In today’s challenging economy, owners of luxury hotels are considering how best to weather the downturn. Once fortunate to represent a segment of the industry that seemed immune to economic fluctuations, owners are now concerned about negative guest perception and political pressures on groups and corporations to avoid the stigma of being publicly chastised for choosing a luxury hotel or resort. Indeed, even the words “luxury,” “resort” and “spa,” once seen as code for a memorable experience, now telegraph extravagance, waste and politically incorrect decision making.

Deborah Lloyd Forrest

Many luxury brands disguise rate cutting with deals including free amenities, resort credits or extra nights, hoping that by maintaining rate, guests will ignore the reduction in freebies that will accompany an upturn and continue to pay. But how does this affect the value proposition established by offering added incentives? Inevitably, guests come to see these benefits as part of the value and resent such reduction.

Those with deep pockets or nerves of steel stand firm on rates and take the hit in occupancy while focusing on doing more with less. For example, Mark Harmon, president of Auberge Resorts, says it is critical to determine your customers’ value proposition and focus on delivering it very well. He maintains you make customers for life if you deliver beyond expectations, particularly in difficult times, even gaining market share without reducing rate.

Taking the hotel down a notch

Lately, though, some owners are taking a hard look at the allure of owning a luxury asset. I heard this from numerous attendees at The Lodging Conference in Phoenix in September. The risk in letting standards slip could be losing a Mobil star rating or a AAA diamond rating to reduce the cost of maintaining the high standards for physical property and service that drive a five-star or five-diamond rating.

To be sure, brands and ratings agencies may have looked the other way over the past year to aid struggling owners. But bending the rules to overlook deferred renovations or diminished service won’t last, and owners are increasingly saying “so what?” to losing that once-prized luxury status. Indeed, some see taking the hotel’s rating down a notch as a way out of the economic minefield toward stability.

Owners thinking about taking their hotel down a level in the ratings systems should approach the process strategically. Begin by assessing your anticipated new client mix. Look closely at what they expect and what they consider extraneous or extravagant and are willing to do without. Make the call or meet with valued repeat customers as you evaluate what to eliminate or change in the way of amenities, physical elements or service. Enrolling your best customers in the process will give them ownership of the changes. Tap your front line staff, from the concierge to the room attendants, for direct observations of guest preferences.

One thing is certain, taking a piecemeal approach and reducing staff and service while avoiding needed upkeep spells slow death for your hotel’s reputation. The better choice is to make changes that telegraph a new direction and make them all at once. Then promote those changes as a positive transformation.

A list of tangible changes

Here are some key ways to make tangible changes, on a budget, that effectively communicate your new identity:
 

The Westin Book Cadillac Detroit’s Motor Bar features high design seating arranged for flexibility.

• Convert your bar at breakfast to a “grab and go” featuring specialty coffees and signature pastries.

• Add vibe to your lobby by replacing large sofas and heavy lounge chairs with more tempting “high design” seating arranged for flexibility.  Add engaging and whimsical decorative lighting. Consider an over-the-top window treatment as a signature focal point.