Are There Too Many Hotel Brands?

Just before last Christmas, Hilton CEO Chris Nassetta capped a record year of growth for the global hotel chain – opening its 5,000th property and welcoming 11.5 million new members to its Hilton Honors loyalty scheme – by launching what he described as an ‘innovation gallery and incubator’ adjacent to a Hilton hotel close to its global headquarters in McLean, northern Virginia.

The 14,000 sq ft gallery showcases the latest technology and service developments the hotelier is considering introducing to its 13 brands, ranging from its flagship Hilton Hotels to Hilton Garden Inn and Doubletree by Hilton, along with newcomers such as Canopy and Tru.

Ideas already under way include new noise reduction systems to help achieve better sleep, allowing guests to customize their room’s digital artwork to their own tastes; and a shower whose glass door steams up, and its ‘wired’ surface captures any inspiration or thoughts the guest writes or draws with a finger in the misty glass and transfers them as a picture that can be emailed to a smartphone or tablet.

Yet introducing new technology into hotels is not the only game in town; the battle for the business traveler of the future is also being fought over the brands themselves.

Despite the surge of new brands in recent years – hotel analyst STR calculates there are now nearly 1,000 hotel brands worldwide – there is seemingly no end in sight for further expansion.

Midscale seems the current sector of choice by the major hotel groups. IHG’s new Avid brand, for example, is the latest of a clutch of concepts aimed at travelers – both business and leisure – who are on a budget and seeking contemporary but practical design features.

Hilton’s Tru brand targets this group and especially focuses on the ubiquitous millennials by prioritizing facilities including comfortable beds, high-quality showers, a free breakfast bar and large lobbies for those wanting to play games, eat or simply relax.

But is the current focus on brands a misstep? “One of the biggest challenges hotels face is the decreasing value of their brands and their shrinking base of loyal guests,” suggests a recent study of prospects for the hotel sector by consultancy Deloitte. “From OTAs to the commoditization of hotels, brands need to extend and deepen their relationship with travelers in order to stay relevant.”

The study also suggests hotels need to rethink their lobby function to allow travelers – particularly those on business – to relax after a long journey. The Tisch Centre’s Professor Hanson agrees, and suggests the traditional check-in desk is on the way out as hotels offer more relaxed lobby environments.

Hotel de Crillon in Paris, for example, reopened last year after a four-year refurbishment with an open lobby where check-in formalities are carried out as though in an elegant sitting room.

Yet for all the vibrancy that the hotel world is displaying with its focus on innovation and investment in new products and facilities, a rather darker trend is emerging: a willingness to impose ever-more egregious fees for services which used to be included in the room rate.

New Tisch Centre data suggests a 5 per cent hike in total US hotel fees last year to US$2.7 billion – helped by the spread of traditional leisure ‘resort fees’ to the cities. Two Hilton properties in New York City, for example, recently tested a US$25 a night ‘urban destination fee’. Several Marriott properties in Manhattan have also been ‘testing’ similar extra fees in recent months.

But the growing ubiquity of such fees is not confined to the Americas: they are also reportedly making an appearance in the UK and some European city hotels, according to traveler reports, which suggests the chains are testing the market rather than introducing comprehensive new fees. Yet it is something the savvy corporate traveler and travel buyer need to keep an eye on.

(Buying Business Travel)

Leave a Comment