CEOs: Know your changing guest
03 JUNE 2014 7:21 AM
During the opening general session of the NYU Investment Conference, a panel of hotel CEOs said today’s hotel guest is radically different from the guest of just a few years ago.
NEW YORK—Segmentation plays a big role in the hotel industry, but Richard Solomons said he believes hoteliers are segmenting the wrong thing.
Hotel company officials spend too much time segmenting by price point, the CEO of InterContinental Hotels Group said during the opening general session of the 36th annual New York University International Hospitality Industry Investment Conference. Companies instead should be doing consumer segmentation analysis.
“That’s not how consumers think,” Solomons said of price segmentation during a session titled “The CEOs check in: A view from the top.”
The panelists spent much of the 40-minute panel stressing how important it is for hoteliers to understand their customer. Frits van Paasschen, president and CEO of Starwood Hotels & Resorts Worldwide, said the hotel guest is constantly evolving and challenging the norms of what one might expect.
For instance, he said the first guest to check into the penthouse of the St. Regis New York was an 18-year-old Qatari man. The second? His mother—in a separate check-in.
“What you see by the day, more and more people are crossing that threshold where they can stay in high-end luxury hotels,” he said, adding that many St. Regis guests are younger people.
Arne Sorenson, president and CEO of Marriott International, can attest to van Paasschen’s experience. He said he was on a flight recently and struck up a conversation with a 27-year-old Chinese traveler who showed him a diary displaying photos of the luxury hotels he had stayed in during his trip.
“He was collecting experiences that he wanted to tell all his friends about,” Sorenson said.
The challenge now for Marriott is to figure out how to cater to this new, younger group of luxury travelers, the CEO said. “That’s a really fun challenge to be engaged in.”
J. Allen Smith, who was announced as president and CEO of Four Seasons Hotels and Resorts in August 2013, said it’s become clear to him what travelers are looking for in a luxury experience.
“I’ve yet in my relatively short tenure to be able to discern a correlation between the guest comments I get and the condition of the building we operate in,” he said. “People always write about the people, not condition of the floors.”
Four Seasons has extended the luxury experience even further via the introduction of its luxury airline service.
“They want bespoke experiences around the globe,” he said of the guests who the air service is targeted toward. “It’ll be very interesting to see how it plays out.”
Van Paasschen said one of the moves that helped Starwood Hotels understand its customers better is when the company temporarily relocated its headquarters to Dubai, United Arab Emirates, in March 2013.
Sorenson said Marriott also is taking strides to build up the ranks of its global employees. “We can’t do as much from our headquarters as we could 10 years ago,” he said.
The executives discussed their brand exploits and overall development efforts, which differed significantly among the panelists.
Launched during the NYU conference a year ago, Sorenson said Marriott’s AC Hotels brand now has 100 signed deals in the United States.
By contrast, van Paasschen said Starwood Hotels has chosen to remain quiet on the brand front. “We’ve been reluctant to launch new brands,” he said. “We realize the importance of making sure each of our brands is compelling.”
Smith said Four Seasons also is undertaking a targeted approach to growth. The company is likely to open four or five hotels during 2014.
“It’s not even a rounding error with you guys,” he said, referencing his fellow panelists and drawing laughter from the audience. “But I can assure you those four or five are really, really good.”