ATLANTA—As hoteliers attempt to figure out how to evolve with guests, one thing is certain: While being flexible is essential, it helps for properties to focus on growing F&B, wellness, and meetings and events.
“The ever-evolving guest is no different than the guest from 10 or 15 years ago because we’re all moving at the same pace,” said Peter Clarke, VP of operations, West Coast, IHG. “They’re looking for quality service. They’re looking for an experience. They’re looking for a reason to come back, whether it’s points or something we’ve done to make their stay memorable.”
Hosted and sponsored by InterContinental Hotels Group (IHG), the Hotel Business roundtable, “Moving Forward: Evolving a Brand for the Next Generation of Guests,” examined how hotels can meet today’s guest expectations—and prepare for tomorrow. It was co-moderated by Hotel Business Editor-in-Chief Christina Trauthwein and Publisher Allen Rolleri.
“Culture crushes everything—make those connections with people so they do want to come back,” said John Belden, CEO, Davidson Hotels & Resorts.
And that’s important in the current industry environment. In 2019, CBRE is projecting an increase in supply of 1.9%, a 1.9% increase in demand, 66.2% occupancy, a 2.6% increase in ADR, and a 2.5% increase in RevPAR.
“While our forecasts are for a healthy economy through 2019 and into 2020, they do call for a bit of a slowdown econometrically during the latter part of 2020, which will manifest itself in a decline in demand in 2021,” said Robert Mandelbaum, director of research information services, CBRE Hotels’ Americas Research. “We’re calling it a blip—not a dip—because it’s not an extended decline.”
CBRE is expecting an even milder slowdown in the larger markets (the top 25 markets). The research firm isn’t projecting a dip in demand in these markets for 2021. During this time frame and sample, CBRE is projecting an increase in supply of 2.5%, an increase in demand of 0.9%, occupancy to be 71.9%, ADR to increase by 1.6%, and RevPAR to increase by 0.1%.
Is the prototypical guestroom dead?
With the industry keenly focused on providing guests with customized and personalized experiences, the relevancy of the prototypical guestroom nowadays is often questioned.
“It’s not gone; in our experience, we’re seeing a prototypical guestroom in a select-service property is still probably the norm, but the public space might be customized at least half the time,” said Warren Feldman, CEO of Jonathan Nehmer + Associates Inc. “We’re no longer willing to have the entire experience be the same.”
Oftentimes, room packages at properties can easily be identified, especially by industry veterans, “but it’s getting harder because everybody’s starting to individualize—at least to some degree—in some spaces,” he said.
Referencing the Crowne Plaza Atlanta Perimeter at Ravinia where the roundtable was held, he said, “This lobby is not a prototypical lobby that we’re going to drop in anywhere. It’s a special lobby for this location, and I think that’s what we’re seeing in the next generation. It’s not a specific thing. It’s something really designed for your property.”
Without naming names, some of the brands are doing a better job of enabling creativity than others.
“There are still people at the brands who, when you try to go outside the box, say no—without even looking at it—because they don’t want to fight the bureaucracy of changing it,” Feldman said.
The connection between hoteliers and designers is evolving. More now than ever before, designers are working with hoteliers to determine how design can assist with improving operations at the property level.
“We, as designers, need to really learn how you all as hoteliers need to operate,” he said. “What will allow you to give that level of service and [let us]design the spaces to let you do that? That’s the one thing that’s changing—is really understanding how things have changed in the hotel industry and how people interact with guests.”
Even meeting planners—many of whom skew younger—are being more flexible with their needs. They’re less likely to want cookie-cutter experiences.
“More than ever, they’re very flexible about where they’re going to have an event,” said Jeffrey Emenecker, GM at Cvent. “They’re less brand specific, and they’re much more open to where they’re willing to have their meeting, and when they’re willing to have their meeting; there’s a lot more flexibility around that than there ever has been before, so it’s up to the hotels to really get that across and pull and probe and ask, ‘What are you really interested in? Here’s what I can do for you.’ Planners are a lot more open to that.”
On the other side of this equation are the meeting attendees. “The meeting attendee is looking for what’s in it for them,” said Meredith Latham, regional VP, Crowne Plaza Hotels and Resorts at IHG. “That is the simplest way to put it.”
“I think we’ll all agree that the lines have become blurred between sub-brands of all of the major brands,” said Craig Strickler, managing director, Valor Hospitality. Looking toward the future—both the future guest and the brand that can support all those guests—he sees “some sort of cross-utilization of each… The key is flexibility.”
Tying into flexibility is customization and personalization. “An example of this is something that we’re working on at Crowne Plaza, which caters to a huge meetings and events business,” Latham said, noting that request for proposal is not quite the right terminology for what’s occurring. “It’s a request for collaboration because we aim to collaborate with you to deliver the guest experience you want and the planner experience you want at the price that you need it to be, and there has to be something in it for us, right? If we collaborate together, we all meet each other’s needs. That’s, in my view, really the way of the future; how we’re going to succeed is by figuring out the best ways to customize and personalize.”
