Blurred segment offerings affect development
Blurred segment offerings affect development
05 JUNE 2015 8:12 AM
It’s not as easy as it once was to define the differences between select-service and full-service hotels. Brand executives and developers are reaching consensus on when it makes sense to go beyond established brand standards.
REPORT FROM THE U.S.—As lines blur between the definitions of select-service and full-service hotels, some developers are stretching beyond traditional brand standards, a trend that’s acceptable to many chain executives—to a point.
“Our guests have told us consistency is very important to them, but if we just made that a blanket statement, then we would go back to where we were 10 years ago when every single Hilton Garden Inn looked exactly the same regardless of location or market,” said Adrian Kurre, global head of Hilton Garden Inn brand management for Hilton Worldwide Holdings. “What we’ve found is we need to pick the lines in the sand where the guest wants to see consistency but allow owners some leeway in areas of not as much concern to guests.” 
Kurre and other sources said several factors—location, consumer expectations, competitiveness and others—drive developers to tinker with brand definitions.
“Guests have told us they want a hotel with a local flair, so the lobby in a Hilton Garden Inn in Idaho will probably look different than one in New York City,” Kurre said. “That said, guests still want consistent delivery of the important services and amenities so they know exactly what they can expect when they come in.”
Each hotel must maintain its brand essence in order to resonate with consumers, said Janis Milham, senior VP for select-service brands at Marriott International.
“The DNA of the brand must be present,” she said. “And by DNA I don’t just mean facilities, because that’s only one part. It’s the service, the experience, the relationship with the consumer. Those are equally as important as the facilities.”
It’s difficult to accurately define what is select service, said David Sangree, president of Hotel & Leisure Advisors and a Hotel News Now contributor.
“Is it (a hotel with) free breakfast or one that has a paid breakfast?” he said. “We probably consider Hilton Garden Inn to be in the select-service model and Hilton in the full-service model, but both hotels charge for breakfast. Hyatt Place, which is select service, has a free breakfast.”
Other items of differentiation between select and full, according to Sangree, include a concierge, 24-hour roomservice (although many full-service hotels don’t offer this amenity), size of the hotel and the amount of meeting space.
“Ultimately, though, there is no clear-cut definition of what select service means,” he said.
A market decision
No matter the brand or segment, hotels need to be representative of the market in which they are located, said Brad Rahinsky, president and COO of Hotel Equities, an Atlanta-based development and management company.
“While it is important to have consistencies with the brand standards and have some benchmarks that allow consumers to distinguish between select and full service, we think the market really drives and dictates that,” he said.
Hotel Equities is partnering in the development of a 175-unit Residence Inn in the Surfside area of Miami Beach, Florida, that Rahinsky said is an example of the need to extend beyond brand standards.
“In order for this project to be accretive to our portfolio and the demands of a market in which rates are $250 to $275 for select service, we knew we had to customize and go above and beyond what the brand specs call for,” he said. “We’re going heavier on the (food and beverage) piece than what the brand calls for. And we’ve evaluated multiple guest touch points to see where we can add value without deviating from the brand’s core philosophy. Done correctly, this will allow us to increase rate and hopefully occupancy.”
Dense urban markets are another place where deviations from brand standards might make sense, Marriott’s Milham said. 
“It might be a little beyond or a little less,” she said, citing room size and room count as examples. “The room size for a Courtyard (by Marriott) in New York City is probably going to be smaller than a standard room you would find in New Jersey. Same with the number of rooms. In order to make a Courtyard work in New York City, it might have 500 rooms, whereas a typical one has about 120 to 150 rooms. And because it has 500 rooms, the (New York City) hotel might have a little more meeting space.”
Global perspective
Variances in brand standards show up most often in locations outside of the United States. F&B is one key area of regional differences, Milham said.
“At a Fairfield Inn in the U.S. you will see a free breakfast, but that will be the only F&B offering,” she said. “Outside the U.S., specifically India and Brazil, those cultures have a greater focus on food and beverage so our Fairfields there have three-meal restaurants. They’re still run in a select-service model with limited menus, but it’s a different approach that we have in the U.S. We want to be continent-appropriate.”
Land and infrastructure costs also influence global brand offerings, Kurre said. For example, land costs in China make it difficult for developers to build Hilton Garden Inn’s signature Pavilion; instead, it must be tucked into the main building. He said these hotels typically have more rooms and more meeting space than the brand’s hotels in North America.
“There are some other simple things we’ve had to do in other countries,” Kurre said. “We don’t have slippers and robes in our rooms in North America, but there are places in the world where travelers won’t stay unless there are slippers.”
And whereas U.S. hotels have coffeemakers, tea brewers are essential in Hilton Garden Inns in China.
“It’s knowing and listening to the local market,” Kurre said. “In every region we’re in, Hilton Garden Inn won’t be successful unless the regional mid-level travelers in these markets adopt us. We’ll never survive waiting for Americans to go to China to fill our rooms.”
Beyond the line
Sangree of Hotel & Leisure Advisors said revenue production is one test to determine whether it makes sense to add extra amenities to a select-service hotel.
“When smart hoteliers go above and beyond brand standards, it’s because they perceive they can generate either higher total revenues or higher (average daily rates),” he said. “However, sometimes a developer wants the biggest and best and we have to tell them in that market there is a ceiling to the average rate they can generate.”
At times, developers want to improve the look and feel of their properties with upscale décor items.
“A developer might want to put marble in the lobby of his Hilton Garden Inn, but I can tell them that in the history of mankind, a marble lobby floor has never generated one incremental dollar of rate,” Kurre said. “I won’t draw a line in the sand on this issue, but I tell them I would rather have them spend (the extra) money on putting in more high-speed Internet bandwidth.”
Ultimately, it comes down to hotel economics, Rahinsky said.
“We tell ourselves never to fall in love with the bricks and to be careful of our egos,” he said. “We never want to create a trophy asset for the sake of it being a trophy. If there isn’t a (return on investment), if we can’t define what that ROI is going to be from an aesthetics standpoint or a functional standpoint, we’re not going to do it.”

No Comments

  • Anonymous June 8, 2015 9:36 AM

    I like the way Adrian Kurre thinks! Sangree is a realist!

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