Peter Karpinski and Douglas Miller share proven strategies for navigating today's hospitality industry transformed by AI, shifting consumer behaviors, and new revenue opportunities.
Change remains the only constant in hospitality, but today's accelerated pace brings unprecedented opportunities to innovate and differentiate your brand. Technology and AI are enabling streamlined operations and personalized guest experiences that drive loyalty and revenue.
Consumer behavior shifts like mindful drinking trends, for example, present deep challenges but can also open new revenue streams for savvy operators who know how to pivot. In this Keynote from Cornell’s Nolan School of Hotel Administration, we’ll explore successful adaptation strategies that can strengthen your business model and broaden your appeal.
Join industry leader Peter Karpinski from Pyramid Global Hospitality and Cornell Senior Lecturer and industry veteran Douglass Miller as they discuss how to survive and thrive in this rebounding market as well as what it takes to gain competitive advantage. They’ll also share storytelling techniques for reaching today's experience-hungry consumers.
Check out Doug’s Beer Essentials Cornell Certificate Program here
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Chris Wofford: On today's episode of Cornell Keynotes, we are exploring the rapidly evolving hospitality landscape, and we learned that it's not just about delivering great service, but knowing how to navigate an industry that is transformed by AI integration drastically shifting consumer behaviors. And an accelerating trend cycle that's creating both unprecedented challenges, but also new revenue opportunities with mindful drinking trends, reshaping beverage programs, technology enabling hyper-personalized guest experiences, and experience hungry consumers demanding compelling brand stories.
Even seasoned hospitality professionals find themselves adapting to what feels like an entirely new industry. So we were so happy to be joined by Peter Karpinski from Pyramid Global Hospitality and Cornell Senior Lecturer. Douglas Miller. Together, they offer proven strategies for navigating this rebounding, but rapidly changing market.
So there's something here for any hospitality [00:01:00] professional who's looking to gain a competitive advantage, or aspiring entrepreneurs who want to understand how to survive and thrive in today's hospitality market. If you're interested in learning more about Cornell's Nolan School of Hotel Administration and their research on hospitality innovation, be sure to check the episode notes for details.
And now here's the conversation with Peter Karpinski and Doug Miller.
Douglas Miller: Just kick things off to give context and to inform people. You work for Pyramid Global Hospitality Group. Can you describe in a nutshell what you do daily, your career, and what this company is?
Peter Karpinski: I work for a company called Pyramid Global Hospitality. We are a third party hotel resort and restaurant management company, Boston based. We've got offices in different cities now in North America and in Europe, , Houston, Cincinnati, Boston. And then we've got a branch of business over in London.
We actually have some Cornell hotelies that are in the leadership of our [00:02:00] company and run the business and started it. So it, it's really neat. It's fully intertwined. We basically manage hotels and resorts on behalf of owners. Most of them are third party management contracts. We have an investment in some of the properties that we have.
Some of the properties we'll co-develop with owners, but we're really a third party management company. The reason that you may not have heard of Pyramid Global or don't really know that name or that brand is because we're not business to consumer. We're business to business. , We work within owners, the brands, our company, and providing those services.
We do work with a major brand, so we're a franchisee of Marriott, Hilton Hyatt, IHG. Mm-hmm. So any of those hotels, , we'll manage as a franchisee for them. And we have about, , 40 or so independent luxury lifestyle hotels as well in North America that we say are brands is one. , And we managed those brands of one on behalf of the ownership groups that, , own those properties for them.
It's a really great business. It's really dynamic and exciting. It kind of [00:03:00] covers all aspects of our industry. I love what I do and I love who I do it with.
Douglas Miller: So let's talk about that. 'cause you've had a dynamic career. You have worked for Four Seasons. We both worked for Four Seasons out on the West Coast.
You've worked in Las Vegas with, , Caesar's Entertainment. You have worked in Philadelphia, , under the Star Group. , You've have various different locations. You've lived and worked. What do you love about the hospitality industry? Why, why are you so passionate about this industry?
Peter Karpinski: I personally think the hospitality industry is the greatest industry in the world.
, even, as a kid, I've always had a passion for it. But besides being like a global economic powerhouse, I think this year I read that, , worldwide, we're gonna do $11 trillion in worldwide annual GDP in our business, travel and tourism. One out of every 10 jobs in the world is in our industry. , So there's that, obviously there's that direct correlation.
And then in our business, like a lot of other industries, but you see it a lot in ours because it's so human capital [00:04:00] intensive, is this multiplier effect. There's hotels and resorts and cities, there's travel and tourism in cities, in marketplaces. But then there's also other jobs that get created because of the hospitality business, like food supply, construction, retail, telecom, healthcare, legal education, entertainment.
The list goes on. Think of a city like, , Las Vegas, right? Like the strip and all this big resorts and casinos, if you ever get off the strip and you can see how big of a city Las Vegas has become, all those industries and all those jobs and all those people living and working is a multiplier effect of our business.
So I think it's had on a very personal level, this profound ability to create meaningful connections, , drive and influence culture in positive ways. I think it's an industry where it has some of the most diverse ranges of personal and professional growth, , available to people. , I think about it, we're in the business of putting heads and beds and butts and seats, which is what we do, but we're really in this business of, creating memories and [00:05:00] experiences for people that could live for the rest of their lives.
