Frits van Paasschen has warned hoteliers in the Middle East that digital disruption is radically altering the market in which they operate.
Change is coming, whether they are prepared or not, he warned.
Pointing to the impact of Booking.com and Airbnb – both of which have grown to dominate sections of the industry in recent years – he warned traditional hotel companies they would have to change in order to survive.
“The biggest mistake we make is to keep doing the same thing and expect the same results,” van Paasschen warned.
Established interests, change-blindness, and set ways of working make it nearly impossible for incumbents to survive, he added.
“We suffer from change-blindness: humans and companies overestimate their ability to understand the world around us.
“We focus on what we are doing, what we do well, and we tend to lose sight of what is happening around us,” van Paasschen explained.
Self-interest also played a role in the downfall of large organisations, the former Starwood Hotels & Resorts chief executive said.
“If you are a successful business, you do not wish to disrupt it.
“This is a hard sell to investors – to explain that you want to cannibalise your own business.”
However, this desire for change is essential in those organisations which prosper, van Paasschen argued at the Arabian Hotel Investment Conference in Ras al Khaimah.
“You wake up one day and you realise you are in big trouble,” he warned an industry audience.
“Either you did not see that change coming, or you did see that change coming, and you did nothing about it.”
Frits van Paasschen was speaking at the Arabian Hotel Investment Conference in Ras al Khaimah
However, there are ways for industry leaders to improve their odds of sustained success.
Companies must go from being change-blind to change-aware, he urged.
Pointing to his former role as leader of hotel giant Starwood, van Paasschen said the company had learned from Booking.com that consumers liked online reviews and price transparency.
From Airbnb Starwood learned guests sought a sense of place.
“People do not want to fly around the world and end up in a place that could be anywhere,” he explained.
As a result, Starwood moved from a real estate company to a branding organisation, he said, incorporating technology to bring an increase in guest satisfaction.
He also urged large hotel companies to “live at the crossroads”.
Start-ups are not afraid to make mistakes, this allows them to fail quickly and move on, he explained.
“Big companies are unable to do this, and this slows the potential for innovation.”
Finally, companies must continue to learn, he added.
Companies destined to fail are led from the centre, while their likely successors will be led by the needs of consumers.
“The centre creates an organisation that is able to learn and hopefully disrupt itself,” he concluded.
The former chief executive of Starwood Hotels & Resorts, van Paasschen was in Ras al Khaimah to promote his new book The Disruptor’s Feast.
Arabian Hotel Investment Conference
Arabian Hotel Investment Conference, now in its 14th year, is the annual gathering for the Middle East’s hospitality investment community organised by global hotel investment event organiser Bench Events in partnership with Meed Events.
AHIC creates a knowledge and networking platform for global and regional investors of all backgrounds, offering essential insights to investing in hotels, showcasing regional and international hospitality investment opportunities and facilitating direct connections with hospitality industry stakeholders.
AHIC 2018 will be held in a purpose-built AHIC Village on the beach of the Waldorf Astoria Ras Al Khaimah, UAE, until April 19th in partnership with Ras Al Khaimah Tourism Development Authority.
Find out more on the official website.