A quick note about the evolution of the hotel industry

I always like reading about how certain industries evolved over time—partly to see how the business economics had changed over time; partly to see how life used to be. I ran across an interview with the founder of the Four Seasons hotel chain and he briefly touched on how the hotel industry has changed.

Question: What was hotel culture like in 1961?

Isadore Sharp: The major hotels were railroad hotels – they were about convenience when travellers got to town and they had different standards. They were the grand old hotels with magnificent halls, and the physical presence of the buildings gave them their image. I looked at it very differently, I didn’t think buildings could sustain your position because new buildings will always come along. So we looked at it from the service point of view.
I find that kind of fascinating. I don't travel much and don't know much about hotels but the present is so different. I can't conceptualize a railroad hotel but I kind of know what he is getting at. In old movies and photographs you see magnificent, grand, hotels but these have largely dissapeared (except for a few catering to the super-rich).
Q: What’s been the biggest change?

Isadore Sharp: The accommodations have been dramatically improved. You would sleep, wash and then go out. But today, the hotel is used as an office. The bathrooms are much more comfortable. The space is better. But the biggest change has been in the technology, and how it gives us access to a database – knowing more about our customer has been the biggest change and it has a major impact on sales strategies.
Isadore Sharp touches on something that has, and is, changing the face of many industries. Namely, customer analytics, largely driven by computer technology (databases, statistical software, etc), allows customer-focused companies like Four Seasons to significantly improve their markeing and sales. Who would have thought, 30 or 40 years ago, that the biggest change to the hotelling industry would be the technology?

As for the future, Sharp sees the following changes in his industry:
Q: Using the last 50 years as a gauge, is 2011 a good time to be a hotelier?

Isadore Sharp: We’ve gone through problems, but it’s a growth industry. It’s a global market – the demographics of the part of the world that was at one point considered undeveloped – China, India, Asia, Latin America – are all part of our economy now. That’s a huge force coming into the commercial world and hotels make up an important part of that. This industry is rock solid.
It remains to be seen if the legacy hotel players can maintain its profit margins or if profitability will shift to other players. OTAs (online travel agents like Expedia/hotels.com) and foreign competitors are part of the market now. Online search systems allow customers to get better prices and even service-oriented chains like Four Seasons may start to see some price erosion.

I talked about Four Seasons a couple of years ago and Isadore Sharp's story is definitely one of the top business success stories in Canada.


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