REPORT FROM THE U.S.—With the dearth of full-service development in the United States, select-service hotels are stepping up to fill in meeting demand.
Taking into account just branded hotels, there were 156 luxury and upper-upscale properties in the U.S. pipeline as of the end of December, which STR, the parent of Hotel News Now, classifies as full service. By comparison, there were 869 upscale properties in the pipeline alone. Upscale comprises such brands as Aloft, Best Western Premier and Hilton Garden Inn.
Arne Sorenson, president and CEO of Marriott International, said it is getting increasingly difficult to justify building a full-service property.
“I don’t particularly see a lot of full-service coming,” Sorenson said during an in-person interview at the official opening of the 220-room AC Hotel Bourbon/French Quarter Area in New Orleans. “It’s time consuming. It’s very expensive to set up. They often depend on city or state subsidies.”
Sorenson added that in the cases when full-service hotels are built, they often work best when located near or connected to convention centers.
Phil Cordell, global head of focused service and Hilton Worldwide Holdings’ Hampton brand, said another challenge facing big-box full-service properties is that it can be difficult to find financing.
Select-service boxes have evolved to fit business guests’ needs, Cordell said during an interview with HNN at the official opening ceremony for the 128-room Hampton Inn & Suites Bellevue Downtown—Seattle. For instance, Hampton features space fit for quick meetings as well as breakfast-on-the-go options for business guests who might be on the run out the door.
The property has one meeting room, and Celeste M. Johnson, the property’s GM, said business demand has been strong for the property, in part because Bellevue is home to several large corporations, including Expedia and an office for Microsoft.
Likewise, Melisa Kennedy, GM of the AC New Orleans, which features five meeting rooms and 2,200 square feet of meeting space, said she has seen consistent business demand in the short time the hotel has been opened. New Orleans had 10 citywide conventions during 2014, and while the number of citywides is expected to decrease to three next year, there will be many smaller conferences to fill in the gaps.
She said the hotel has to be prepared to cater to business and leisure guests. She said the lifestyle feel of the property (staff members who don’t wear matching uniforms, for example) helps make every guest feel at home.
“Each day is different,” she said. “You have to be prepared to always be fluid and always be mobile and always be ready to go for that change.”
She added that in a market such as New Orleans, business/leisure trips are common.
A vote for full service
Robert Finvarb, founder of real estate investment company and developer Robert Finvarb Companies, said that in a lot of ways, select service has evolved to be essentially the same as its full-service brethren.
“Select-service hotels today are basically full-service boxes without (substantial) meeting space and (other) operating departments,” he said.
Still, Finvarb didn’t discount a potential comeback of full service. His company has a full-service Hyatt under development in Miami Beach, which represents Hyatt Hotels Corporation’s first venture into the city.
He said full-service development can still pencil in certain markets such as Miami and New York City.
“The delta between a full-service Marriott and a high-end brand-new Courtyard when it comes to the rate is not as dramatic as you would think,” he said.