I go far, so far as to say that our industry, has and will continue to transform humanity. I really believe that in very positive ways. Our business ultimately is in the business of bringing people together. That's my view of the business in general. On a personal level, I've had the fortune, of working and living in an industry and finding this combination of what I can both be great at is what I truly love to do.
I love this business. It's one of the things that I've found in my life that I can be, I think, really good at or great at. And when people can find that intersection between love and greatness, I call it it doesn't feel like work. It's just, it feels awesome. You show up, you spend more hours at work in your life than you do anything else in your professional career.
For me, it's never felt like work for me. It's just felt like what I love to do and love to do it with. I think another thing in our business that's been great, and [00:06:00] I've had the great fortune over decades of doing what I'm doing and who I've been able to work with in positions that I've been in to influence a lot of people's lives.
I think our business is like this tree trunk, and there's nothing more powerful than being able to influence someone's career growth and helping them find personal and professional success and satisfaction. I'm not the trunk, I'm maybe a a branch of a branch because before me there were people that helped me get to where I'm at.
But I also like to think that since I've been along, that there's another few branches have grown and maybe even grown from that. And to see that happen and see that evolution to me is, it's very heartfelt and very profound.
Douglas Miller: And one of the things I often say is we are the nameless, faceless people who are part our lives forever.
So an example of that, when I lived in Las Vegas, I was the Easter bunny, and I went from room to room given out candy and. My guess I'm probably was shown in somebody's wedding photo album or some family reunion. Who [00:07:00] am I? I am nobody. But that's why we're the nameless faces of, of lives forever because we create those great experiences that facilitate memories lifelong.
And to think about that when you are developing these, various different concepts, , from full service luxury down to, , you talked about, , developing , a Gulf Stream concept. When you're looking at that, , type of situation, how do restaurateurs become better storytellers?
Like how do they tell the story of the concept or themselves or the business that they wanna create?
Peter Karpinski: Great. , I had the opportunity this morning to talk to your restaurant class, , and we touched on this very topic. , I call it sort of the creative and the development process. , Everyone has a different path that they take.
I've kind of come up with this. I've had the opportunity over decades to have been able to create dozens of restaurant bar, coffee shop, and hotel concepts. , It's been really great. And if I, I really looked at the projects that are, and were, [00:08:00] or still are the most successful. , That creative process is important to go through, and the most successful ones are the ones that have the strongest concept identities to begin with.
So we'll, , really sit down and think if we're either creating a concept that's. Something personal and meaningful to me, or the person who, who's doing it and I'm doing it on their behalf with them. Something that's a personal story. Or maybe you kind of make up a story and you come up with a concept, or maybe you're in a marketplace and you see a real need for something and you say, we're gonna create a concept to fill this void.
The most important thing to do is really write a strong concept, , statement, , what this brand is, what this concept is, and then to stick to that. Really stick to that. Everything that happens after that. Once you feel the team, you have architects and developers and interior designers, the branding companies and chefs, and you name it, the list goes [00:09:00] on.
, Really keep that team cohesive and always go back to that concept statement and the brand identity that you've come up with. It's really easy for people to get an idea. , And you don't want to, you don't want to hinder that, but that isn't great or, , to chase that shiny star. Or you just see like, oh, there's this trend happening during the development of it.
, Try not to do that. Stick to knitting. Stick to what you came up with in the very beginning because everything has gotten so specialized today to compete today. That brand concept, that brand story has to be really great. Another thing that we're doing in our business, I think is important. Once you do that concept, that statement, once you bring that concept to life, is to think then how, when I operationalize it, how do I create, , symbolism and rituals that reinforce that brand concept and how it lives and breathes , on a daily, weekly, monthly, yearly basis.
, In our industry. I could give a couple good examples of that. Just, , I think maybe Kimpton Hotels and restaurants did a great job of that early on with [00:10:00] their wine hour. , They've been doing that for 20 or 30 years now. It's well known for them. They're consistent about it. It brings everyone together, creates this neighborhood residential vibe.
They used to give, , customers a fishbowl with a fish in it, with a goldfish if you wanted to have a pet in your room. I don't think they do that anymore. That was kind of a ritual they did. Obviously like take Ritz Carlton, serving ladies and gentlemen, is I think significant four seasons who, , you and I both used to work for early in our careers out west and have that common bond are very well known for their personalized and warm greeting.
Every time you come across an associated or a team member to Four Seasons, they make eye contact with you. They recognize you, they probably know you by your name, and they give you a warm, heartfelt greeting. Leave Madison Park, great restaurant in New York City. It's like best in the world at one point.
Maybe it still is. , They're well known for their gifts that they give at the end of the meal that are personalized. You get to take home with you. , Starbucks, think about it like when you go to [00:11:00] Starbucks and you order a drink and they write your name on it. , That's operationally significant just from a, a tactical thing to do to make sure that you get the right coffee and , it's your order, but the act of writing your name on the cup and someone doing it and seeing your name and it being handwritten, , creates a level of like authentic personalization, which I think is great.
, We had a restaurant, , I developed years ago. It's successful called Departure. It's modernization. We created this idea where there are these kind of like wheels of, I mean, you'd see 'em in, in Asia, like prayer wheels. , We called 'em wheels of wishes and good thanks, where when you walk out the restaurant, you're supposed to spin 'em.
