Did you see the statistics for the new Model 3 Tesla? The company is claiming that, thanks to its preorders, it’s poised to have the biggest one-week launch of any product ever.
Just last week Tesla said it has received 325,000 preorders for the car, launching speculation that the manufacturer will have a tough time fulfilling that demand. As it stands now, this new “affordable” Tesla is scheduled to begin rolling off the assembly lines in late 2017.
Now consider that product launch and lag time in terms of hotel products. For the last few years, all we’ve heard about and talked about are new brand launches in that select-service, lower-price sweet spot. There’s Canopy, Tru, Glo, Vib, AC, the list goes on. Every time a brand launches, the first question we ask is, “how many deals are signed?”
And while we talk about how these brands address very real consumer needs, and how their pipelines are robust, the hotels aren’t open yet. These brands don’t have any sort of mass, much less critical mass, and hey—hotels take a pretty long time to build when you compare them to other consumer goods.
I’m curious to know how hotel companies reconcile this knowledge that demand for these types of hotel products exists right now, but it’s not being fulfilled by them yet.
Here’s a little story to illustrate this idea: I’m in San Francisco this week, and on my way in to the city my cab driver (yes, an old-fashioned cab driver, not an Uber driver; but he was a millennial, so there you go) and I got to talking about hotels. As a San Francisco native, he was happy to tell me about how much the city has changed in the five years since I last visited. He talked about office buildings going up, new condos and apartments changing the skyline. And then before I knew it, he started talking about Airbnb.
He put it into the context of San Francisco, both for himself as a resident and travelers he sees arriving to the city every day: His take is that Airbnb is striking while the iron is hot, taking advantage now of people who want to travel but who can’t afford to pay astronomical San Francisco hotel rates.
Then he said, and I quote (I was in the backseat, typing this into my phone): “I may want to stay at an Airbnb now, but hey, if I had the money, I’d rather have a hotel with a brand.”
Yes. He said that. Not exaggerating. And he wasn’t trying to get an extra tip out of me, because I hadn’t even told him that I write about the hotel industry.
He talked about how he has noticed that among his friends and taxi fares, he sees people traveling a lot more than they used to. But hotel price can be a huge limiting factor, because if people who are new to travel have money to do it, let’s face it—they’re going to be thinking about the destination before they think about the hotel.
And then he said (and I don’t quote here, because by this time I was done typing surreptitiously in the backseat) that he wished there were hotel brands at his price point from names he trusted.
I almost jumped out of the backseat. “There are! There are!” I said excitedly. Then I started babbling on about Tru and Moxy and whatever, and I think he thought I was nuts. Because why would he care about those words? Those hotels haven’t gained recognition yet. Nobody outside the industry even knows what or who they are. Those brand names won’t be mainstream to the level of Holiday Inn, for example, for years. It’s just a fact of life.
So here’s my question: What are hotel companies doing to acknowledge the fact that demand for these new brands they’re launching exists now, but they won’t be able to fulfill it for a couple years? How do you find and grab that customer’s loyalty now?
Maybe the key is aspirational luxury. After all, the Tesla 3 is the new “affordable” model, right? It’s aspirational and affordable. Now there’s a novel concept—who will be first to figure out how to do it?
Share of the week
Here’s a hotel deal of the week that I’m willing to guess was brokered off the table.
I’m going to go ahead and advise against the chili.
As always, you can email me at sricca@hotelnewsnow.com or find me on Twitter @HNN_Steph.
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