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This episode of our podcast is sponsored by Cantina Consulting. Cantina crafts innovative experiences, products, and services for a connected world. They help organizations solve complex and transformational initiatives, making them indispensable to customers. Learn more at cantina.co.
Kaitlin Milliken: Hey, you’re listening to Innovation Answered, the podcast for corporate innovators. And this is a very special season where we take you inside the C-suite of big organizations. In each episode, we’ll interview a different C-level leader to talk about how they connect to innovation teams. I’m your host, Kaitlin Milliken from Innovation Leader.
Today, we’re going to talk about the hospitality space.
Ah yes, remember vacations? Where you would get on a plane and travel to a relaxing place, possibly with a beach. And then you could order a drink, kick your feet up, sleep in a bed with high thread count sheets, and watch TV in a place where you don’t know any of the channels.
Or work travel.
Which involved hopping on a plane to head to a big city like New York. And you’d go to a conference for keynotes, cocktail hours, and networking sessions. Then you go back to your hotel room to unwind — or catch up on email.
Well, work and leisure travel may be right on the horizon with more and more people around the globe receiving COVID-19 vaccines. The hospitality industry has to plan for that future while dealing with the safety precautions of today.
To discuss striking the right balance while trying to get the business back on a growth path, we called Vera Manoukian, Chief Operating Officer at Sonesta International Hotels Incorporated. Privately held Sonesta has grown exponentially over the last year. In November of 2020, the company had only 58 hotels. That grew to nearly 300 owned and managed hotels through acquisitions.
A large part of this growth came in the form of a helping hand from Service Properties Trust, known as SVC, a real estate investment trust with a 34 percent equity stake in Sonesta. SVC has hotels that were managed by large players like Marriott and Intercontinental Hotels Group. According to Forbes, during the pandemic some of these big players stopped making their minimum payments to SVC. Once those contracts were terminated, many were transitioned to Sonesta. Both Sonesta and SVC are owned by The RMR Group.
Then, in March of 2021, Sonesta acquired Red Lion Hotels. The company now has approximately 1,200 locations, more than 100,000 guest rooms, and 15 brands across market segments. Vera says that makes Sonesta, headquartered in Newton, Massachusetts, the eighth largest hotel company in the US.
During our conversation, Vera talked about how her team approached growth during a tumultuous time. She also shares how her team is scenario planning for what might happen next.
We’ll be back with more from Vera after this break.
Kaitlin Milliken: Looking for a place to brainstorm and scenario plan with your peers? Innovation Leader’s Charting the Future event explores the most important trends for innovators as we move into an uncertain future. Sessions and presentations will explore how teams successfully pivoted amidst the COVID-19 pandemic and how they’re preparing for the year ahead. Charting the Future will be held online on June 9th through the 11th. To learn more, visit innovationleader.com/charting2021
Kaitlin Milliken: And we’re back with Vera Manoukian, COO of Sonesta International Hotels Incorporated. Vera started her career in the hotel space as a Banquets Manager and Concierge in the 80s and has worked her way up since then to the C-suite. On our call she discussed how innovation helped her team respond to COVID-19 and how they’re navigating the return to normal.
Can you talk about your career path and how it led you to this role at Sonesta?
Vera Manoukian: I went to school to get my bachelor’s in biology, chemistry, and math, in the hopes of fulfilling my parents’ dream of becoming a doctor. So that did not happen, as you can tell, due to the fact that I had a bit of a situation going on with blood. So it was very evident to me that being a doctor was really not going to be part of my future.
And I went back to school and got my MBA with a specialty in marketing. I was literally driving around in Bedford, New Hampshire with my yellow Volkswagen Jetta, I saw a sign that says, “Positions available.” I went in and in the hopes of maybe I could answer the phone or do something for gas money when I’m looking for a real job that combined my science and my business background. So I was part time the first week and by the second week, I caught the hospitality bug, and I truly fell in love with the business and never looked back.
So most of my career has been in operation, I grew through the ranks. I started as a concierge, worked in food and beverage front office, and I ended up being a general manager at 29-years-old and the first female in the company to be a GM.
I spent five years with the W Brand. My last assignment prior to the Marriott acquisition, I was the SVP of Operations for half of the US and Canada. Hilton came calling and it was a very different role than what I’d done in the past. And it was to be the Global Head of the Hilton brand. And it really put me in a unique situation where I had both operations and brand experience.
