Fortuda's Interview Series - Eric de Neef, Global Chief Commercial Officer, Radisson Hotel Group

Thank you, Mike. Thank you. Good afternoon or good evening, I don't know in which time zone you all are, but now I'm very excited to be with you. And to your point, Mike, it was a tremendous event at the time in March, at the time we were able to travel. But you're right, it's repositioned Radisson totally, because we were Carlson Rezidor at the time. With the takeover of the company by HNA, we had the opportunity to reposition the brand and the group. Talking to a customer, there was a clear discrepancy between our brands and the company name, and what we wanted to do should leverage the master brand. If you look at the local lockup of the group now, it's all being Radisson or endorsed by Radisson, and all the commercial levels being released from meetings.radisson or radissonhotels.com, leveraging the master brand. That was a game changer for the company, because every time you talk one of these brands, you're talking about Radisson. So you push your brand equity and brand reach tremendously. It was a game changer. It was a nice time, absolutely, we worked one year with the whole team on this, but it was worth it. It was tremendous.

You have two questions there and I will try to split them into two answers. COVID-19, evolution, revolution, transformation. To be honest with you, when you look at the current situation, 2020 has been unprecedented. Last year at the same time nobody was talking about COVID-19, nobody knew about it, and today see where we are. The travel industry as a whole has never seen such a global standstill before. We had 9/11, we had the financial crisis, but what we have experienced here was simply not seen before. That we would close more or less worldwide, I'm not talking about Radisson only but the industry, more than 50% of the capacity, of the inventory of all the majors, nobody would have ever believed you. It's quite impactful. Now in my view, this brings a transformation and evolution because COVID-19 has fundamentally transformed the way people travel and will travel in the future. That's clear. What we have seen is that health and safety has become paramount to our customer. We are working a lot with Google on a daily basis and we saw in the search that we went from location, price when looking for hotels, to safe for them. Safety and health protocols are critical, and that's why very rapidly in April already, we worked with the team here at Radisson on the Radisson Hotels safety protocols to be implemented across our portfolio, but also in partnership with SGS, one of the leaders of testing and verification companies, because we didn't want to just tell the world we are safe, we wanted to be audited and labeled by a third party. It gives you much more credibility. You saw that all the majors did the same. Everybody was following the guest behavior on this safety focus and expectation of our customers. And in the evolution, I remember in the beginning when we reopened hotels at the beginning of June, we said to a customer, due to the COVID restrictions, we will not have any breakfast buffet, it will just be grab and go, you have a croissant and a coffee in a bag and you go. And you saw three weeks later, already beginning of July, our customers pushing us to say, guys, you need to enlarge your offer, we want to have the buffet again, we want to have our cart again. So our customers are getting used to and then rapidly want to have more, even if they know there are restrictions in place. So this transformation because we travel differently, and evolution because you need to keep your finger on the pulse on what your customers are expecting. Now to your first question, I don't think we need to save the industry personally. I think the industry is strong enough. People like to travel, people like to discover, people like to engage with other cultures. So the fundamentals will remain. We're going to go through three to five years of difficult, very tough moments because the business is not bouncing back as we would have expected. We will need to rethink the way we drive operations, we will need to rethink our brand standards to be in sync with guest expectations. But I'm very positive about the industry and a strong believer that we will get back there.

What the majors have done, once we have all worked internally on our safety protocols, we regrouped under the leadership of the WTTC to work on safety protocols that you could apply to the industry, because everybody started in a silo. One of the first ones was Singapore who came in with safety protocols, India went very fast behind, and the groups came in, and other governments, states and regions did the same. The risk from there is that you are confusing your customer totally, because you have so many protocols in place that they don't know at the end of the day what they need to believe. That's why all the majors worked together, and we were in the driver's seat with two or three others in WTTC to put this on the table, to say let's have an industry protocol because this will be critical. This is not in my view of short-term need, it will be a long-lasting feature that our customers are looking for. Now you see on RFPs for corporate companies the same. In the past it was all about responsible business, what we are doing on that level. Now today it's clearly what are you doing on safety, because the duty of care is critical for their people. So all our job is to protect our partners, consumers, or teams, to be sure that we deliver a safe environment. I think this is critical, but the more we are aligned and integrated, the clearer it becomes for the consumer, and it has this added value.

