Malark predicts the future of hospitality—and business

Greg Malark, chief operating officer of HelmsBriscoe, kicked off the Passkey Housing Forum yesterday in Boston with some serious style. He is a funny guy and, as he talked about where we are as an industry, and where we’re headed, he had me both shaking my head and giggling. OK fellow boomers, can you related to this one as an example of how fast things are changing:

"I have now bought the Dark Side of the Moon by Pink Floyd five times: Vinyl, eight-track, cassette, CD, and now DVD."

Another favorite, which he says his wife made him include: "Forty percent of women feel their spouse creates more work around the house than they perform."

But he did do a lot of serious talking about how things have changed, and how they continue to evolve. Calling the past seven years “the most dramatic we’ve ever had in our industry,” Malark outlined the ups of 2000, when there was an oversupply of hotels relative to the demand, then the downturn that started with the bursting of the Internet bubble, hotels losing control of their inventory through deals with online travel sites, and, of course, the terrorist attacks of 9/11. “The high-end hotels took low bids,” he said, which drove profit down for everyone. Then supply slowed down through few new hotel builds, hotels going condo, and Hurricane Katrina taking many hotels off the market in the Gulf Coast of the U.S. The result, he said: “The last three years have been the most profitable ever in the hotel business.”

While Malark predicted that the market will stabilize, don’t expect the cost of rooms to come down. “The top markets will get more expensive, while the secondary markets will hold steady,” he said. Keep in mind all the changes that the hotel business is going through, he added. For example, hotel owners, no longer content to passively invest, now are pressuring management companies to be profitable, or write a check for the difference from forecast at the end of the quarter.

Capital also is now being used to reposition hotels, and planners should pay attention to where their headquarters hotel is in the capital cycle—is it about to be renovated and repositioned? Has it peaked and now is getting a little outdated? Has it recently had some money invested in it for renovations? Hotels also are being inundated with RFPs these days, in large part due to online systems that make sending multiple RFPs a snap compared to those of yesteryear. They’re now looking to redeploy business as much as possible to shoulder and non-peak times even more than in the past.

Business Itself Is Changing

It’s not just hotels that are changing the way they do business, Malark said. He predicts that, in the very near future, we’ll see more and more organizations using a structure of decentralized independent contractors, similar to HelmsBriscoe’s model. I'm not entirely convinced that we're ready to pry our fingers off the traditional command-and-control, hierarchical model, but as someone who spent 10 or so years as an independent contractor, and another however-many it's been in this job as a telecommuter, I hope he's right about business going virtual.

Organizations looking to morph to new ways of doing business can take some tips from what HB has learned over its 15 years of working as a network of independent contractors.

For example, you have to provide the same support in a virtual environment as you do in a traditional office. “If you don’t, they’ll go all Howard Hughes on you, eating microwave popcorn and peanut butter straight off the knife,” he said with a laugh. “You have to coach them on how to start working, and more importantly, when to stop working.”

You also have to help people figure out how to work around family members and friends who think that, because they’re working from home, that they’re not really working and can be the errand runners. And you have to provide them with both straight data (number of guest rooms in a specific hotel, for example) and anecdotal information (how well that hotel worked for someone’s group).

And, in good news for meeting planners, you also have to do more social interaction face to face, including intensive training and lots of networking.