Exclusive Views: Last week, Whitbread announced plans to withdraw from operations of its Premier Inn brand in India and Southeast Asia, the group is therewith abandoning its original international expansion goal of 50 hotels outside of the UK by 2018.
Whitbread's plan to develop 80 hotels in India in 10 years dates back to 2012 (similar announcement for 12,000 rooms was made in 2007). Expansion for the Middle East and Indonesia was announced in the first half of 2014.
Early last year, the VP Development stated: “We have started 2015 with a bang by entering into development agreements for another four hotels throughout Indonesia. We believe Asia Pacific has strong economic growth potential, and we are excited to see (these 4) hotels added to our already strong pipeline.”
Knowing "what" to do is not enough...
Then what happened in the relatively short period between the excitement of launching in international markets, and subsequently withdrawing?
In reaction to the withdrawal, Whitbread's CEO stated “A key strategic theme is to focus on our strengths internationally and that means identifying those opportunities to invest our capital and management time wisely to generate the best and most sustainable returns."
No doubt, "those opportunities to invest our capital and management time wisely" had previously been well thought through.
Although, a Hotel Analyst (2015) perspective undermines this premise: "Premier Inn has been slow off the mark in its announced international expansion. Having first invested cash to get sites open, it then decided that it would prefer development partners to make the capital commitment, putting it in the same position as the major brands, when looking for new sites.”
The knowing-doing gap...
Hotel-management companies realize growth targets through the execution of hotel opening projects. The common thread in most press releases with growth "slogans" is the lack of substance as to how these goals will be achieved.
Therefore, a likely possibility is that this is a case of the "Knowing-Doing Gap in Project Management". This well-researched phenomenon means that senior hotel company executives can explain what their company needs to do strategically but are not able to actually implement these strategic growth plans.
A study by the Project Management Institute found that “project management is now used in more than 85 occupations across a wide swath of functions and industries”. Unfortunately the hotel industry is not one of them.
A Cornell Hospitality Research on root causes of hotel opening delays provides insights why this is the case:
- Senior corporate leadership has limited understanding of project management as a strategic competence.
- The hotel industry has few project management champions.
- Most hotel companies have not embraced project management as a corporate culture.
- Hotel companies are traditionally cautious in embracing new technology and disciplines.
- A general misunderstanding as to what causes new hotel opening project delays persists.
Of course, we are well-served to remember that stock markets react favourably to announcements of growth, but are likely to punish listed companies for not achieving growth targets...
Gert Noordzy " Managing Director, Northside Consulting
Northside Consulting Company Limited (NCCL) is a boutique consulting firm, specializing in new hotel opening processes, and Organizational Project Management for the hospitality industry. Services provided include pre-opening support for new hotel projects, and new hotel opening project performance improvement.
Contact Gert herte: gert.noordzy@northside-consulting.com or visit www.northside-consulting.com for further information.