And as you're spinning them, you think good thoughts, you give thanks. You wish good things in other people that you know in your life. And our idea was that if you do that, you're gonna leave the restaurant and you're gonna be happy. So we think it's been great.
, It's important to do this now because we've shifted from the digital revolution, , which is really the bulk of my career up until now, to this experiential hospitality and people [00:12:00] really looking for memories. , Travel and tourism is shifting this way. There's a real hyper focus today on, , this idea of creating memories, creating experience, making it personalized, it's, , experiences versus things.
And I think that this is going to continue for the foreseeable future.
Douglas Miller: So in thinking about that and build upon that, people say, oh, I wanna do elevated. Oh, I wanna do something unique. , Is it always the best route to go is to do something unique, just to be unique sake or just creating a great concept
Peter Karpinski: concept?
Well, if you're doing something that's unique for unique sake and there's some demand in the marketplace that is actually there and that like works great, that feels and sounds a little bit too risky to me, kind of go back to what you think is a really good concept. What's a really good idea what carries through?
And then what's been backed up, obviously by really good market [00:13:00] research data, um, psychographic and demographic studies. , A really good understanding of where you're gonna be to know that there's a need and a demand for that. I also think on this note, that there's this continued focus and shift, and it's going to, it'll, I think it's gonna be lasting.
It's not a trend where people really want to go to place, to concepts, hotels, restaurants, bars that are, , I like to say of the place and for the place. A company I co-founded and is grown called Arrive Hotels and Restaurants. That was actually our tagline and we didn't just think about the state we were in or the city we were in, , we thought about the actual little community that we are in, and we wanted to create concepts that were really of that neighborhood, but they were also for the people that live, work and play in those neighborhoods.
That's why we say. For the place and creating, , living rooms. It could be a restaurant, it could be a hotel where people that even aren't hotel guests are [00:14:00] gonna really feel comfortable and it's gonna feel to them like, this kind of belongs to me. And I feel like these developers, these operators, whoever came up with this concept, has given this to the community and it's made the community a better place.
Douglas Miller: Because in 2019 you delivered a speech at the World Food Travel Association, and you were talking about trends in the trend cycle, up emerging trends. What are some of the current trends that you see in the industry? , What are fads that you see? What do you see coming down the line?
Peter Karpinski: The trend cycle and maybe some of the things that I spoke to when I gave that presentation. , I do think a lot of those things have continued, some of those have accelerated. I'd love to talk about it for a bit.
, COVID obviously changed things tremendously. It shifted our business around. It caused people to adapt, improvise, evolve, overcome ways that they probably never even, thought that they would and they were forced to. , It was a really interesting time. , But I will tell you from some of those trends that were [00:15:00] existing then maybe through COVID and today that will continue, , is this idea of in the food sector at least, , off premise, , delivery first and convenience.
Mm-hmm. It's just, it'll, it's gonna continue. I mean, not everyone is gonna live their lives getting. , GrubHub and, , Uber delivered or Uber Eats, but, , there will still be demand for dining and restaurants, but , it's becoming more difficult for full service dining establishments to just do that and not have a big piece of their business focused on, , off-premise delivery, , and packaged home meal replacement options.
I think, , another trend during that time that will continue is this idea around health, wellness, sustainability overall, and maybe you could add to that ingredient transparency. , People are really being much more mindful of what they're putting in their bodies. I think they're being much more mindful of the earth and the, , sustainability of, , of our environment that we live in.
That's being prioritized [00:16:00] all through different channels. , Localized sourcing, reduced food waste, eco-friendly packaging, , vegetarian vego, vegan menus, finding things that are allergen-free. I think that's important. All operators have to do that today. , Another thing that's continuing and will continue is ongoing menu innovation, customization and experiential dining.
As you know, the middle of the page continues to get harder and harder. We're getting cost pressure. We want to maintain those margins or even grow those margins. So how do you do that? You really do that by staying innovative. , Fast casual formats. Are gonna, continue to grow. They're growing, they're becoming more specialized.
, I think dining as an experience, , will continue to grow. , More immersive dining experiences, a little bit more entertainment involved. , Instagram friendly environments. Obviously social media and friendly environments will continue. , And then, technology, , is having a really big impact on our business, , technology.
The digital transformation that we've seen in our business. , [00:17:00] Everything in regards to technology , is increasing. I used to joke about when I started in the business, you could just get a, , a box, like an old cigar box and just open it up and put your money in it. That's completely changed. , Ordering apps, self-serving kiosk, , AI analytics for menus.
I know we're gonna talk about AI in just a little bit. , Inventory, labor management. , It all is, , tools that our industry can use for. More personalization, , and really an enhanced customer experience. Lastly, I'd say on that topic, , people are looking for value, this word of value, value, consciousness and inflation pressures that we continue to see and probably won't slow down for a bit.
, Although consumer spending, if you look at it like , in a national scope like the, it's increasing in real dollar terms, but real growth is actually a modest to , decreasing if you factor in, inflation., Spending is actually going down because people are, are having to tighten their wallets.