In fact, COVID-19 has hit us tremendously on the daily business, obviously, because as I mentioned, Radisson closed 450 properties out of 1,200 in three weeks' time. So we were hit very hard by surprise, and then afterwards it was survival, because when you close 450 properties it's impacting you on all fronts. That was really the first approach, and then we started in June to reopen. Now from a global strategy, we didn't change the strategy of Radisson Hotel Group. Of course we did fine-tune it because the safety protocol was obviously not in our strategy, but going forward to say where do we want to position Radisson Hotel Group, the role we want to play in the marketplace, that didn't change. What we are now fine-tuning is what is the answer Radisson needs to give on the guest experience, because this is coming at the end of the day, the guest experience being paramount and will be your competitive advantage of different chapters. The contactless strategy was already present in the five-year plan of the Radisson Hotel Group, the global strategy, but now we accelerated it obviously, because contactless, online check-in, online check-out, choose your room, it's becoming an urgency to be deployed. This is where we adapted the execution of the plan, but overall on the strategy we didn't change, and thanks to our shareholder and the vision of the management, we keep investing, we keep pushing, because it's a tough time but it will bounce back and you need to be ready. It's in difficult times that you need to invest, in difficult times that you need to take risks and opportunities. The same, we are working on our brand portfolio, for example. We have seven brands, but clearly we know that going forward you're going to have issues on the independent side. Independents will struggle big time, they are struggling, they struggle even more. So we are working on and we will announce it in a couple of weeks a value proposition for independents, a loyalty kind of affiliation to help them to bounce back. This is something we didn't have in the plan that we added, but that's the fine-tuning of the brand strategy more than having another strategy.

Yeah, I think I would just add one thing, is the way that we adapt ourselves to the new normal, knowing that the new normal is evolving. But for the moment, and if you are talking of 2021, I see two additional marketing, commercial focus to have. The first one, and this is where we have been heavily hit, is on international travel and meetings and events. International travel today, the Chinese borders are closed, the U.S. borders are closed, the EU borders are closed for international travel from non-essential travelers. So today when you look at occupancy of highly international cities, London, Paris, Berlin, call them, we are struggling big time because we are depending as well on the airline industry. When you know that 75% of the airlines are grounded, you know that the capacity will be limited. So the focus now on the operators is to be commercially really domestic, what we call a staycation for leisure and domestic business for international business travelers as a whole. This regional and domestic component will become critical in the overall commercial strategy. The second one is meetings and events. What I always said to my teams three or four months ago, we were maybe 10% in the world knowing the existence of Microsoft Teams and Zoom and Skype. Now the whole world knows because everybody is home-based, everybody is teleworking. So structurally the meetings and events will be touched. It's not just a six-month waiting time and it will come back as it was before. It will never be. So we need to be inventive. We launched yesterday hybrid solutions for meetings, where you don't need to travel internationally, you can gather in only one city domestically and be connected via satellite with other cities remotely in the world. So you can still have your remote meeting but the domestic and regional people can be together in meeting rooms. We have partnered with Zoom for that. So you need to be inventive and creative in the way you drive this business. This business is under pressure, because if you decide one out of two meetings I will do it online and the other one physically, then you take structurally 50% out of the business. International travel will bounce back. Meetings and events, I think we need to be creative as operators to find the right approach and solution to drive this. Hybrid meetings will be something that will offer your customer duty of care for their people, will decrease their costs because less travel, and will ensure IT security because it's being driven. That's the biggest issue now and the risk we have with teleworking is that you are not VPN safe when you are home-based. So the security of your data is quite high risk when you are teleworking. This is the type of reflection we are doing to fine-tune this. So to your question, beside guest experience and safety, on the commercial side it's to be creative in new offers, keeping in mind guest expectation, and being very regional and domestic-driven for 2021.

