really think about – how to motivate and how to grow what I call a high-performing team.

Tan: How can hotel companies get ahead and stay ahead in this competitive environment?

Mansfield: There are so many of us in the room who do different things, but we differentiate and that’s the key. We have a targeted customer and it’s just delivering on that being disciplined and aligned to what your targeted customer expects. How do you differentiate and activate that feeling of community in your property that actually delivers value for money?

Franchising is here to stay… We’ve been very fortunate with partners who really believe in the brand and service for customers. That’s the key to franchising – getting a partner that that believes in it… You need to be very sure of who you’re in bed with.

Peng Sum Choe

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Derry: What will make us competitive going forward will be around the experiences that we offer in our hotels and our owners making great investments to not just the design and the feel of the hotel, but actually incredible experiences… It also has to be around the brand making individual hotels standout. What’s unique to the brand? How does that appeal to certain markets? That is going to be critically important.

Peng: I call it niche marketing because if you can’t tell the brands apart, we fail… For example, in our sustainable hotels, we take guests on tours to our rooftop solar panels and explain the benefits to the urban farms and to the biophilics in the design. You won’t believe the tours are booked up every day. And since it is so popular, we threw in a high tea and charge $78 – and it’s still full.

Tan: What are your thoughts about franchising in the region?

Peng: Franchising is here to stay…  We’ve been very fortunate with partners who really believe in the brand and service for customers. That’s the key to franchising – getting a partner that that believes in it… You need to be very sure of who you’re in bed with.

Derry: We have more than 100 franchises in the region… But it is for certain brands or categories and we tend to find that franchising works really well in more regional areas or just outside of CBD locations versus CBD hotels where management tends to still work better.

Mansfield: We love franchising… We have a responsibility and obligation to provide all the systems and support we can to help those business owners make the best out of that location and generate wealth for themselves. And without that we really don’t have much of a business. So, there’s a lot of responsibility, whether it’s brand franchising, business for franchises where we need to deliver. That’s probably the key, and we’re doing that in Australia.

Moderated by Ashurt Partner Pauline Tan (far right), panelists included (from left) Peng Sum Choe, CEO, Pan Pacific Hotels Group; Sarah Derry, CEO, Premium, Midscale & Economy, Accor Pacific; and David Mansfield, managing director, The Ascott Ltd., Australia.

Tan: How do you balance the investment in the infrastructure that sustainability measures require?

Derry: Sustainability is not a competitive advantage. It’s something that we all need to be united around – everyone in this room, investors and so on.

The other piece is building the capability and knowledge in our leaders, our owners, our general managers. So, all of our teams right now are going through a training program about building our own capabilities and knowledge in that space.

Tan: How much efficiency is there for green hotels versus traditional hotels?

Peng: The costs of sustainability equipment is dropping... What was a 15-year return has now become a five-year return. Slowly, it’s going to make more sense.

Tan: How have increasing construction costs impacted your business growth plans?

Mansfield: You have to think outside the square. If you don’t come up with solutions and work collaboratively with your development partners, we’re just going to sit around the table, look at each other and say, ‘nice to see you again.’

We have to go back to the table and work with the developer and say ‘we understand you need a better return, we understand you need a higher rent.’ Then we need to look at how that impacts the entire stakeholder network and structure responsible deals whereby we can get cash flow and activate the value in that local community. That right location that brings about the returns for our owners and, more importantly, impacts our ability to grow the network and grow our brands.

Peng: We do buildings and resist two words: variation order and extension of time. These are the two things that will kill you and come about when you do last minute changes. You have to do the work upfront. Get it down all the way and seal the deal.

Tan: What do we need to do to fix labor shortages?

Derry: The difference this time around is the skill level of the individuals that are coming into the industry. So, it requires more investment from us for training.

It’s also about looking at new sectors as talent is everywhere. It’s about looking in every single corner for great talent… People want flexibility and a bespoke approach to how they work now. We have a program to understand the individual and what they want, and tailor an experience for them.

We have to go back to the table and work with the developer and say ‘we understand you need a better return, we understand you need a higher rent.’ Then we need to look at how that impacts the entire stakeholder network and structure responsible deals whereby we can get cash flow and activate the value in that local community.

David Mansfield

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Peng. We need to really talk about retention, starting with orientation and training so staff will feel that they are part of the company and treated well… If the culture is strong, we’re really looking after our people. Even if the competitors offer more money, employees will think twice before leaving an environment where they feel comfortable and belonging. That’s important.

Mansfield: We just need people to be able to be themselves, and diversity is very important. We need to support females and their partners… How do we bring about real change that’s supporting families to actually have children, but more importantly, to bring people back to have their career without any stifling audit?

Tan: What gives you hope?

Mansfield: The unity between the Accommodation Australia CEO Michael Johnson, TTF and Tourism Australia. Without a doubt, the alignment with those three organizations to support our industry is well and truly in place. It’s really one united body that takes it to government, particularly in getting change that supports what we need done for our sector. We have that in place now and I’m so looking forward to seeing that come to life under a new purpose, vision and mission.

Derry: It’s about people and partnerships… It’s about goal setting. Hope is the idea of thinking about the future and identifying this is the goal I want to achieve here and having the determination to do that. And that’s done through people and partnerships, whether it’s investors, owners, community partners, but having great people. It’s something to embrace because it will help us all succeed and perform better.

Peng: After the industry went through quite a bad patch with COVID, it has come up really strong… But I also think we need to be careful as while the industry is coming up, getting all the money we can get, we really should look after our guests.