Kessler’s downturn plan: ‘We won’t join the rate war’
Kessler’s downturn plan: ‘We won’t join the rate war’
06 SEPTEMBER 2019 8:19 AM

As industry forecasts point to low RevPAR growth in the coming years, Lori Kiel of The Kessler Collection explains that while others might want to cut rates to save occupancy, her company will hold firm against the tide thanks in part to its niche guests and digital marketing efforts.

NASHVILLE, Tennessee—The Kessler Collection has a number of hotels scheduled to open within a year or two, such as the Grand Bohemian Hotel Charlotte and the Grand Bohemian Hotel Greenville.

The company currently has nine hotels operating and is “making it through 2019 almost unscathed,” said Lori Kiel, chief revenue and marketing officer at Kessler, during a break at the 2019 Hotel Data Conference. Hearing some of the forecast information and economic sessions earlier in the conference provided her with a sense of relief, she said.

“It’s certainly what we’ve been seeing at our hotels,” she said.

The projection of 0.9% revenue-per-available-room growth in 2019 is on par with what Kessler hotels have experienced, Kiel said. The 1.1% and 1.2% RevPAR growth projections for 2020 by STR and CBRE, respectively, were more optimistic than she expected. STR is the parent company of Hotel News Now.

“I hope that that’s what we see,” she said. “I’m worried some of the commentary was contradictory, though, speaking in the way that things are going to continue to slow, although not abruptly, so I’ll remain on the optimistic side of that for sure, especially as we go into budgets.”

Holding rate
While other hotels might be tempted to preserve their occupancy levels by cutting rates during a downturn, Kessler won’t, Kiel said.

“The weapon we don’t choose to fight with is rate, and that is because there is valuation at play here,” she said. “These hotels are not lobbies with 100 rooms on top, that’s not what they are. They are of real value, and their contents are of real value.”

To maintain that value proposition, hoteliers have to hold their rate at some level, she said. Every revenue manager understands that at Kessler, there is a floor it won’t go below.

“If that means we have to give up occupancy and fair share in the market, we’re willing to do that for the sake of the valuation of our product,” she said, adding that integrity is a core value at Kessler. “We won’t join the rate war.”

Helping with that strategy is Kessler’s approach to optimize all of its topline revenue streams, Kiel said. Because of its customer base and what the guests are looking for, there are revenue opportunities through its cooking school classes, wine blending programs and art galleries.

“Every touchpoint we are selling to a guest is an important place to optimize, so our revenue strategy is also very in-depth and includes all toplines,” she said.

A niche market
One comforting factor is that hotels in The Kessler Collection serve a niche demand, Kiel said. The guests who want to stay at her company’s hotels are looking for a sophisticated experience beyond the “head in a bed” kind of stay, she said. As a result, the guests of these upper-upscale hotels are less price-conscious, which allows the collection to maintain rates.

“That is really important to us at The Kessler Collection, because that does equal value in the greater conversation of valuation,” she said.

Kessler guests want to be enriched, Kiel said. They’re looking for inspiration, to feel something, she said. Walking into one of Kessler’s hotels, such as the Mansion on Forsyth Park in Savannah, Georgia, satisfies that need, she said. The artwork, décor, furnishings and service levels all complement the experience. Even if a guest doesn’t attend cooking school class that evening, they’ll still get the experience and enrichment just by being in the hotel, she said.

There is original artwork throughout hallways and in the rooms, a unique hat collection and two specially made Bösendorfer pianos that are only at the Kessler Collection hotels, she said.

“Those are experiences that you get just for being our guest,” she said. “Certainly you walk away with something more than what you came with.”

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