Yeah, totally. Now, innovation, we can talk about innovation. What is innovation? Innovation in my mind is something that doesn't exist, that nobody saw, and you come with something big. That happened every 10 years. Clearly the evolution of the mobile phone to the iPhone of this world was one of these innovations. Now in hospitality, and you were mentioning innovation in hospitality, I think this is more the right approach. It's in fact trying to implement something that exists to enhance your guest experience. You have your check-in online, everybody is used to having check-in online on airlines. No, in the hotel industry it's not there yet, and you have no operator today having implemented it across all properties. They've implemented it in one region, in two regions, in one segment, but not totally. So for me, contactless is one of the next big innovative hospitality industry components, because it's something your customer is asking for, but the real differentiator will be on the execution, because this is where we are failing. We are working today, and I think we are not the only ones, on the choose-your-room principle. What is choose your room? It's what you are doing on airlines for choose your seats. You can choose your seat. The only difference is on airlines, when you choose your seat you get the floor plan and the elements, where you want to sit, aisle, window, front, back, and that's it. In the hotel industry you have 10 to 15 to 20 different room types, different views, so you cannot just give a floor plan. You need to show pictures of the rooms, of the views, you need to have a 360. The complexity in the hotel industry compared to airlines is much, much tougher. So this is where the innovation in hospitality is to bring this. It's not an innovation as such, the big thing that doesn't exist, it's how do I implement it into the guest experience. For me, it's critical at Radisson, not only for me but all the team at Radisson, to be really state of the art in the execution, because that makes a difference. You have a lot of marketing where groups announce ABC, but in fact you find it only for the rewards member, you find it only in some properties in the U.S. or in Europe or in Asia. The guests will expect to find this globally. That's where I think the innovation in hospitality is to be very close to your consumer. We have created a guest experience committee within Radisson. What is the guest experience committee? To take all the reviews, all the quality checks we are doing, putting this data together, understanding also with Google what the consumer is looking for, and putting on top of it the trends, and then having an evolution month by month to say guys, we need to focus on this one because this is coming, this is coming fast, and focus on the consumer. And consequently, I would say an approach to have 80% implemented is better than looking at 100% and never implementing it. Right to failure exists, but at least you move fast and you're in close contact with your guest experience. We went from a product strategy to a guest experience strategy. We went there already since two or three years into this approach.

The hotel industry as a whole—it's not about the bed and the shower anymore. It's about experience. And if it's an experience, then you come to the big discussion of data. Because data we have enough. So innovative hospitality is also what is on the back end—how do you treat the data? It's not a lack of data today. It's how do you manage the data to make it understandable and to drive your strategy. That's investing for the moment a lot on AI, on robotics, because a human being cannot manage it anymore. There's too many data.

So for me, the safety protocols—it's not about product. It's just been understandable, it's becoming guest experience standards. So it's a combination of product, of course. The first criteria is location, that we know since seventy years—in the same case when Hilton and earlier they started the journey. So location is key. You have your product, but if I'm taking Europe for example, all the major groups are working with the same fifty designers in Europe. There's not more than that. So when Hilton, when Marriott, when Radisson is coming with a new product on the market, it looks nice—believe me, you don't make a difference there anymore. So the real difference is your guest engagement at the property level, and this is for us at Radisson critical. So what we are doing now is taking out of the operations all the satellite and backend expertise to centralize it in a center of excellence, to really have the people focused on the guests. The hotelier is the expert on guest engagement. This is critical and they need to be busy with this. And the data will help you at the end of the day to drive your personalization, because it's all about personalization. You have data to understand the trend, and Google is for that an amazing source of learning, because you see what the people are looking for. You have your data based on your guest behavior through your loyalty program, through all the database that you are building, in order to understand the consumer expectation. That's critical there, and that's what we are building now. Even with the crisis, we didn't stop—we are working on the integrated IT system, because you have so many different back office systems, you have so many systems in silos next to each other. They are not talking necessarily to each other, and then you need the data from three or four different systems. What we are building is a vertically integrated system, from CRS to PMS to CRM, and then you have your 360-degree view of the customer. And then of course you can drive your activity in personalization towards this customer, and you have the financial data in the back. This is in my view how you need to structure the operation. The personalization and the guest experience can only be delivered if you have a data-driven sound strategy. And this is where we need to have the hotels, because they are second to none to engage with customers, but you need to give them the information they need to drive it. This is in fact the relationship between the regional offices, head offices, and your hotel guest experience properties.