The recruiter came calling me about this opportunity at Sonesta. At first I didn’t know what was Sonesta because it was a company that truly operated under the radar. I met the CEO and a couple of the senior leaders at the time. And it just felt right. So I’ve been here close to five months now. And it’s really been an incredible journey. My goal is to help the team really take Sonesta to the next level and make it the best of the best.
Kaitlin Milliken: So your role as COO, how does innovation play into it? What’s the connection there?
Vera Manoukian: I’m very, very much involved in innovation at Sonesta, as I was in my previous roles, because I’m always looking for being a leader in the industry of how we can do things better and different. So in the past four months, we’ve grown 350 percent just in the managed portfolio, and have added another 900 hotels in the franchise portfolio.
One of our key things that we’re focused on is really: How do we stand out in the sea of sameness? It’s such a crowded space, we all blend in together. We really are focused on operating like a startup. We’re nimble. We’re scrappy. We’re focused on having speed to market as we roll out new ideas and initiatives. When you look at startups like Google, like Uber, like Airbnb, you know, they were industry disruptors. And they changed the world because they were willing to take risks. And also they didn’t have those traditional bureaucracy that can stifle innovation in older companies.
One of the things that growing through a pandemic, I think we’re very much at an advantage. We’re looking at growing and adding people versus other companies which sadly had to downsize and lay people off and close hotels. So we’ve been ahead of the curve in terms of saying, “What does that traveler want post-pandemic? What type of services and what type of experiences they’re looking for?” And also now that we’re, you know, playing with the big boys and girls, we need to be set up to play with the big boys and girls. However, we have one thing in mind is that we want to shake things up by moving fast and taking calculated risks.
Kaitlin Milliken: So I do want to talk a little bit about 2020, before we move into the future and scenario planning for what’s next. 2020 was a really tough year for the hospitality sector, generally. Fewer people were checking into hotels and more people were staying home. Those who were checking into hotels, safety was top priority. How did the team at Sontesta respond to the challenges caused by COVID-19 and pivot to meet the new safety needs that guests might have had?
Vera Manoukian: It was definitely a tough year indeed for everyone. Safety and security obviously is critical in today’s world. It was when the pandemic started, and it continues to be. We rolled out a program that’s called Stay Safe with Sonesta that really focuses on ensuring that our team members and our employees are safe, that every area of the hotel is sanitized regularly. We would put a seal at the door at the guest room so that the customer understands that the room was sanitized right before they enter in, so no one else has entered the room to check it. Putting bags on the remote controls and sanitizing the public areas regularly, the frequently touched areas. I have to say that the program has been incredibly successful and has created that safety.
Another thing I’m proud of the team is that, you know, given that our customer bases change and group business didn’t book and business travelers didn’t book, the team did a phenomenal job reinventing themselves and finding business during the time of pandemic. Essentially fish where the fish are.
The industries that were traveling and staying in hotels were traveling nurses, buy outs for movies and buy outs for TV, Netflix series, construction groups. So one of the things in Sonesta is that we’re not spoiled as some of the large companies are. So we don’t have that umbilical cord that you plug into the system and the reservations keep coming, we have to go find business. So that strategy really works by being scrappy, and nimble and really booking that piece of business that truly made a difference in our performance in a pandemic year, and in all of our portfolios, we won the marketshare game. So we outperformed the competition, because we were ready ahead of time and we were able to identify business, as I said, that was traveling during this tough times, including now. We’re still in that phase, because obviously, things are getting better. But the situation is not over. For us, we were in a very unique situation where we were growing leaps and bounds. So as companies were, you know, letting people go, we weren’t hiring. When I started, we were a company that had close to 1,600 employees. And in four months, we went up to 6,500 employees. We most likely were the only organization that was able to do that.
Kaitlin Milliken: 2021 is a really interesting transition year where there’s this period, pre-vaccination, and there will likely be a slow reopening and lifting of restrictions and more people getting the vaccine. What are the trends that you’re seeing for the rest of this year in the hotel space?
Vera Manoukian: All the experts say group is not going to come back till 2022. However, we’re starting to see an increase in activity for group inquiries by 40 percent over the last three weeks, particularly in resorts and in warm destinations. Our urban hotels are still struggling, because those are so focused on corporate business and on corporate groups. So we’re seeing different types of groups that are coming our way.