Total F&B revenue at upscale, full-service properties increased by 2.8% from 2017-2018, increasing by a CAGR of 1.7% from 2007-2018, according to CBRE.
Even though everything now is about experiencing local flavor when traveling, guests are going to want to stay on property at times, and that’s a good thing for properties with F&B offerings.
“I think it’s unrealistic that you’re going to have a hotel guest stay on site for multiple days,” said David Marvin, founder/president, Legacy Ventures. “I think if you can capture them for lunch or dinner—breakfast makes sense—but lunch or dinner once during their stay, that’s a victory.”
The key is to focus not only on guests but locals. “We’re looking for both the physical layout as well as an offering that will have appeal to outside customers and hotel customers, and with that, you bring profitability to the restaurant, but you also bring a certain amount of energy,” Marvin said.
To be successful, restaurants have to operate on their own terms. Restaurants should be able to stand on their own—without any help—which is why many restaurants are targeting customers outside of the property. “Driving business outside of your walls is just as important as getting it inside the walls,” Latham said. This is why many restaurants within properties have their own marketing teams, managers, social media accounts and more.
Outside of F&B, there are ways for properties to generate revenue while providing guests with outside experiences.
“We did a property in Hawaii that had a typical gift shop space in the hotel that wasn’t generating that much money, so we tore it all out and put in what they call an ‘excursion’ shop,” Feldman said. “We had mountain bikes and kayaks and paddle boards and things like that replace the gift shop, so that the guest could go in there, rent a mountain bike and go ride around the island, or get a paddle board and take it out in the ocean and experience why they’re here. Instead of saying, ‘OK, I need to check the box and have something,’ we really recognized there was something different where that hotel was located and how it should operate—that’s where we have opportunities.”
He also pointed to a property in San Diego where the chef surfs with guests in the morning—in an effort to recruit diners—as another example.
“Maybe six guests sign up a week,” Feldman said. “It’s not like it’s a big deal, but you go out and surf with the chef for three hours and you’re talking about F&B, but you’re experiencing surfing, and you know what? Those guys eat in the restaurant that night because they’ve now got a connection to the chef. You can do that in so many different ways. Take advantage of your employees and who they are, and sell that experience to your guests.”
Another way for properties to bring the outside in through F&B is through farm-to-table restaurants.
“Everybody now is becoming a lot more socially aware,” Clarke said. “We’re all looking to reduce our carbon footprint for various reasons. One, to be good citizens, but two, to reduce our costs; that also plays a big part in local F&B and activating that space.”
Meetings and events
Even meeting planners are looking for ways to take their events off property for local F&B events to complement their meetings.
“They may have two F&B banquets here, but they want to be able to take everybody over to the sushi place one night, or there’s a wine bar across the street for an event—not for a 500-person meeting, right?—but if you’re bringing 25 people or 50 people,” Emenecker said.
Sometimes meeting planners will work to find locations to “provide some local color, and it’s just a more complete banquet or meeting experience,” Marvin said.
Even though banquet F&B is still down from prior peak but growing (banquet revenue registered a CAGR of -2.2% during the forecast period from 2007-2018, according to CBRE), there’s an argument to be made about an increase of destination meeting facilities.
“You wouldn’t build a museum today or an aquarium or a college football hall of fame without being able to accommodate groups; that’s very appealing for a meeting planner to be able to give their guests a themed experience without going through the trouble of decorating, getting them off site, and I think embracing that makes for satisfied return customers,” he said.
While this may seem like properties are leaving money on the table when it comes to events, not all hoteliers are too concerned, especially if they’re able to scoop additional revenue from a single event.
“For example, we have an amazing event facility downtown, which is a two-level glass building that sits on top of a mixed-use project anchored by a hotel,” Marvin said. “On top of the mixed-use facility is a helipad. We do a lot of weddings there, and we try to bring in the wedding party for the complete weekend and show them the way to the aquarium, but also capture the rehearsal dinner at one of our other venues, and encourage after-wedding gatherings and drinks, so in the end, we control the whole piece of business, or guide the whole piece of business. We don’t get it all, but we get more of it than the single wedding, so I do think it drives profitability.”
Oftentimes, properties have deals with local tourist attractions, such as aquariums.
“Sometimes hotels own that relationship with the museum and they build a unique relationship where we’re going to do the catering—we’ll cater for you, but we have first access to this venue at all times; sometimes, it can work hand in hand,” Clarke said.
Can outside F&B help?