Rising food and labor costs are [00:18:00] forcing operators to rethink their businesses. , How we portion food menu engineering value propositions. , Consumers are , really looking for value now. They're expecting value, and we're now focusing on how do we give them value and how do we drive that through increased promotions, loyalty, , bundled meal opportunities are important and ways to get them back and become repeat customers.
So yes, I do think that the trend cycle that maybe we talked about before, I is gonna continue. I think it's accelerating, but I think it's doing it with some headwinds. It kind of depends on, , where you are, what your business is doing, , how you're going after your customers. I think our markets and our businesses are still rich with opportunity.
, Some of the shifts are permanent after COVID. I, some of 'em may be short term and we're adapting back a little bit to way things were pre COVID. , But it really varies by operator, by your segment and by your [00:19:00] geography.
Douglas Miller: One of the questions in the chat. Does touch upon, , ai, , specifically he is asking about story, talent and experience delivered with ai.
And I would like to expand upon that is how is AI impacting the hospitality industry? Oh
Peter Karpinski: my gosh. Ai, ai, ai. I mean, we could spend a whole hour talking about ai,
Douglas Miller: but
Peter Karpinski: , We could, you know, it's interesting. AI is what everyone's talking about. , Not just in our business, but any industry you're in. I'm sure if you were in the legal business or healthcare or manufacturing, or doesn't matter.
Banking, everyone's talking about ai. , It's evolving and it's growing rapidly. , I'm super excited about AI and what it has for the future of our business and just business in general. And the way I look at AI is that while we're all still learning about what AI. Is currently and what it's becoming and what it could be.
, And that's gonna continue to accelerate. Companies are investing billions and billions and billions of dollars into [00:20:00] AI and LLMs and these high, super fast computer and neural networks, which is, just gonna kind of exacerbate it all., I kinda look at it like it's just for us, another operating layer to our business.
It's another tool that we're all gonna use. , We live through this sort of the whole.com era and social media and, , the advent of all the stuff that came online and all the digital ordering and whatnot. That was, everyone was asking all those same questions then and had kind of fears and doubts and unknowns.
It's the same thing with ai, but I really just look at it like a tool that's going to be an operating layer on top of what we're already doing, and it's really gonna help our industry and other industries with a lot of functions. , It's gonna make, um, like if you think about, to me, customer service is different than hospitality.
Customer service is just kind of like fixing or, finding a solution to a need or a question or an answer. Hospitality is really genuine hospitality and making you feel a certain way and [00:21:00] creating a connection. I think AI is gonna do this really great job of helping us do a much better, more efficient and more productive job of the customer service side of our business.
It's gonna cover, , operations. Marketing, forecasting, guest experiences, hr, revenue management, , it's gonna cover all aspects of our business. So I really think ai, , at least my view of it today, is that it's gonna help us shift as an industry from being reactive to predictive. It's going to create an environment where we're going to have, , instead of one size fits all, we're gonna be able to do things that are much more personalized and on a custom level.
And we're going to see systems and operating platforms and data, , go from being siloed to very integrated data ecosystems at Pyramid. , They've done a really great job going back years and years ago to seeing the importance. Of clean data and integrating the data on the backend. We actually have a data [00:22:00] scientist that we hired that works for us who's an SVP in our company.
We hired him from MIT, he's not even from our business to come in and build a whole team to build a backbone engine to our system. We call it NEO People know that from like the movie The Matrix, NEO it, it actually stands for Next Evolution Optimization. And we've invested millions of dollars over the years to synthesize all of our data, keep it clean, and make sure everything is integrated.
And it was really prescient actually, because I think at the time when Pyramid did it, they weren't necessarily thinking about ai. Mm-hmm. But AI needs that and wants that in thrives in those environments. So the data and analytics we're gonna be able to get from it are gonna be tremendous, , to give a couple sort of areas in the world of AI where I think it's gonna be most meaningful today and most impactful.
And then maybe we can get into talking about some of the things that you could actually do today. It isn't just aspirational. , Revenue optimization on the commercial side of our business is gonna be a big piece of ai. We're already starting to [00:23:00] see it. , Dynamic pricing yield management. It's gonna be done less by, , humans sorting through data more through ai, , and taking history.
, -Historical sales. . Predictive future sales and forecasting and bundling it all together. It's crazy to think that even today in our business, , they're already figuring this out. As you could make a room at a hotel tonight. I can make a reservation at a hotel tonight.
They know your spending patterns and how you think and , how you live your life. They know how I do the same thing. They could charge you a different price tonight than they would charge me for that same room. , Just based upon what they think that they can yield out of us as consumers. It's pretty wild.
There's gonna be a huge, , efficiency that we're gonna be able to be gained from AI in labor and scheduling. We're already starting to see that with predictive scheduling platforms that we're using and automated training, we're starting to do the more and more of that in our business. There's gonna be lots [00:24:00] of opportunity in our business, , for.
, Plant property facilities, CapEx, preventative maintenance programs, and for systems that are AI based to help us monitor and manage those pieces of our business. I mean, yes, we're in the business of managing mm-hmm. Hotels and restaurants and resorts, but we're also in the commercial real estate business.
And how do those commercial real estate buildings live and thrive and function well to optimize those values? , I think there's gonna be lots of opportunity in AI right now and in the near future for personalized marketing and loyalty. I think there's gonna be lots of opportunity for operational insights and forecasting that we don't have today that are just gonna be better.
