Leadership Series Fireside Chat #5 with Saurabh Rai, EVP- South & South East Asia, Middle East, Africa, & Australasia, Preferred Hotels & Resorts

1) The Preferred Growth over the Years: Started in 1968, Preferred Hotels & Resorts are in the 52nd year of operations in the United States. They started in a very small and limited manner and were called Indi-Corp (Independent Hotel Corporation). In 2004, the Ueberroth family bought the enterprise. Today, it is the single largest collection of independent hotels and small regional groups across the globe. Their total hotel count is about 775 properties across 85 countries. They are a soft brand and do not own or manage the hotels. They are one of the largest ambassadors in the independent hotel's space. Their portfolio is equally divided between regional chains and independent properties.  

Preferred has always believed in reinventing its model and adopting new and exciting ways. For instance, they were tracking loyalty trends in the hospitality space and found that they used to have a guest benefit program. They dug deep into the research to rethink and re-engineer the program for it to be one of the largest points programs for the independent hotels space. Preferred at one time used to have multiple brands under the group. They saw the market becoming very crowded with many new brands coming through. Also, a lot of hard brands had launched their independent collection. To cater to this and overcome the threat, Preferred chose to pull back and collapse their house of brands into one branded house calling themselves Preferred Hotels and Resorts. This became an important change in their go-to-market approach. 

2) Asset Assessment Strategy : This is one of the most critical parts of the process on which Preferred operates. The initiation happens in 2 different ways. The first being Preferred reaching out to a prospect which is a good fit and the second being when a potential partner hotel reaches out to Preferred. Drawing an RoI estimation is the key as it covers two important aspects. Firstly, what the partnership would mean, and secondly, what the partnership would deliver. Some hotels join Preferred as they see them as a great platform of like-minded independent hotels while most other joins to see an uptick in revenue numbers. 

3) The State of Luxury Travel: In the luxury travel segment, one can observe a great overlap on homogeneity and behaviour. In the pre-COVID-19 scenario, sub-segmentation was already happening. In the post-COVID-19 that sub-segmentation has fast-forwarded. As such, it is a wise move to re-study and not assume what Luxury Travel stood for. Going forward some very distinct sub-segments with their trends and behaviours are going to evolve. Post COVID-19 Luxury travel will be more about us and less about me. The sense of purpose and giving back will dominate the space. 

4) Being Local! Yet Providing a Global experience: Independent hotels and properties connect more to the local culture and can deliver the best experience to the guest in comparison to a branded property. Each independent hotel is a storied experience, which means that these hotels provide the best cultural experience. There are independent hotels that have gone out and locally sourced artwork. They have induced the history of the destination and have the culture of the destination the interior décor and architecture. It helps guests to connect more locally with customers.

5) The Recovery Road-map: The common opinion is that the occupancy level post-COVID-19 will possibly come back after 18 months. It will be in the last quarter of the next year. Average rates could potentially take about 2 years from today to revive. A phased recovery with domestic market opening up followed by the regional and international markets can be seen. In terms of asset valuations, as per HVS, the general sense of recovery is about 3 to 3.5 years depending on the location of the city.

6) Offense Strategies: The offense is a moment in recognition of the fact that what we have may not exist on the other side. Post COVID-19 stitching stories would rely less and less on room types. It would be more meaningful to the consumers when they start to attach more value to the non-room spend and experiences. Hotels with banquets and business spaces can offer these services as Work from Hotel. A hotel is a great example of hygienic, certified, and regulated space with available tech facilities. Thus,one of the ways in which hotels can be on an offense is by re-purposing spaces leading to higher revenue generation. 

7) Luxury Hotels & Recovery: There are two parts to the recovery of Luxury Hotels. The first is external parameters that are beyond the hotel’s control. These can be government’s regulations on in-bound flights, quarantine, a minimum length of stay restrictions, COVID checks, and others. This would lead to ~60% of the recovery curve that applies to all luxury hotels. The second part is the internal factors that are to be regulated, anchored, controlled, setup, installed, and communicated by the hotel. This would lead to ~40% of the recovery curve for a hotel. It will be different for different hotels in that location. 

8) Role of Social Media: The Travel and Hospitality industry has not been at their best when it comes to social media promotions and stories. However, this shut down made them realize the importance of social media. The result is an inflow of better content and stories in 3 months compared to 3 years put together. This shut down had shoved the industry into a very fast-paced accelerated learning curve of optimizing social media. 

9) Sustainability Driving Guest Loyalty and Pricing : Preferred Hotels and Resorts have a giving back program called GIFTS (Great Initiatives for Todays & Tomorrows Society). They have partnered with Whitewater to provide drinking water to underprivileged parts of the world. They have initiatives around curtailing human trafficking. These initiatives are selfless. They generate a sense of satisfaction in the guest's mind resulting in guest loyalty. 

10) OTA Partnerships: The mix varies drastically depending on the type of hotel. At a property level, optimized and adopted loyalty can be a powerful agent. It has allowed Preferred’s hotels to manage their relationships with OTA partners way better than other brands.