Companies have failed throughout history because they couldn’t diversify beyond their core product. Hotels may be coming dangerously close to that fate.
Marriott International, it’s about time you entered the all-inclusive segment!
This week’s news from the lodging giant somehow ran a little bit under the radar, maybe because it’s earnings call week, too. In case you missed it: Marriott is launching an all-inclusive platform that for now includes management contracts with hotel developers building five new all-inclusive resorts in the Caribbean and Latin America under the Autograph Collection, Ritz-Carlton, Westin Hotels and Marriott Hotels brands.
The long-term plan calls for the company to include Luxury Collection, W Hotels and Delta by Marriott brands in the all-inclusive mix.
Now I think back to last year’s CHICOS conference in Bermuda, when an audience member asked a Marriott executive on stage something to the tune of, “when can we expect a Ritz-Carlton all-inclusive in the Caribbean?” And everyone chortled, in a “can you even imagine such a thing?” sort of way.
But yes, we all can imagine such a thing, and so can Marriott.
It makes so much sense for the giant companies to dip into all-inclusive, just like it makes sense for them to explore homesharing and alternative accommodations. Over the years, I have enjoyed seeing companies like Accor, Hilton, Marriott, Hyatt and IHG explore what are essentially new places to sleep. Some fail, some stick, some kind of just sit there for a while.
But trying these different, non-core segments is what will drive brand extensions forward successfully in the long run.
Despite what we hear about small, nimble startup companies having a leg up when it comes to innovation and diversification, in the hotel space, it’s the giants who have the potential for broad-based success long-term, simply because they have the most money.
Mind you, of course, there are obstacles. Huge ones! Public hotel brand companies face Wall Street growth mandates that are ridiculous, and expectations of growth metrics that some may say are a little quaint. It’s difficult to make the case for new revenue and operations models, given all that stakeholder pressure.
But when it comes to safe innovation, if not now, when? Most of the big publics are global, safely asset-light and driving their fee-based businesses.
Now we just need some smart, cash-generating action, which is why I’m excited to see Marriott’s announcement this week, which has more than 2,000 rooms already attached to it.
Sometimes I get frustrated when I hear CEOs talk about how the industry needs to focus on the core of why it does business—to provide hospitality. That to me sometimes sounds like an excuse to not innovate.
At the end of the day, hotel companies provide places to sleep away from home. If hotel companies think the only places to sleep between now and the end of time will be contained in traditional hotel boxes, then they’ll go the way of Kodak, when it refused to acknowledge the digital photography evolution and instead stuck to film. We all know how that story ended up.
Hotel companies often tout their innovation around creating new brand launches. That’s cool, but it’s not the only way to go. Think of it as good practice: If you can invent some so-called “white space” for an “upper-mid-tier lower economy” brand launch, you can figure out how to extend your brand to all-inclusive, homesharing, hostels, airport pods and more.
The smartest and most forward-thinking companies will do it. They are doing it.
It won’t be easy. Fifty years from now, people will still sleep in places other than their homes. But 50 years from now, I doubt the same “Big 5” hotel companies will be providing those sleep experiences.
The opinions expressed in this blog do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.