A new mindset is emerging from guests about what they want from their upscale hotel experience. Downward mobility is the new “trading up.” Today’s consumers of luxury goods and services are spending less on bling and more on the basics.
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Ted Brumleve |
Cash-strapped hoteliers should take this into consideration when establishing upscale hotel renovation budgets for 2010 and beyond. Three concepts can help hotel owners and operators better craft their new-reality capital plans for this year and thereby spend their dollars more strategically. 1. Stay in sync with the consumer
Not surprisingly, the luxury market is shrinking. Recent analysis of the retailing sector by Bain & Company, a global business consulting firm, found that the luxury market declined about 10 percent in 2009, with an expected return to pre-recessionary levels in 2012. The takeaway is that today’s buyers focus on value, not just price, and they’re willing to shop hard before committing to the purchase.
Price and luxury have not been perceived as equivalent, since average rates at the austere, see-and-be-seen lifestyle hotels first eclipsed the rates of the older, expensively decorated luxe set more than a decade ago. The luxury market has become increasingly accessible, with a growing number of affordable, wannabe luxury brands running in lock step with a newly affluent, typically younger demographic. With price point winning over brand loyalty more than ever, it’s easy to see the accelerating change in the luxury hotel club membership.
Today’s guests increasingly buy the experience. Witness the growth of cultural and eco-tourism, spiritual and physical wellness packages, heritage tours, culinary immersions and other unique revenue-producing programs. Successful contemporary hoteliers focus keenly on creating a home base for the modern social experience–adventure, education, or just hangin’–accompanied by up-to-date technology and decor, a trendy lounge, anticipatory staff and unqualified access to local hot spots.
Not long ago, space equated to luxury (as in, square footage). There always will be a market for traditional luxury. But in today’s world, extraordinary and resonant experiences increasingly are synonymous with luxury, frequently upstaging the need for grand interior spaces. Every in-sync hotel will need to have appropriate capital allocated to keep pace with evolving technology requirements and to maintain the physical environment in tune with the hotel’s role as home-away-from-home for its target customers.
Bottom line: Anticipating your guests’ evolving needs is the design essential. It doesn’t necessarily require huge capital dollars today, but a few well-placed and cost-effective experiential elements can keep your property fresh, competitive, and in tune with customer aspirations.
2. Keep it neat
One of the easiest things to control is the daily upkeep of your buildings and grounds. Nothing will undermine the guest feeling “special” more than lax housekeeping, dysfunctional heating and plumbing, a leaky roof, or stale odors.
From the capital expense perspective, taking care of the basics should be the hotel owner’s number one priority in 2010, paramount to the operator and engrained in every employee’s job description.
First, the building itself must function properly and efficiently and be easy to maintain. In 2010, update and rank priorities to assure that the value of the asset is not diminished simply by the passing of time and lack of attention.
The second priority is to upgrade the guest interface with the hotel: craft the first impression with inviting and appropriate landscape, hardscape and lighting; carry that through to the reception areas and lobby with cost-effective updates to fabrics, finishes and furnishings. Remember to address air quality, background noise and ambient lighting. Every guest wants to look and feel marvelous. In this economy, perhaps next year (or next owner) can be the time for a full remodeling. However, at the very least, scrub it or power wash it now.
Third, make the guestroom really count. If physical renovation isn’t called for or is not affordable in 2010, take care of the smaller things, such as cleaning or replacing dirty grout and broken tile, tired fabrics and outdated accents. Install better lighting, especially at the bathroom and task surfaces. Provide a luxurious bed. Each room should receive preventive maintenance once a quarter.
Bottom line: Yes, it costs real money to maintain your asset. No, it doesn’t have to be a lot all at once. Take care of the leaks, noises and smells first, and prioritize from there, focusing on delivering the best guest experience.
3. The importance of theater
Successful upscale hotels and resorts do distinctive things to uniquely position themselves within their competitive set. Starting with superior guest service, this is frequently achieved by offering innovative programs such as cultural tours, special meetings packages, spa and wellness incentives, access to luxury transportation, memory-maker packages, cooking/dining experiences, and so forth.
While planned differentiation can be a good thing, it’s the hotel’s complete delivery on the promise that makes it resonate with guests. Every hotel staff member must be an agent for the successful customer encounter. Consider the people in your hotel as actors—staff and guests alike. Design the hotel’s physical facilities as the stage for their performance. This frames the importance of creating a complete ambiance with the lighting, sounds and smells that reinforce people looking and feeling good in their roles. Looking and feeling great will resonate with the guest well after departure … positive memories make and keep loyal clientele.
Bottom line: Consider what your property must do to be uniquely positioned in its market. Chances are that a little freshening of the interior and lighting combined with a fresh employee initiative will pump new life into the property. Identify your distinctive traits and look for opportunities to reinforce those strengths in a cost-effective manner when deciding how you deploy capital for physical improvements during the coming year. It doesn’t have to be a lot, but it definitely has to be effective.
Consider how these three smart moves can help you preserve market share and properly deploy capital in your hotel in 2010. Stay in touch with and anticipate the upscale guest’s expectations, keep your facilities in top condition, and always provide the best possible stage for an excellent experience. Greater market share and profitability will likely follow.
Ted Brumleve is director of development management services for Warnick + Company. He may be reached at tbrumleve@warnickco.com
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