We’re also seeing significant amount of leisure travel that you know, pent-up demand of people being locked up at home. So we’re seeing that in our destinations where people are flying to get there are also in dry markets. There’s a segment that now I’m not sure if you’ve heard of it, it’s called the revenge segment. So those are people that are extremely angry, that can’t wait to get out of their homes. And I think we may know many of them. And what that segment is doing has really shifted a lot of their budgets to either go on one large trip for multiple weeks, and to get the being at home out of their system, or smaller mini vacations where they go on frequent vacations. We’re seeing significant amount of pickup on weekends on leisure travel. At the same time, the segments that were relied on during the pandemic continue to perform. So still medical, government construction, entertainment, those segments have not lightened up. They’re continuing to perform for us.
Kaitlin Milliken: I think there’s also this question of planning for the different potential things that could happen this year, how is your team approaching scenario planning?
Vera Manoukian: The group business is going to take some time, but we know that the virtual piece is really, really going to play a component in part of our lives. So we’re really focused on saying how do we have the virtual components in meetings and events? How do we have that for our corporate customers as they start coming back? So really upgrading our capability to ensure that we provide these customers cutting-edge experiences and look at different ways of monetizing our spaces to say, if we can open all five restaurants in a hotel, and we just go with one, what do we need to do to repurpose some of our areas for us to continue to generate revenue?
We know that life has changed, and it’s definitely not going to go back to 2019 levels immediately, that there’s going to be significant steps as we get there. And I think also safety and security and cleanliness is going to continue, despite the vaccine situation. We are hearing from our customers that that’s critical in a selection of a hotel so we will continue to do so
Kaitlin Milliken: Great. And when it comes to understanding guests and customer demands, how are you staying in touch with them? How are you gauging where they’re at?
Vera Manoukian: We obviously have a lot of clients that we’re in touch with, whether it’s leisure groups, whether it’s corporate groups, whether it’s BT customers. We’ve kept our ear to the ground to be in constant communication with them. Because as you know, we had a lot of business that canceled or moved their meetings forward to next year, because there was that uncertainty of having those meetings. We know what everyone is saying in the industry. We personally feel that we’re going to continue to see those green shoots as the vaccination population increases. So there’s going to be a comfort level that is out there that we’re going to continue to see more activity. We’re also hearing some companies have started to kind of lift the restrictions of having their team members travel to go see customers, we’re truly by listening to our clients, we’re seeing that there is an appetite of starting things a little bit sooner.
Kaitlin Milliken: Transitioning a bit, I do want to take a deep dive into growth since Sonesta has expanded so rapidly. And a lot of that is through acquisitions. Can you talk a little about the company’s acquisition strategy and what approach you take when it comes to that?
Vera Manoukian: Yeah, so historically, our approach — we were very, very focused on being opportunistic, and focused on trying to grow and overall size, to leverage size to be able to increase our awareness and really be a larger portfolio. Also, as you know, we acquired Red Lion as a franchise organization, because our intent is to get into the franchise business, additional to just a managed business. So acquiring Red Lion was very strategic as they have strong expertise in how to operate in that franchise community.
Moving forward, we’re looking to be really look at our portfolio and become a little bit more strategic and filling certain holes that we have. We have a gap in New York City. We have a gap in South Beach. We have a gap in downtown LA. So it’s really important, so growing has been awesome. One of our key strategic moves is to have a presence in this gateway cities. A — to increase awareness of the brand. B — is to capture some of the international business that these cities play a key role in. And three is, it’s important to be in those largest cities in the US as feeder markets so that the big companies know of us and start doing business with us.
We’re also focused on acquiring resorts and destinations in order for us to complement our travel pass program, our loyalty program. So even though right now we’ve had some hotels that we acquired in Kauai, and in Puerto Rico, and we have Hilton Head in Fort Lauderdale, but we feel that we have major gaps like, Punta Cana, like Cancun, like ski resorts. So it’s really important for us as part of our growth is to have those destinations, which gives our road warriors and our loyal customers that ability to redeem their points, in hotels and in destinations that they look forward to, to go there with their families or friends. So that’s kind of shifting our strategies to be a little bit more strategic and not necessarily focused on size, because as I mentioned, we’ve exploded in size, but really look at where we have opportunities and fill those gaps.