And I really think there's gonna be this enhanced, , guest service automation. We're already seeing it with, , chat bots, , virtual concierges. We're gonna see more and more of that. We're gonna have AI concierges that are gonna basically very quickly in the near future and they're already doing it. , Plan your whole trip for you, book your whole trip for you.
Set everything up where [00:25:00] it's just like. One stop shop. And as that gets more and more sophisticated and they know more and more about you, those trips are gonna be really great. And they're going to be experiential based. They're gonna create memories. They're gonna create, , instances that you're gonna find yourself in that are gonna not just be things.
, I think from a consumer perspective, it's gonna do a lot as well. You're gonna feel things that are more personalized, it's gonna feel more frictionless to you as a consumer. You're gonna be able to feel like you're getting much more richer hospitality and, , it's just gonna be a better experience for you.
So it kind of going through those categories again. . , Revenue and forecasting is gonna be a big one. Tools like Duetto Revenue Analytics, predict HQ Marketing and CRM platforms. , Revinate. That's a platform that we're using at Pyramid across the whole company. Now to do that better with seven rooms, fishbowl, Salesforce, CRM, , staffing and scheduling, , hotel Effectiveness, Harry Seven Shifts, home base, ai, customer engagement, [00:26:00] and chat.
HiJiffy, ASuite Whistle Chat, GTP actually. So chat, GTP is something that a lot of people are familiar with because it was just so easy to long out and use as a consumer. , They've now got all these different added layer platforms that you can do with Chat GTP. It's incredibly powerful. It's incredibly easy to use.
It's really intuitive. , And I would encourage everyone just to sign up, not just for the free one, but , get a subscription to that paid level and see what you can do with it in your businesses. I think it can help you. Menu and food costing, , lots of opportunities. Brizo Food Metrics, XtraChef by Tenzo ai, , training in hr. We're doing a lot of that. Ally AI ad app, ai, micro learning chat, GTP again. , And then guest feedback and analysis review, pro Trust View, Revinate Chat, GTP. Again, all of those tools are available today to, , operators to, , quickly adopt and start using and, enhancing their businesses right [00:27:00] now with ai.
Douglas Miller: Do you think some of this also will take the hesitation for some people when they travel in the sense that, , now I can look at a bot, I can have a, an itinerary that fits my needs. So do you think for some people it'll make 'em more inclined to travel or to dine out or to, , participate in the hospitality industry?
Peter Karpinski: Yeah, absolutely. I don't have my cell phone on me, but like our cell phones . . Over the last couple decades . Have become these, , someone said this term to me once I thought it was cool. It was like a weapon of mass power or something. Right. Sort of to that gist.
And they really are. And we've now been using our phones more and more and more to help us. To answer these questions, to give us this, this advice for us to learn from. And then as consumers to kind of go in through our head , this decision making process to what we're gonna do and, , how we wanna spend our money.
, These LLMs, these large learning models and chat. GPT is a great example, I think most people [00:28:00] are familiar with, , is gonna continue to enhance our ability to do that. , You can already just ask , an LLM model and there's a , number of them out there to help you with your consumer making decisions, things to do, give you suggestions, make advice.
It was a little bit clunky at first, but just even over the last year or two, it's gotten so much smoother and so much more sophisticated. When I travel and I travel a lot, almost every week, , . I'm not saying putting my toe in the water 'cause I've been doing it quite a bit actually. But I am purposely using AI LLMs and AI chat tools to help me make consumer decisions when I'm at places where I'm going and where to stay, where to eat entertainment, to go out to cool things and excursions and experiences that, , I might want to do if I find time for.
And I'm super surprised in a very positive way by some of the suggestions that I've received and some of the, insight that I've been provided that I might not have [00:29:00] known just by doing a Google search or just by going and doing something in a search engine like we normally would. So again, I, it's this added layer of, , as a consumer of getting information very quickly that's been synthesized in a way that's personalized to me and is going to be much more unique than just, , doing a query on a traditional if then search engine algorithm.
Douglas Miller: I think , it is the future and the future is now. I know some people are hesitant, but there's one point in time this thing called the internet. Everybody thought the sky was gonna fall when the internet came out. I remember when we got rid of, , fax machines, the world was gonna come to an end.
So , it is progress . and I wanna switch it up a little bit and talk about the beverages and beverage industry. 'cause a huge component of your company and your career has , revolved around beverages. , It is no surprise, , if you read different polls, gallops polls, it's been in the press, , that alcohol consumption's down, , alcohol consumption in all sectors.
Be it [00:30:00] wine, be it beer, be it distilled spirits, cocktails, fill the blank. , It is down, not just nationally, but , around the world. , So as that is a integral part of revenue for these places. . And as. Consumer habits are changing. How do operators, , create meaningful beverage programs for today's consumer .
That may result in them not consuming a traditional drink?
Peter Karpinski: You are correct. , Alcohol beverage consumption is down. , and it's down. To a degree and over a enough of a period of time for operators to, I think, be able to recognize and say that this isn't just a blip, it's just not a trend.
, This is sort of happening. Why is it happening? Understanding of that better and then shifting their businesses to, , adapt to those, call it the new reality. I mean, alcohol consumption is not gonna go away, and it's not down massive amounts, but it, it is definitely shifting, particularly in certain categories.