Some properties are partnering with food ordering and delivery platforms like Uber Eats to bring the outside in by providing an alternative room-service option—but it depends on F&B options. (This could be one of the reasons why in-room dining revenue has decreased from 2017-2018.)
For example, full-service properties are less likely to offer food ordering and delivery platforms during restaurant hours.
“If you go to select-service, maybe DoorDash is the way to go,” Clarke said. “If you don’t want to operate 24 hours, then DoorDash could be a great option between midnight and 6 a.m., but if you’ve got the staff in the hotel, then we should be working with menus and creating dishes that are appealing to the guests we’re seeing in the hotel.”
Many guests expect room service to provide comfort food late at night (burger, caesar salad, meatloaf, etc.).
“Something that’s quick and easy to produce,” he said. “Nobody wants to wait 45 minutes for room service anymore, so it has to be fast and convenient.”
Some hotel companies—such as IHG—have created brands around wellness, which is an important component to the entire guest experience.
“At Even Hotels, we have refillable water bottle stations,” Latham said. “Things that are important to this wellness customer certainly cut through the environmental and carbon footprint. Same with great F&B. Grab-and-go F&B that’s not a Snickers bar is pretty nice to have.”
The guestroom experience is another important component to wellness. “In-room workout stations and equipment, as well as on-demand videos, have been really, really popular, certainly with that brand,” she said.
IHG has seen a “ton of excitement” around Peloton bikes at some of its properties, she said. “Our CEO was at HY36 Crowne Plaza in New York City, and he was talking to another guest in the gym, and he asked him why he stayed there,” she said. “The guy said, ‘I like these Peloton bikes. That’s why I booked this hotel—not because of the sleep, not because of the location, not because of the price. I like these Peloton bikes.’”
Additional amenities are important; just because guests are away, their lives don’t end. “Your life continues,” she said. “It is a blend of your life and work.”
When it comes to wellness, sometimes guests aren’t happy about a particular piece of equipment; it’s more about the overall experience.
“It’s not the cycling or the bicycle itself,” Strickler said. “I think it’s more of the experience that you get because you’re still competing.”
For instance, many guests are into the on-demand videos, but many properties don’t offer the space for guests to use them.
“Get rid of the machines,” he said. “I don’t want all the treadmills. I don’t want all the ellipticals. I want some dumbbells and some space to use my bodyweight, and that’s what I think the true, avid fitness buff wants, but couple that with the experience to compete with your friends; that’s the enticing thing Peloton has.”
When it comes to spas, the majority of them (67.5%) are in luxury and upper-upscale, according to STR data.
While some believe gyms are money wasters, others have found ways to generate revenue from their facilities. “If you build a good enough gym, you can also sell limited exclusive outside memberships,” Clarke said. “The InterContinental Los Angeles Downtown has a phenomenal gym, as does the InterContinental San Diego, both recently opened properties. The InterContinental San Diego has a wonderful space. It has a digital wall and you can take personalized classes, from kickboxing to cycling. You just program it in. It comes up on demand.”
With regard to F&B and wellness, some properties are adding protein bars and shakes to their grab-and-go options to accommodate healthier options.
“We do quite a few upscale corporate events, and we create a smoothie station as part of the offering; that seems to be very popular,” Marvin said.
Mocktails are also becoming increasingly popular with guests who don’t drink. “What about the guy who doesn’t drink?” Latham asked. “If you actually create a mocktail station, it’s a revenue driver, and it’s a crowd pleaser. It’s not that hard.”
For many, wellness at a property starts in the guestroom—specifically, the bed. “I don’t know if any of you have stayed at an Even hotel, but their beds are phenomenal,” Clarke said. “They’re selling like hotcakes, so if you haven’t stayed at an Even, go check one out. Go sleep in the bed. Go buy one. I’ve got one being delivered to my house soon. They’re really, really good. It’s a quality sleep.”
Next-generation loyalty programs
Brands are attempting to develop loyalty programs for the next-generation guests.
“At IHG, our research is telling us that millennials and people with the millennial mindset are less loyal,” Latham said. “They’re more loyal to self and the experience they can get. The days of the road warrior gaining all of these points and taking his family on a trip are changing.”
Some customers are loyal to a brand while others are loyal to a system. “You often hear, ‘I’m an IHG guy or an InterCon guy.’ There’s almost two different approaches: loyalty to a whole system and loyalty to a specific brand,” she said. “It’s definitely going to have to continue to evolve.”
IHG is evolving its loyalty program by allowing guests to create experiences for themselves (e.g., using points in a restaurant).
Above all, building emotional connections with a guest is key, no matter if you’re an independent hotel, a branded hotel or a hybrid property.
“There are a lot of independent hotels with no loyalty program, and people will go to them over and over and over again,” Belden said. “Why do people go back over and over and over again? They feel something when they go there.” HB