Kaitlin Milliken: Do you have any advice for innovators that may be looking to work more collaboratively with their CEO, or with teams in charge of operations?
Vera Manoukian: I’m in a unique situation because I oversee both, but that’s not traditionally the case. And I think a few things that I feel are important is partnering and collaborating between the innovators and the operators, not working in silos. It’s really key to have the operators be part of partnering with the innovators to understand what is happening, and also to provide input. Because, you know, I always say you can have the best strategy, the best idea, the most cutting-edge program, and the operator in the property doesn’t bring it to life. It’s meaningless, right? It stays in somebody’s deck or somebody’s screen. So it’s really component that they have the buy in of the operator, and engage them with the process because, you know, some ideas sound phenomenal on paper. But when you go to operationalize them, you find that there’s so many steps that are missed. So partnering from the beginning of the project, having that voice of operations, as an advisory to the project to be present at all times, and have their buy-in will really help bring an idea to life and make it successful at the hotels.
We also like to, when we’re doing that, use testing those ideas, right, in key destinations that represent kind of a majority of our portfolios, and I call it “wash and rinse and repeat.” So really worked through those ideas pulled the bugs out, when we feel really good about them to roll them out in the rest of the organization.
However, I do have to say that being the past operator myself, some of the things that operators like to do is that, they push back because they’re used to doing things a certain way. And the curiosity factor may not be as consistent among all the operators. So we have to also make sure that we don’t settle by someone pushing back, that we really try to rationalize to the team, why are we doing this and how their hotels is going to benefit from it and how much more they’re going to be productive, or they’re going to generate more business or they’re going to increase the surprise and delight the customer. So when they understand that they’re going to benefit from it, and clear communication, partnership and collaboration, that’s truly, truly key.
I remember when I was in operations, as I would work with other departments in corporate, the ones that were easy to incorporate were the ones that I had a clear understanding of what was being accomplished, understood what’s in it for me, and also helped them identify any obstacles that they may see. So those are the best way to approach it, that is, you know, proven to be successful.
Kaitlin Milliken: Fantastic. And this is my final question for you, Vera — what are some tips that you want to share with innovators operating in the hospitality space?
Vera Manoukian: Given that hotel business is open 24-seven, our doors don’t lock, so we’re open all the time. We have guests in and out all the time. So we need to get out of the tactical things and being in the day-to-day stuff, and really be able to lead and be more strategic. That’s a weakness of an operator in our industry, where you’re putting out fires all day long. You feel really good about it at the end of the day, but how much time have you really thought about to really be strategic and take your property to the next level? So I think as an innovator, it would be music to an operator’s ear, if they’re able to find ways to drive performance so that we can add value to our owners. So that’s number one, in terms of what can you do for me — that I’ll be able to generate more top-line, bottom-line, be more efficient, more productive.
Secondly, how can you help me build loyalty with my customers, whether it’s technology or other ways that can help me deliver service that’s really different than any other company does? How can technology or innovation help be more efficient at the hotel? So I still have a phenomenal product, phenomenal service. But it doesn’t cost me that much money to deliver on those.
Going back to my initial point. There’s so much friction sometimes in the processes that we do. And we spend so much time in manual or things that we’re used to doing it a certain way. How can innovation help the property teams and the operation teams to remove some of this friction — whether it’s technology, whether it’s new processes, whether it’s new ideas — to take the friction out of our day to day life, so we’re able to focus on generating more business and making more money? Make us more time. Alleviate that running around, so we have an opportunity to think and to be more strategic.
The best days I have is when I have an hour or so where I sit back and think about “What is it that we need to do to improve our organization?” And most of us find time in between meetings to do it. So how can they help us to alleviate some of that tactical time so that it gives us the ability to be more successful, and the ability to look at things differently.
Kaitlin Milliken: Great, thank you so much, Vera, for sharing your insights on our show.
Vera Manoukian: Oh, you’re very welcome. Thank you for having me.
Kaitlin Milliken: You’ve been listening to Innovation Answered. This episode was written and edited by me, Kaitlin Milliken, special thanks to Vera Manoukian for sharing her insights. For more tips and tricks from inside the C-suite, be sure to subscribe to this special season of Innovation Answered. You can find our show wherever you get your podcasts and on our website, innovationleader.com/podcast. Thanks so much for listening, and we’ll see you soon.
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