By Joseph Fischer – November 2016
Generator Hostels, Hotels, Wombats Hostels, The Student Hotel, Prizeotels, Motel One, 25Hours hotels, Mama Shelter, Moxy By Marriott, Canopy & TRU by Hilton and the most recent Jo&Joe by Accor.
This is only a very short list of new hotel brands introduced to the market in recent years.
The common denominators between all these brands are:
- Ultra modern design elements – affordable chic
- Communal seating areas and spaces
- Strong integration in the local communities
- Small in size but comfortable accommodations
- Great price-value proposition
- Limited Food & Beverage offerings
- Free high-speed Wi-Fi in all the areas
Some of those brands bolster star interior designers such as Philippe Starck in Mama Shelter and Karim Rashid in Prizeotels. Others focus on fantastic value propositions for their guests. These hotel/hostels were focused on the younger generations commonly called by many the Millennials.
Some of the known established global brands chose to develop their own new brands. Marriott & Hilton are the ones who are doing that with Moxy, AC Hotels, Canopy & TRU by Hilton.
Others such as Accor and Rezidor prefer in some cases to buy into existing brands like Mama Shelter and Prizeotels.
In 2016 the share of the Millennials traveling globally has official surpassed the “BabyBoomer” generation.
This huge social and demographic change forces traditional hotels and hotel brands to face a significant challenge.
One of the greatest challenges faced by most global established global lodging groups, is how to transform established, well-recognized ‘core brands’ such as Novotel by Accor or Holiday Inn by IHG that were created some time ago (First Holiday Inn opened back in 1952 and Novotel back in 1967), into brands that fit the 21St. Century Traveler expectations.
If in the 20Th. Century, the majority of the guests in those brands were North-Americas and Western-Europeans, the 21St Century brings a huge change with the emergence of Asian travelers, coming mainly from China and India.
The hotel groups are fully aware of the challenges ahead. They do try to reinvent and rejuvenate some of these ‘old brands’: redesign old hotels, adding the words ‘styles’, ‘budget’ or ‘colors’ to the core brand like BLU, Red – but will it work for the long run? I have my doubts…
Doing a cosmetic ‘facelift’ – even a full ‘plastic surgery’ – on a 60 years-old brand, doesn’t change the basic fact that the core is a 50-60 years-old brand.
I believe that in order to successfully transform old and established hotel brands to the 21St century market, we need to come to grips with the major changes that happened in our industry during the last decade.
Let’s take for example the airlines.
Low Cost Carriers – LCC’s are the fastest growing airlines in Europe and Asia. People still do travel with legacy carriers but the move to budget airlines is phenomenal. If now the majority of flights within Europe is operated on a low-cost model, within 5 years from now, the same model will be implemented on the Trans-Atlantic routes.
Norwegian Air will be soon followed by Ryanair and this will push the legacy Carriers to adopt or to look for alternative routes.
Another example are the fashion stores. Recently we read about the difficulties GAP and M&S Fashion are facing from other High Street competitors; brands such as: Primark, Zara, H&M, Bershka and Century 21. Millennials, buy fashion as they would buy Ice Cream. It has become an ‘Impulse Purchase’ – no need to plan and wait for the ‘sales’.
For Millennials, travel is evolving into an ‘impulse buying product’ and the lodging brands need to recognize this change and adopt accordingly.
When you fly from Berlin or Paris to Milan for 30€ return ticket, you find it absurd to pay for accommodation €80-100 per night.
It is true that, on one hand, Millennials are seeking local ‘experiences’ when traveling – but on the other hand, they just don’t want to spend too much money on this ‘experience’.
Loyalty membership, which was a key factor in the success of global lodging brands, isn’t that attractive to the Millennials; ‘experiences’ and price-value propositions are the new kings of the block.
Global lodging groups, as well as hotel owners, need to think strategically about their current brands. Are these brands befitting the changing clients? Do we actually need such large public spaces and back-of-the-house areas for the new Gen travelers?
Are minibars a ‘must’? Do hotels need their own parking garage? What about room-service?
If hotel groups want to keep being attractive to hotel owners and their own investors, they would be required to reinvent their current brands offering. It’s not going to be just an evolution but more of a revolution.
It’s a strategic change that will require comprehensive research, testing and implementing new concepts, giving-up on hotels that aren’t willing to change.
Interesting times lie ahead for the global lodging industry and we need to be ultra-creative and think “outside the box” if we want to succeed on the long run.
About the author:
Joseph Fischer a 30 years veteran of the global lodging & hospitality lodging industry is the CEO of Vision Hospitality & Travel services- International Lodging & Travel Solutions. Joseph is also a guest writer on several international Tourism & lodging publications and portals.