I read a [00:31:00] recent, , poll that said that maybe it was Gallup that said 50% of adults in America. , Reported, , drinking less alcohol than they did the prior year. It's the lowest level that they've had. Uh, it's been over 50% since 1939. That same survey said that only 20 4% of adults said they had, a , drink in the last, , 48 hours or two days, and 40%, , said people hadn't had an alcoholic drink in more than a week.
So we're seeing this in all demographic categories. , Mostly though with the younger generation, , gen Z, the millennials, the 20 year olds, the 30-year-old olds, a little bit more than, , a little bit of the older demographics, and they've really been shifting more towards. , Moderation or mindful drinking.
I think that that generation is becoming a little bit more health conscious. , And you know, they've got higher absentation rates, so take beer as an example. , That's gone down. You're a beer expert, you teach a class. It's been [00:32:00] down a couple percentage points. Wine is suffering fairly steep declines.
We've seen, , wine is down more than 5%, , some even more in some markets. , Not all categories, not all beer, not all wine. Certain areas of those categories are increasing or, , holding their own. The spirits business. We've seen a decline, but we've seen an increase in high-end spirits, which is really interesting.
, So the business is shifting, right? What are we doing differently? And that's your question. , You're starting to see more. Ready to drink options. And you're starting to see that, , off-premise and on grocery store shelves, liquor store shelves. You're also starting to see that in restaurants, canned cocktails.
You're starting to see a lot of sort of alcohol adjacent formats. I'll call them. You're seeing a lot of, , low alcohol, , to no alcohol beverages. That's fine. , There's all these great drinks you can make that don't have alcohol in them, mocktails , or non-alcoholic alternatives. , And then again, I'm, you're seeing this increase , in the premium.
, And then just maybe the sub [00:33:00] premium segmentation. So focus on that , the people that, , do have a higher level of disposable income are gonna spend it and they're gonna spend it on those premium products. And it is really shifting because, for a number of reasons. But, , health and wellness attitudes, , younger behavior, particularly Gen Z, they're just less likely to drink less frequently.
It's not as big of a social thing for them, or a social stigma for them as it maybe it was for you and I. , They're looking for better value, , with these economic headwinds that we talked about, and they're really now shifting , to occasional drinking. , As opposed to be doing it, , on a more regular basis.
, I would say if you're a supplier or if you're a brand, or if you're the alcohol space, if you're an operator, just be aware of , , the volume categories are under pressure. , Growth is more likely to come from innovative products like the canned cocktails I mentioned just as one simple example.
Elevated formats, premium platforms, , and then, , non-alcoholic or very low [00:34:00] alcoholic options. , Mocktails or something just has a little bit of alcohol in it. , The focus is, will continue to be, and I think this isn't a trend, , it'll last into the future around wellness moderation. , Experience as opposed to just like, let's drink more.
, And really focus all of your marketing and your effort on those younger demographics and on those younger cohorts because they're gonna be your paying consumer, , for the next few decades to come.
Douglas Miller: I say to people all the time too, is when you create a beverage program, is there a good story, right?
And I think in today's, , industry, you have to methodically think about why are you putting something on the list and is there a good story behind it? Because story telling is such a great, powerful tool to be able to engage with the consumer and more likely to, , consume these different beverages.
Today's certain demographic, younger demographic, my students, , they're all into different social platforms, TikTok or Instagram or other different things. [00:35:00] WeChat, , the power of the influencer, as I say, the camera now eats first.
Before we consume. we know influencers are powerful, but how is that shifting the industry and shifting how we think from a marketing perspective to an operation perspective? 'cause there is, Instagram followers are 10, 20, 30, 40 million followers. .
Peter Karpinski: I'm gonna answer it 'cause it's a really good one. But before I do one quick thought ahead about the beverage business. . You were talking about it earlier. . Was, , quality, , there was this time where you could just sell things and people would drink it.
They didn't have a lot of choices. Like everything in our business, everything has gotten so specialized and the quality level of the stuff that's getting produced has increased so much. , You can't sacrifice or skimp on quality. And I don't care what age you are, what demographic you are from.
Everyone now is looking for high quality, so, , don't lose that, right? , That's an important thing to always stay focused on. The question about influencers is great because, we were able to live through this advent of the internet and then , the creation and the innovation of social media and, frankly, , [00:36:00] how we market in our business from the old traditional model of, buying advertisements and buying print ads and, spending your money in certain ways has completely shifted 180 degrees.
We almost spend all of our marketing, and sales ad dollars in web-based, , it's all through different, , channels now, e-comm channels and, one piece of that puzzle now is influencers. And it has been, , for over a decade, , it's increasing, I'd say. , It's a difficult one for our business because it's very difficult to measure, engage, and quantify, call it the return on investment of that marketing spend.
, There's different measures, right? Return on engagement, return on ad spend, how many clicks and all those different things you can look at. It's still very, very difficult unless they're purchasing directly through you and you can really track the spend, which we're getting better at, , on the computer systems.
But, , influencers are, that's more than a trend., Influencers , are here, they're [00:37:00] gonna stay here. , We're gonna continue to spend money on and with influencers to help enhance our businesses. It's become kind of a marketing line item almost. . The trick is really, there's so many out there and it's easy just to hang a shingle and say like, oh, I'm an influencer, right?
