Carlson Hotels Worldwide CEO Jay Witzel and Paul Kirwin, newly appointed president of operations in the Americas (BTNonline, Feb. 4), spoke with Business Travel News hotel editor Michael B. Baker during the company's recent annual conference in Las Vegas about the role of corporate travel for Carlson and growth plans for its brands.Business Travel News: Despite talks of economic downturn, you've talked of an "unstoppable momentum" in the hotel industry. Would you explain?
Jay Witzel: Historically, North America has been very strong, probably the strongest economic engine on the globe, followed by Japan and Germany. Now, however, there is an ever-increasing middle class in India and China, and there will be more of them than we have population, and it's coming by 2010 or 2011. We have the wealthiest generation of Americans thinking about or starting to retire. We're going to be ready for it, or we're not.
BTN: Will the industry be ready?
Witzel: Inevitably, this boom is going to be so well-discussed that everybody will get there. Think about the statistics: 97 new regional airports in China, and 48 of them are going to be done by 2010. The hotel industry is pretty well aware of it. India is now open to foreign investment. When we first went there, you had to go through a partner, but now you can have direct investment.
Paul Kirwin: Being an owner of Carlson Wagonlit Travel, we have a keen understanding of corporate global travel trends. In Asia, the brands that are strongest in Europe and America have a real disproportionate competitive advantage with corporate travelers, because the inbound European and U.S. corporate travelers stay disproportionately with the U.S. and European brands. That will be a strong trend for us, to continue to climb toward 1,000 hotels, then on to 1,500.
Witzel: The interesting thing is that the European community is actually more prepared than the United States. If you go to any of the Rezidor breakfasts, the buffets are decked out for Chinese and Japanese travelers. Here, we're probably aware of it but haven't really executed it. It's like the carbon footprint issue. Everybody makes fun of it, but it's a wave that's coming.
BTN: How big of a role is business travel currently playing for Carlson Hotels?
Witzel: We're predominately a corporate travel chain. Until we start building a lot more resorts, it's always going to hold that way.
Kirwin: It's about 55-45. It's a fairly healthy balance, but as the larger share, the rate that business travelers pay on average is higher than leisure, and therefore is very important in the revenue pie.
BTN: What key amenities are business travel buyers asking about?
Kirwin: Coming back to the States after six years, there were a lot of little amenity tweaks that seemed to happen prior to my leaving. At Country Inns and Suites, you see things like coffee makers and irons and ironing boards in the rooms. You had this whole product that evolved, the sort of select-service midscale, trying to give people these convenient amenities you didn't historically have. Internet and free Internet is a biggie, and I'm sure we'll continue to have more of those, but the pace has slowed down.
Witzel: Internet access was probably the last of the must-haves. We rolled over on that relatively early. I'll guess that all-inclusive price is next. People are going to say, "I want to pay a rate, and for that rate, I want the water; I want the chips; I want this or that," everything but the alcohol in the mini-bar. Look how fast in-room coffee swept the world, and it didn't really hurt food and beverage profit at all. At least you shouldn't be nickel-and-diming a customer to death in the room.
Kirwin: With the illogical notion that you get free Internet in a Country Inn and you don't in a Ritz-Carlton, it would make sense for us to get all-inclusive pricing. The reality is economic fundamentals drive behavior, so I'm not sure it will change soon.
BTN: As hotels across all tiers add amenities, how do you keep your brands distinct?
Witzel: The only way you can do it is through real diligence to say, this is the price point, this is what we're going to offer and hold to it. Just because the guy next door puts in a five-ounce bar of soap in a midscale property, you don't have to. The reality is: You have to define your brand standards and hold to them. When things become ubiquitous, then you have to make a change.