HAC: Lessons from the world's best innovators

Doug Stephens

Doug Stephens

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By Colleen Isherwood, Editor

TORONTO — Does your company want to be Blockbuster or Netflix? Doug Stephens of Retail Prophet kicked off the Hotel Association of Canada (HAC) conference at the Hilton Toronto Feb. 3 with this analogy in his keynote address, “Lessons from the World's most innovative companies.”

The more things change, the more things … change, Stephens told the more than 300 delegates to the conference, giving the Blockbuster versus Netflix example. In 1997, when Netflix came on the scene with mail order DVDs, Blockbuster had a 27 per cent share of the movie rental business.

Two years later, Netflix offered subscriptions, and unlimited rentals chosen from 15,000 titles, while Blockbuster had 2,500 titles. In 2000, Reed Hastings of Netflix approached Blockbuster about a partnership, but Blockbuster brushed them off.

By 2004, Netflix had nine per cent of the DVD market. Blockbuster modified its policies, offering a grace period on the late fees that provided 20 per cent of its revenues and starting an online store.

In 2005, Netflix started streaming video on the Internet, while Blockbuster ended its late fees and made a minor investment in streaming. By 2011, Netflix accounted for 32 per cent of all bandwidth, and Blockbuster was out of business.

Blockbuster's downfall was due to three factors, Stephens said. First, their organizational imprinting took place from the era in which the organization was formed, and that set their view of the world. Blockbuster believed that people want to go to the video store. Secondly, they protected their existing business — sticking their heads in their shells. Thirdly, they had incremental rather than exponential responses.

“These three things in concert sealed Blockbuster's fate,” Stephens said.

HAC year in review

Philippe Gadbois

Philippe Gadbois

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Philippe Gadbois, chair of the HAC, filled the audience in on the association's accomplishments over the past, noting that “2014
was a banner year for HAC government relations with major successes resulting
from our Grassroots Program.”

He said they had two objectives: namely, to deliver on a national hotel worker program to
address human resource shortages and securing funding for international
marketing.

“The
HAC National Hotel and Worker Program is now in the implementation stage
including getting past the curve ball thrown at us with the changes to the
Temporary Foreign Worker Program,” Gadbois said. “Critical to this initiative is our securing
the support of the chair of the all tourism caucus, Blake Richards, MP, to
champion this program on our behalf.”

Gadbois also told the conference that in
November, Minister of Tourism Maxime Bernier announced there would be
funding for marketing in the United States. Bernier stated “I want to thank HAC and
TIAC for the big lobby in writing letters and meeting with MPs. This really
helped convince my government colleagues of the need for money for the U.S.
market.”

Changes to HAC board

Nora Duke has stepped down from her position at vice-chair of the HAC board of directors, due to her position on the board of the Canadian Tourism Commission. Duke is president and CEO of Fortis Propertis. Vito Curalli, Hilton Worldwide’s executive director of sales for Canada, Latin America and International, will take over her position.

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