That's cool. I want all my stuff paid for. I want to travel for free, and I'm gonna do this and do that for you. I think you've gotta be able to filter through all of that and really know who the people truly are that are going to influence your business in a positive way that's helpful to you, that's gonna increase your revenues, it, is gonna give you an actual good return on that, , engagement spend.
But, , it's something that I've learned to lean into and embrace. , At first I thought it was kind of like, oh my gosh, I rolled my eyes a little bit. , But it's, that is how the world thinks and that's how, . 20 year olds and 30 year olds today are being influenced. .
They're being influenced by, [00:38:00] and it's definitely having an impact on their consumer and purchasing decisions. I would just say be very careful on who you're picking and be careful on who you're gonna spend that money on. , There's so many of them out there. It's very difficult still to decipher, , if it's the right pick or not,
Douglas Miller: because it is, I don't think it's gone away.
And when you think about how people consume media today . It's, it's changed Again, going back to the cell phone, most people consume information and media through their cell phone and not traditional print media, , magazines. And another question that, came up in the chat. , , in person, interaction of staff, , with guest to increase human element is.
Twofold. Can AI help increase what you talked about earlier, hospitality and that in-person engagement? , Is that a tool that operators can use? Because we're in the hospitality business, right? The stronger connections we build, , the more meaningful experiences, can technology help leverage [00:39:00] those conversations?
Peter Karpinski: Absolutely. And, , companies, if you think about the best companies, I'll take Four Seasons as an example. Mm-hmm. Because you and I used to both work for them. They did early on before they had all these tech tools. A really great job of, spending time and energy and money and resources, trying to figure out who their consumer was and what their preferences were and what their name was and what they looked like, and train their associates on their ability to recognize that person.
And then in their own heads, , think about ways where they could anticipate what that guest needed in a way where they could surprise and delight them. , AI is gonna completely shift the paradigm there and give operators very accessible. Cost efficient, easy to use tools to be able to do that through their CRM platforms.
, As an example, Revinates a company. We work with a pyramid and we're building, our CRM platform with them. We have been, it all interlinks to our clean, synthesized data that we have, in the back end. , And the more and more we [00:40:00] learn about a customer or an operator learns about a customer, the better they're going to be able to, , give them those personalized experiences, know things about that person, make it, , special to them, and really surprise and delight even at the most basic level of guest name recognition.
I mean, that's something that's powerful. , What's the, someone said it like, I can't remember the saying, but what's the most. Powerful thing someone can hear and is like music to their ears, and the answer is someone else saying your name. It really means something to people when they hear their name being said and that other person can make that connection with 'em.
Obviously if you're good friends with someone, you know their name, but like if you're not good friends with 'em and you can do that, it's like, wow, like that's very human. Right. It goes back to that human connection and the cultures and transforming hospitality, humanity through hospitality like I looked at, I talked about earlier, but I do think that the [00:41:00] AI is, , it already is available.
It's already happening. And it's through these C-R-M-C-R-M platforms and through this data that you're gonna be able to get from your consumers and your guests to, , very quickly and easily be able to give them personalized, heartfelt servant hospitality that's very specialized. And it's very impactful and meaningful to them.
And to do it in a way that's,, cost efficient from a labor perspective and doesn't cost you guys a lot of money in the backend to get to that point.
Douglas Miller: And, , talking about the careers, we've both, I've been very lucky, wonderful career, multiple companies, multiple cities. You spoke to students earlier today and also the last two days.
You wanna get into industry in various different capacities, shapes, roles, things of this nature. And , Anthony was asking questions. He's 22 years sales and banking. And this ties into another question. Is those who want to enter the hospitality industry, be it somebody who's at a college university, to somebody who already has [00:42:00] established a career, , what are ways that people can enter, into this industry?
Peter Karpinski: To go from banking to New York to hospitality in our industry. That's, , I mean, anyone can do that. That's a good question. Normally we'd see this progression of people that when they're younger, that say, I want to be in the business, like these students at, , the Nolan School of Hospitality Administration, and they get into business.
I always recommend people get into operations. , Even if they do want to, and a number of students, they're graduating and getting more into, , these very specialized buckets of commercial real estate. , And in our case, hospitality, commercial real estate, finance and accounting consulting work.
, The list goes on. But , I'm just a firm believer that you can't do those things well. , Until you've had operational experience and you can know the business, even if it's for a year or two. It'll help you so much more in your career. I, I would say that if you are in a different industry.
, And you're unhappy with what you're doing, or you wanna make a life change, then sure, give it a [00:43:00] shot. , It's not an easy business. , It's not a business that's known, especially if you're not having worked your way up to be , a senior executive. , A business that pays a tremendous amount of money.
But that really goes back to that original thing I was saying, that if you're at a point in your life where you're doing something that you just don't really love or that you're not gonna be really great at, and going to work feels like work, and it doesn't feel like you're just gonna have a great day today because you love what you're doing, , it would be a great industry to go into.
It's a human business. It's heartfelt, it's extroverted. , It's social. , But I would recommend that, , you maybe take a job in operations, go work in a hotel, go work in a restaurant, , go see what it's like. If you really enjoy it, then it's probably just a matter of time before, especially if you're smart.
