REPORT FROM THE U.S.—Before the recession hit, there was no amenity too small or too inconsequential to add to a hotel. The amenity creep, however, stalled shortly after. As the economy starts to slowly climb out of the trenches, brands are again adding amenities, but this time with a focus on long-term benefits.
When the downturn hit, many brand companies became more flexible with standards and guestroom amenities, said Robert Habeeb, president and COO of hotel management company First Hospitality Group, which has 48 properties in the U.S.
“Over the course of the last several years, brands have been very aggressive to changing and enforcing brand standards,” he added. “As an owner, that creates pressure on capital. When the economy softened up, everyone stepped back a little bit but only temporarily.”
First Hospitality Group
Adding DVD players, flat-screen TVs, and free Internet “was about keeping up with the Joneses,” said Mark Van Amerongen, senior VP of operations at Prism Hotels & Resorts. Cash-strapped hotels that couldn’t provide those amenities lost guests and market share.
But there’s another amenity creep coming, Van Amerongen said. “We all hope it’s going to be technology- and service-based with long-term implications,” he said, but those amenities, including the cost of enhancing Internet speed can cost anywhere between $25,000 and $50,000 for a 200 room hotel.
Van Amerongen said successful amenity additions are “cutting edge” and allow hoteliers to increase their rates.
“With an amenity creep, as soon as you introduce a new amenity, it becomes the standard,” he said. “If we’re going to go into the guestroom and begin to take things away, you’re not going to continue to drive rate."
Brands lay out their own plans for what’s expected, but the onus falls on the owner to implement those changes. Finding a cost-effective way to appease both parties often is challenging, sources said.
“The brand is a top-line organization and an owner is a bottom-line organization. The brand is pushing things that will drive (average daily rate), and the owner has to decide how to get there without spending too much money that will effect (return on investment) for the hotel,” said David Roedel, partner at Roedel Companies, which owns, manages, builds and renovates hotels.
Some hotel brands allow for alternative choices as long as the look is the same, Roedel said.
“If you can accomplish the same look with a different tile or light fixture, if you can get it at lower cost but it doesn’t take away from the design, then (the brand) is willing to work you,” he said. “You have to meet a standard, but (the brand) is relaxing a bit on how you get there.”
Additionally, being thoughtful about what customers want and actually use can save brands and owners money, said Ron Pohl, senior VP of brand management and member services for Best Western International.
“We considered 3D TVs, and we didn’t see the return at this point in time of that added expense,” he said.
Instead, Best Western is not looking at changing amenity standards. “If there’s not a ROI on it, it’s not something we should be spending a lot of time with, and that protects us from amenity creep.”
Best Western International
It’s about focusing on key areas of the hotel, Pohl said. Customers “want a good experience. It doesn’t have to be the latest and greatest stuff.” For example, Best Western added in a new shower head after research showed it reminded customers of home.
“There is bit of cost, but there’s a good life expectancy … the sleep and shower experience is what we sell,” he said.
Brands, Habeeb said, have divested of many real-estate holdings, so driving top-line revenue has become a major priority.
“If a brand standard tended to drive more business to a brand that’s a positive,” but it’s also important to step back and take notice of how the incremental cost of brand standards across all hotels compares to the profit.
Focusing on the future
The focus for most hoteliers is creating value for customers while also following through with brand standards. And much of that emphasis is focused on technology amenities.
Van Amerongen said in round two of amenity creep, “It’s not just about adding the next best alarm clock with a shelf life of three months, it’s about products that will drive rate.”
However, the expectation from technological-savvy guests is the Internet will be a free service, sources reported. And with more devices, hoteliers are faced with increasing bandwidth—a costly endeavor.
“Now we’re faced with how do we effectively provide enough (bandwidth) but not limited bandwidth for every customer,” Van Amerongen said.
He said he also envisions a future where amenities go mobile to provide more thorough and efficient service. For instance, “the room entry lock system is going to have a mobility read on smartphones, like you do with boarding passes,” he predicted.
But technology can be elusive, as it’s constantly changing. With the new iPhone 5 hitting the market, the old iOS-compatible docks now seem outdated.
“Unfortunately with technology, you don’t know what’s going to be around the corner,” Pohl of Best Western said. “Many hotels will be concerned about the iPhone jack that’s now changed, and we have to work through that. We never know what technology is going to be.”
Outside of technology, brands also are looking at sustainability.
Red Lion Hotels Corporation
“We’re in the process of improving our brand standards at the moment,” said Richard Gleave, VP of facilities, procurement, design and construction for Red Lion Hotels Corporation. “One of the things that we’re introducing—from a product perspective—is we’re much more cognizant of sustainable choices.” From organic foods on the food-and-beverage side all the way to the shampoos and lotions the brand chooses, renewable products are advantageous because his clients are seeking them out.
Thinking about products for the long term, “that’s just good business,” Gleave said. “The economy is the economy is the economy so what can we do? We can take care of the customers and grow accordingly, as a means of broadening the customer base and looking at that.”
“All owners are concerned about investment—that we might be one quarter away from going into a recession,” Pohl said. “We’re much smarter operators today going through this last downturn. If there isn’t an ROI, whether it’s customer satisfaction or monetary, then why would we do it? Is it meaningful to the customer? Is there a benefit? Let’s do it in the most cost-effective way. Let’s not add (amenities) to add them.”