Yeah, so I commend your organization for investing in that vertically integrated solution, and the integration of the solution is key. Today I'm supervising and leading the whole commercial organization, and we have conscientiously taken all the levers of the commercial organization into one integrated approach. Because what you need to do at one point is to create demand—that's our task. We need to create demand, and once you create demand on top of the funnel, then you come to the end of the funnel where you have your guests staying at one property. And then you have all your layers: is the customer coming through the OTA? Fine, it's a channel that he decided to do. Are we able to change his behavior? I'm not convinced, because if he's going to an aggregator, it's because he wants to book his airlines, he wants to book his rental car. What you can do is that once he's at the property, try to convert him to become an advocate and a fan of your brand. And if you go down the funnel, you have your revenue management also telling you: for this property, at least at this date, for this segment, this is the right price for the right customer, the right property at the right time. So it's an integration of everything, and I think this is where the successful operator will come out—is if they are able to integrate the data as a whole and integrate all the commercial levers in one strategy. Because otherwise you have parallel strategies in different topics. When we are talking about digital, we are talking of this on a weekly basis. We are combining the team working on distribution with all the third party and the team working on digital direct channels. We need to know to each other what we are doing. And this integration is critical—it's the way that you'll be able to drive the performance.

No, I think that the roles will stay. If you tell me tomorrow we're going to get rid of all the sales team and we bring to zero and we put everything on digital, it would be a wrong decision. You will still need sales people because you have a global contract, you have a need for traditional sales. Maybe you're going to downsize this to invest into digital. It's true today—of the industry numbers, and the ones of Radisson are very close—is 55 to 60 percent is going online, so only 40 is going in the traditional way. So you need to downsize your team and to adapt your scale. But the critical thing is to get rid of the silos, to give to all this team the same objectives. As long as you give the same objective to everybody, at the end of the day everybody will work towards the objective. I think that the mistake we did in the past—and we did it with Radisson as well—is a different objective for the sales people, from the revenue management, from the marketing guys, and so they were fighting for the objectives, which also makes sense. So we created also from a head office perspective, from a brand perspective, sometimes maybe a mistake, and we created unconsciously division. Now we have here in Radisson under the same leadership two or three common objectives that everybody is following. And at that moment you ask yourself in this position: what do I need to do to help the company obtain and reach the objective? And everybody has a role to play, and it's complementary. Of course you have the tension between revenue management and sales because at one point on the Wednesday when everybody is full, he closed everything to get the bar rate. It's a healthy discussion. I would like to have this every day because it means that I'm full every day. So I would be very happy to have the fight every day between revenue management, sales, and marketing. So it's healthy, but everybody needs to have the same objective, and this is critical. Again, integration of the way you tackle your strategy, but also the way you incentivize your team. And then when you are in sync, it manages itself very well.

I would just add one element to it: the focus will be very domestic and regional. So you need to find the right answer by countries. If I'm taking now the Nordics market—very online from a behavior perspective—I think the Middle East market where it's much more offline-driven, you cannot implement the same strategy. So what is your business segment, and how are your customers domestically reacting and behaving? This is critical. We need to be lean enough to give to the areas also the flexibility to come up with the idea and the right approach for this customer, because it will be very domestic. And we are convinced today that your business will be driven by 80 percent domestic instead of in the past maybe only 50, but now it will increase. Then afterwards you need to see by country what are the type of reservation fundamentals that they are using. And the OTA is an easy channel to leverage. Knowing that to be honest, between the two biggest, you see one is outperforming the other big time. So you see differences. And then you have your B2B with the total management companies as well. So you need to understand all the business structure region by region and country by country in order to take the right decision. Because the one-size-fits-all is over, certainly now. Because your international travel is down, so it's becoming again much more granular at the regional level.