I'm sure you are, you're gonna work your way up, , into a position where you're in a position of leadership. You're running departments and teams of people or maybe a corporate environment.
Douglas Miller: And I make the argument banking [00:44:00] is hospitality. Yeah, that's right. I think a lot of times you silo hospitality as a front desk, a restaurant, a hotel, but you know, banking is hospitality.
, Hospitals are hospitality.
Peter Karpinski: Airline industry, airline is Yes. Ship. Yes, yes. Obvious there, but even hospitals, right? Yes. Healthcare is hospitality. That's a good point, right? You're providing a service. . , You're taking care of a guest or a customer in a certain way that, , the way to do it really well and to optimize it is to do it from a place of.
Hospitality, , as opposed to a place , of just customer service, a lot hotelies graduate. , I think it's a very translatable business. , It's another reason I encourage people to get into it when they're young, because if you're in the hospitality business and you have those skills, those social skills, those traits and those abilities to connect and to provide service, , in a way that's meaningful and heartfelt, you can be in any business you want.
Right? And it translates really well to other industries. And in fact, I think you see that, I'm sure a lot of companies that come and recruit at Cornell, , [00:45:00] particularly at the Nolan school aren't, even in the hotel and restaurant business because they know that if they get that, , young student out of school, they can be thriving in their business because their business might need that, , human element maybe more than they have today in their company.
Douglas Miller: Because I, interesting enough, I will say. One of the most important services in the hospitality that is offered is at a hair salon or barber shop. A nail salon. There you go. And people don't even think about it like a barber hospitality. Yeah. It makes people feel good.
Peter Karpinski: That's right.
Douglas Miller: You know, it makes people look good.
Peter Karpinski: Yeah. We, we always think about it maybe just in the context of travel and tourism. . Hotels and restaurants. But it extends beyond that. Maybe that was also like when I used that term earlier, the multiplier effect. . And all the other businesses that spawn from it and grow from it, , and are adjacent to it.
It's all interrelated.
Douglas Miller: . And thinking about, another question that we have here is differential, , bigger brands. Large chains, some of the large ones versus [00:46:00] independence because you started a small, , independent hotel company, now you work in a company that manages for larger brands. How are the dynamics different from being an independent versus consulting versus working for large brands?
'cause you've kind of done all three.
Peter Karpinski: I have. , , it's the brands are the big brands. Say you think of like just at least in North America, Marriott and,, Hilton and IHG and a core, , they're getting big. They're really big. , I think Marriott, what a tremendous company they have.
, I don't know, something like 36 or 40 brands now under their Marriott brand umbrella. , They're getting so big and they're getting so powerful and they have so much money. They're getting so much economy of scale, , that , it's making it even more challenging. , For independent operators or brands of one, I would say.
, To compete and to figure out ways to capture the consumer and then also be able to do it and get the margin at the same time. But , I'm a firm believer that, , [00:47:00] multi-unit brands or a chain of brands compared to a brand of one, there's always gonna be space for both in our industry, , there's always gonna be the consumer that's gonna want to gravitate towards the, maybe the multi-unit brand space.
There's gonna be the consumer that's specifically gonna go to the independent space. There's gonna be the consumer that goes to both, right? , I'm a consumer that actually likes and enjoys and appreciates both for different reasons. , Maybe if I am, traveling a business for certain reasons, I would stay at one of the big brands in the chains because it's offering me a product that I feel comfortable and is gonna be consistent.
I know what I, I'm gonna get when I want to go on vacation with my family or my wife and I. Think about, , doing something cool and unique and special for the place. , I'll do that, but , like I said before, we have like 40 hotels and resorts in North America that are independent.
, How we have to go about those businesses market and , sell those businesses is very different than, , how the big brands do, and frankly, how we compete against 'em in our comp sets and in [00:48:00] our space. But it really goes to the, , again, to me it's coming up with these personalized experiences, unique experiences that you can only have at that property, for the place of the place personalized and really unique to that brand of one.
This idea of rituals and symbolism is very powerful. It's something to pay attention to. If you're in the, in independent space, do something that's very unique, at your business as an independent that. , You are known for, do a consistent stay the course rinse and repeat, that no one else does. And it'll differentiate you in the marketplace and against the big brands.
But the big brands are continuing to grow to get bigger and bigger. , Have more and more sway, have more and more selections. They're doing a lot of things great. , But with that they might be a little bit slower to market . Than some of the independents. They might be more kind of layers and bureaucracy and decision making.
Maybe they have to, before they make a change, they've got to [00:49:00] put a lot more r and d and research and quantify and, , really say this is gonna work across all of our properties. Independence can be nimble And can make changes very quickly. They can beta test things quickly. , And they can definitely stay ahead of brands in that regard.
And that's one of the, one of the beauties of independence is that , you do have the flexibility to be a lot more nimble, be a lot more agile. Make decisions on the fly, and then if it doesn't work, fine, just fail forward quickly, , and try something else.
Chris Wofford: Thank you for listening to Cornell Keynotes. If you're interested in learning more about Cornell's Nolan School of Hotel Administration programs and the research on hospitality trends and innovation, be sure to check the episode notes for details.
I want to thank you for listening as always, and please subscribe to stay connected with Cornell Keynotes.