Focus on net ADR and distribution, investors told

BERLIN – Attendees at the International Hospitality Investment Forum (IHIF) in Berlin this afternoon were advised to focus on their net ADR and distribution during a panel focusing on profitability.

Neil Kirk, COO of London-headquartered L+R HOTELS, suggested drilling down into the big KPIs to examine what is driving them, such as true net ADR, as well as focusing more on distribution.

“The true net ADR is something we all need to work harder on,” he said. “Net ADR is the one we all have to get better at.”

L+R, which manages a 23,300-room portfolio including Iconic Luxury Hotels and Atlas Hotels and has a worldwide investment and development portfolio of approximately £9 billion, is focusing on growing its select service portfolio in the UK and Europe. Earlier this year, the group announced it was joining forces with Dutch pension fund manager PGGM to back a new €1 billion venture aiming to buy hotels in key European cities.

Meanwhile, Kirk said clustering its teams had allowed the business to drive top line profitability, while others spoke of redeploying staff, all in light of the sector’s staffing shortages. Jens Mathiesen, CEO of Scandic, the largest Nordic hotel operator with approximately 280 hotels, and Ruslan Husry, MD and Founder of Berlin-based multi-brand operator HR Group, said their companies had an increased focus on digitalisation to free up staff for deployment where they are most needed.

All panellists agreed that the pandemic had shone more of a spotlight than ever on people, whether that was the importance of investing in team members; maintaining relationships with partners, landlords and suppliers; or understanding the customer needs – as well as delivering on that.

Although Kirk suggested customers were aware of and sympathised with staff shortages, he said the question remained when that sympathy would wear off.

Jonathan Mills, CEO EMEA of Choice Hotels, said the franchise-only operator conducted a survey of its customers and franchisees, which revealed higher expectations among customers for the higher prices they were paying. The group franchises more than 7,100 hotels and reported total revenues of $1.1 billion for full-year 2021.

Following the survey, the business reviewed its operational model, its value proposition, and refreshed its brand – all of which, he said, was a bottom line-driving approach with an emphasis on customer experience.

Panellists also spoke of a pivot towards leisure, which has recovered from the pandemic more quickly than business travel. Kirk, for instance, said L+R changed the way its city centre hotels booked rooms, allowing guests to book interconnecting rooms to make them more appealing to families.

Methiesen spoke of “moving more and more into leisure-driven decisions” when leisure previously contributed approximately 30% of Scandic’s revenue.