Motto—I think you need to leverage what you have at the moment you live. The past is the past, it's over. You cannot just go back in time, and the future is unknown. So even if you need to give a direction and transaction, it's still unknown. You need to see the present. And when you think nothing is written in stone and nothing can be taken for granted—look at COVID. It put our lives upside down. I remember when I was with friends on New Year's Eve and wishing everybody all the best, and then three months later you were in a total unprecedented time where you closed all the properties. So it's a reminder of how fragile these things are and how unpredictable they are. And some are uncoordinated. From a business perspective, my biggest frustration is a lack of coordination between the different nations. If you look at how China has driven it, or the US, Israel is driving this, or the EU—it's just impossible. You're paralyzing the whole business because one country or one state is deciding on their own without coordination with the others. All this color of orange and red zone—it's just a mess. So I'm not surprised that our consumers are not traveling, because they don't know tomorrow if they will be locked down, if they will be able to travel back, if they need to go on quarantine, if they need to test. So for me, nothing can be taken for granted and nothing is written in stone. That's a critical one. The second one is—I was amazed, and this is something that we know but it's in times of crisis that you realize this—is our capacity and ability as human beings to adapt ourselves. Look how we lived in January this year and how we are living today. If you would have told the world that three billion people would have been locked down, that now five billion people are wearing masks all day long when they are in public spaces, you wouldn't have believed it. And the human nature is to say: okay, this is a crisis, we're going to close, we're going to shut down the businesses, we're going to accept to be locked down, we're going to take care of our family much more than we were doing in the past. And then you adapt yourself. So from a human being perspective, the fact that you are able to adapt so fast and easily is amazing. One concern I have to be honest, when I'm listening to different opinions and opinion leaders, still there is a lot of people that think that once we have the vaccine everything will be solved and we're going to go back as it was in 2019. And to be honest with you, I don't believe this, and I'm very concerned about this. Because my brother-in-law is a doctor, and I was in the same approach to say yeah, the vaccine will be the game-changer. And he told me: Eric, you know the flu? Yes, of course I know the flu. Do we have a vaccine for the flu? I said yes. We have a vaccine for the flu, and we still have three hundred thousand deaths a year to the flu with the vaccine. So the message was to say we will need to learn to live with this COVID. Of course the vaccine will help some of the stuff, it's not totally useless, that's not what I'm saying. But you will not be able to deliver three billion vaccines in one year's time. So you will have also the discussion who is benefiting first. So I think we need to take the opportunity now with COVID-19, the crisis we are dealing with, to change the way we live and to try to be much more safety-conscious. Because what we did in the past—and again, when you stop doing things, you realize what you did in the past. You could take a plane and fly six hours for a meeting of three hours and come back, and everybody was okay with this and nobody was asking. And now today you say: was it necessary? No, maybe not. So you need to adapt yourself, and I think we need to take the opportunity now to build the world. That's my personal thought on this—it's an opportunity, and we need to leverage it definitely.

Well, the biggest point is that I hear experts in the industry—in the travel industry, in the tourism industry—projecting that the industry will recover by 2022, others saying 2023, 2024, 2025. So you get everything on the menu, so you can choose. And the truth is, we don't know. We need support. Again, you need to drive your strategy with the balance of short-term opportunities, understanding the customer behavior, try to be really focused on your strategy because this is something that you have worked on to reposition or to position your company. And then you need to manage it very—and I like your agility, because this is what you need to do. The safety protocols is something that in the industry was not existing six months ago. So you need to be agile enough to create it, to integrate it into the guest experience. So what we need to do is to be very close to the consumer. And this is something that maybe at one point in the history of the industry—that made the OTA so big—is that we didn't engage with our customer. Why? Because it was not needed, because when one customer was leaving the property unsatisfied, you had three other ones waiting at the front door. So the industry was in a situation where it was not the big focus, and we were product-driven. So now we need to be very close to your guest and to their expectation, and then to be agile and to adapt very quickly to the new norm. And the new norm is evolving. Look at how the consumer is reacting between June, when we reopened, and today. Sometimes you ask yourself: do they know we still have COVID in the country and the virus is still there? So you need to go on this path as well. That's a finger on the pulse and very close to the consumer.

Thank you, thank you.

It was a pleasure.

Thank you. Bye-bye.