Simon Allison is uniquely placed to offer insight into the hotel industry. He is the CEO of Hoftel, the organisation that brings together hotel property investors and provides them with a voice. That’s a voice that he is hoping will be heard loud and clear this month when Hoftel hosts the Gulf and Indian Ocean Investors Summit (GIOHIS) 2017 in Yas Viceroy, Abu Dhabi from 6-7 February.
“I joke that we are kind of the trade union for the owners,” says Allison.
“They’ve increasingly found the contracts they are locked into are pretty unfavourable. We just got bored with going to the big hotel investment conferences where investors barely make up 10% and the subjects are all pretty shallow and nobody wants to say anything that offends the sponsors.
“Even with networking at these events, you’ve probably got 90% of the room who are not owners or are selling things to owners.”
Allison says the next logical step was creating a forum for owners that’s run by owners. He describes this decision as crucial because owners are increasingly finding that trends are moving against them.
“The online travel agents (OTAs) are charging up to 20%, when they used to pay travel agents 10%,” he says.
“Owners are still paying 6,10, 12% of revenues in different forms to the brand and 20% to the OTA. Owners are left scratching their heads.”
One major issue of concern for Allison is brands are starting to work closely with the OTAs; he fears that owners could be left out in the cold.
“As the brand companies get bigger and bigger, they start to get into bed with the OTAs like the Marriott/ Expedia deal. Is this good for us and, if not, is there anything we can actually do about it?” he asks.
“The biggest trend that owners have been talking about for the past number of years is the online travel agents.”
The other major point of concern for owners, Allison believes, is brand proliferation. Barely a week goes by, he explains, without the announcement of a new hotel being built in the Middle East.
“What does that mean if you own 10 Marriotts or 10 Sheratons?” he says.
“The brands prefer to create new ones to find a new niche or new segment. Of course it means that restrictions on not building near their existing owners are often eliminated. Everybody’s trying to create something new all the time. The issue of obsolescence is something that people aren’t thinking about enough.
“There are an awful lot of hotels and if nobody wants to stay there because they are all off to somewhere new, what are you going to do with it?
“The brand companies ultimately control all this inventory because they are the ones telling you what to spend and how to renovate it; they are not really reinventing the old brand they are just creating new ones.”
Allison is keen to point out that, despite joking about being a trade union for owners, he has nothing against the big brand hotel chains.
“To become a member of Hoftel you have to be paying fees to a brand,” he says.
“We’re not anti brands, I actually believe in brands and they do a good job in what they are best at, which is creating a high standard that guests know they are going to get when then stay there.
“What we are saying is to be a really good brand you have to be transparent and fair with contractual arrangements and much more profit driven because actually what the brands are making isn’t a customer paying $100 a night, it’s the owner paying them a million a year in fees.”
Allison says that many brands have been supportive of the forthcoming event.
“We’ve got the head of development from Accor, sponsorship from Hyatt and from InterContinental, Viceroy and Rotana,” he says.
“Most brands know perfectly well what the real situation is, they welcome the chance to go and meet owners and put forward their side of the case.
“We’re very happy to put their side of the case forward and we’ll always have a brand in one of these discussions.”
FROM JP MORGAN TO ZIGHY BAY
When Allison talks, people listen. That will come as no surprise to anyone who is familiar with his rise to becoming a key figure in the hotel sector.
“I went to Oxford before I went off to JP Morgan as an investment banker and did that for 10 years. I specialised in real estate and, within that, in hotels,” he says.
“I realised the hotel sector wasn’t a good one in investment banking, the deals simply just weren’t big enough for the lifestyle you led.”
It was at this point that Allison went to one of his clients – a Kuwaiti-based hotel investment company – with an idea.
”We brought in very blue chip investors, the Government of Singapore, General Motors Pension Funds, we’re talking serious blue chip investors. We built that up to a half–billion–dollar portfolio in Europe and that was where the idea of Hoftel came from,” he says. “We still felt we were being legged over quite often. Often on stupid things, but the brands couldn’t answer questions we had, they were being evasive or frankly charging things they shouldn’t be.”
It was at that point that Allison began setting up Hoftel, as an opportunity for hotel owners to have a peer-to-peer discussion.
“I went off and left that to become CEO of Six Senses, which includes the famous Zighy Bay. I was doing that for four years when I went off to become head of development at Onyx Hospitality in Thailand,” he says. “I’ve seen most of the sides. I’ve seen most of the bits of how this works, when I was going back to the UK I thought ‘I believe in this, let’s see if we can build this up into something’.”