DISRUPTERS SEE OPPORTUNITY, NOT OBSTACLES
Social good — even uncertainty — serve as forces of success, Rick Spence writes.
There were two key themes at the World Entrepreneur of the Year Conference, held last week in Monaco: Uncertainty and Purpose.
Everyone knows we live in an age of business disruption, and that social purpose is good for the soul (and reputation). Everyone except the highgrowth entrepreneurs who are the centrepiece of the annual conference, organized by global consulting firm EY.
These Entrepreneurs of the Year, representing some 50 countries, come here to Monaco to compete for the title of World Entrepreneur. They are accomplished business people who mingle readily with government leaders and business titans, and serve customers around the globe. Their ranks include an Australian company that provides health care in the outback, Papua New Guinea and sub-Sahara Africa (Aspen Medical); a Belgian firm that converts waste biomass into green energy (Vyncke); and the planet’s second-largest berry distributor, Chile’s Hortifrut. (And that’s just A to C).
These entrepreneurial leaders, for the most part, don’t see uncertainty as a threat, mainly because their businesses never knew much certainty or security. If anything, it’s they who create the uncertainty.
Take Munich-based Dieter Muller and his wife, Ursula Schelle-Muller, who run Germany’s Motel One Group. When I asked what uncertainties plague their business, they couldn’t think of one. What about the rise of Airbnb? I asked. What about the commoditization forced on the hotel industry by discount travel sites such as Priceline? What about finding service employees? They shrugged, and explained why they don’t care.
But first, understand that Motel One is cooler than it sounds. Its 56 hotels occupy a niche that barely exists in North America: designer budget hotels. Aimed at young business travellers tired of characterless hotel chains, Motel One operates aesthetically pleasing, individually themed hotels that reflect their communities and encourage guests to interact at a communal lounge/bar/work space just off the lobby. Sure, guest rooms are small, but the Mullers focus on what they say travellers really want: high-quality beds, a good shower and a great breakfast.
So here’s why Motel One shrugs off uncertainty. Airbnb lodgings are anti-corporate, too, but they’re too hit and miss for the business crowd. And Motel One undercuts most Airbnb rates, with standard prices of 49, 59 or 69 euros (slightly higher in major cities, such as London).
And as for that Trivago guy and other price-comparison sites: again, the Mullers shrug. Motel One offers standards that don’t change day to day, and they never discount. There’s nothing that upsets guests more than knowing that someone else paid less for the same room, says SchelleMuller. By offering consistent value every day, they build goodwill and loyalty.
How can they do it? Rigorous cost control, says Muller. It starts with finding the best locations — usually on urban fringes, close to highways.
And they push volume, with rooms averaging just 16 square metres — about half the size of North American hotel rooms. As a result, Motel One’s profit margins are among the highest in the industry — enticing enough to attract Morgan Stanley as an investor and provider of capital for expansion. Which helps explain why Motel One’s revenue has grown by seven times in the past six years.
With 15,000 rooms, the Mullers intend to keep growing by 2,000 to 3,000 rooms a year for the foreseeable future. They’re building multiple hotels in big German cities (they just opened their ninth hotel in Berlin and have started on the tenth), and tackling new cities abroad (Basel and Newcastle). Eyeing expansion beyond Europe, they expect to hit the U.S. and Canada first.
Looking over the sparkling swells of the azure Mediterranean, I was reminded of the adage “Fish don’t know what water is.” The Mullers don’t perceive uncertainty in their marketplace — because they lead it every day. In fact, bigger chains such as Accor (where Muller started his hotel career) are now modifying their cookie-cutter brands to emphasize design and local character. “We take that as a compliment,” says SchelleMuller.
As for that other conference theme: purpose, Motel One offers formal training programs to all employees, from chef to chambermaid. And it doesn’t simply hire refugees, it helps them learn German and integrate into European culture, through special training, sports and social events. That’s a social good, but it’s also good business: Motel One reduces turnover by prioritizing employee satisfaction and advancement opportunities.
The WEOY conference launched with an EY survey that revealed 89 per cent of global executives see growth opportunities from today’s uncertainty. A related poll finds nearly one in four high-growth entrepreneurs expect current-year growth of at least 26 per cent. Proof, if you need it, that obstacles are just opportunities you haven’t sorted out yet — and success is an attitude, not a result.