Validated Learning in Hospitality Development

I will be speaking in the "Ferðaþjónusta og fjárfestingar" conference sponsored by Landsbanki and the Ministry of Industry, Iceland and organized by Promote Iceland. The words in Icelandic mean "Tourism and Investment" thank you Google Translate. I wrote about it when I got invited. The message of the presentation is "Apply the Lean Startup principles even before launching a hospitality development project". Especially validated learning, Google Insight for Search is a fantastic tool that I have been using for all our projects. I highly recommend that you do too. It can give you insights on anything that you are working on or plan to work on. 

When we embarked on this journey to develop our presence outside of India in 2009, we wanted to build a scale able business which means we build teams around specific themes that we wanted to invest in. What we believe works well in Hospitality development is vertical integration of the value chain. What do I mean by this? Our company in India whose core business is to invest, develop and manage Hospitality projects owns a number of support businesses

1. Furniture Manufacturing and distribution company specifically to serve our Hotel developments
2. Food and Beverages distribution company that supplies our hotels
3. Food Service business that runs all our restaurants in our properties
4. A Taxi service company that runs a fleet of cars for all our properties

All our investments outside of India are in businesses that move up the value chain of Hotel development

1. Buuteeq - A Digital Marketing system for Independent hotels (selling rooms)
2. Clara - A Community analysis company for the gaming industry (to understand future buying trends)
3. Boutique brand - A new boutique brand that is truly international and can be applied to any geography
4. Hotel interior design company - A company that designs high end interiors for hotels and private residences
5. Furniture distribution company - A platform to sell the furniture manufactured in India

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Race to the Top

My friend Stjani was watching Seth Godin talk about our obsession in the Race to the bottom, i.e. continuously seeking cheaper products and services is coming true in 2012. His emphasis was if price is your only marketing strategy for your product or service, there is always going to be someone willing to do the same for cheaper. This got me thinking about Hotels and Hospitality. I have been invited to give a talk on January 25th in a Conference on Investment and Tourism here in Iceland and I think I will focus on talking about the Race to the Top instead of the Bottom.

I have been meeting a lot of people in Iceland who want to build a hotel. I think that is not a bad idea given that Tourism is a growing industry in Iceland and there has been a pent up demand for Hotel rooms as the last proper hotel was built in 2007. The financial collapse in 2008 has made a number of building standing empty and it seems logical to think of ways to utilize them. I have written about what a tourists spends on a trip to Iceland. They spend a big portion of their wallet in Air ticket and other miscellaneous retail not Hotel and Accommodation, so starting an airline is not such a bad idea.

When I ask the question what kind of customer segment that the Hotel should cater to... I get blank stares! Nobody is thinking about who they are building the hotel for! This is an epic fail in the new world of tourism and travel. You don't believe me, check out Google Insight, under the category Hotel & Accommodation the word "unique" is trending up and "cheap" is trending down. What does this mean? well, people show their intent based on the search words and when majority of the travelers are looking for Hotels or Accommodation, they are looking less for Cheap hotels and more for Unique, Boutique, Different experiences.

I think Hospitality development in Iceland needs to focus more on defining who their customers are and targeting the development catered to their taste. Maybe, that is being done by focusing on the traveler who does not want to spend any money when they visit Iceland should that be the customer Iceland should focus on? I think not... we should focus on providing excellent service to travelers who can afford to pay for the service, they get the Icelandic experience for free and pay exorbitant price for everything else so they want to cut spending money on Hotels. I would say don't focus on that cohort, target the affluent traveler looking for unique experiences and Iceland has many.

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buuteeq - Innovation in the Hospitality business

Image via CrunchBase

We have invested in a company called buuteeq (pronounced boutique!) I know not the best of names but a kickass concept. The team at buuteeq wants to disrupt the traditional market of marketing and selling hospitality by independent hotel owners. These are the kinds of investments that we love doing:
1. Great team
2. Big market
3. Innovating the traditional way of doing business using the new infrastructure of Google, Facebook, Twitter and Amazon (I have written about this earlier)
4. Executing on the idea (1500 hotels in 20 countries in 12 months, thats traction and scaling)

I have always been associated with the Hospitality industry, for crying out loud my Statement of Purpose to all my graduate school applications was written on the premise that I will eventually get back to working with Hospitality and Hotel development. I am glad to have come a whole circle in pursing that vision. I digress... here is a video that explains what buuteeq does, if you are an independent hotel owner or operator and want to run your property with the same infrastructure of big branded properties in marketing and sales buuteeq is the way. The second video is an interview of Forest Key, CEO of buuteeq on why they are switching to working with Silicon Valley Bank from a traditional bank. To all my banking friends in Iceland... you have a golden opportunity to serve the next generation of fantastic entrepreneurs here in Iceland, try to understand your startup clients and serve them well, if you do that guess what they are going to want to do business with you even when they become the next Google... just sayin...

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