Alterations are on the horizon for the hotel industry, and these alterations will affect everything from the path to loyalty status to the kinds of hotels that are slated to open in the United States.
One of the most important conventions for the hospitality sector, the Americas Lodging Investment Summit, is held once a year immediately before the main corporations begin reporting on how well they did the previous year.
Despite all the talk about economic instability, this year's gathering in Los Angeles was unusual for the pervasive sense of optimism that was there. From the looks of the event halls at ALIS, one would never guess that a recession is on the horizon.
It appears that support is growing for the hypothesis that hotel performance in the United States will be higher than it was before the pandemic this year (according to a report by CBRE). To have a better understanding of what the future holds for hotels, TPG conducted conversations not just with the CEOs of Marriott and Accor but also with industry experts from other hotel companies.
Here are some of the most important things that we learned.
IHG is showing that it still has a place at the table.
As a traveller, it is simple to concentrate on Marriott and Hilton due to the scope of their operations and the diversity of the possibilities they provide. Hyatt is another key player in the industry because of the fast ascension the firm has made in recent years into the luxury and leisure hotel markets. The intentions that Accor, which is located in Paris, has for accelerating its growth in the United States have also piqued my interest.
However, we are unable to ignore the fact that IHG Hotels & Resorts is perhaps the corporation that possesses the most well-known hotel brand in the industry.
IHG is probably best known for its family of Holiday Inn brand hotels; however, in recent years, the company has made several strategic efforts to expand its lifestyle, luxury, and ultra-luxury product lines as well as its brand network. In addition to revamping its customer loyalty programme, IHG made many strategic acquisitions, including Regent and Six Senses, while also organically expanding other brands, such as the Vignette Collection and Voco.
Late in the previous year, it even began to make headway in the all-inclusive resort industry. During my time as a Diamond Ambassador over the past three months, I've had the opportunity to visit a handful of IHG's newest hotels and work with some of their newer partners (more on that to come in the next few weeks). This included stays at InterContinental hotels in Paris and Los Angeles, in addition to stays at hotels in Germany and southern France that are part of the collaboration between IHG and Mr and Mrs Smith.
There is no basis for believing that this point will mark the end of the expansion. The United States did not appear to be included in IHG's plans to expand into higher-end luxury, as most of Six Senses and Regent's properties are located in other nations. But even that is beginning to shift. IHG made the announcement earlier this month that it will bring the Six Senses brand to the state of California with the opening of the Six Senses Napa Valley in 2026. This information emerged not long after IHG revealed its intentions to establish the first hotel in the United States to be a part of the Vignette Collection. The Gwendolyn is expected to debut in the Willamette Valley of Oregon in the year 2025.
IHG has an impressive InterContinental lineup in the United States, but when it comes to ultra-luxury hotels, is it starting from too far behind the competition?
Elie Maalouf, the CEO of IHG's operations in the Americas, was quoted as saying to TPG that "if you look at uber-luxury brands, they tend to establish their reputation and grow their brand first outside of the United States." After that, they travel to the United States.
According to him, there are already 20 Six Senses properties open to the public, and an additional 34 are in the process of being developed. Maalouf also mentioned that numerous additional properties would be coming to the United States following the Napa location.
What happened to the arrangement for a Six Senses hotel in New York City that was cancelled?
"At some point, you can expect to find us in New York. Maalouf has stated that there is no cause for concern over this matter. "There is a significant amount of interest from both property owners and developers for us to be located in New York. There will be one Six Senses location in the city of New York. We can exercise a great deal of discretion on the time, place, and manner of it."
The redesigned guest loyalty programmes offered by hotels.
Although Omni Hotels & Resorts is not the most significant player in the U.S. hotel orbit, the proposed overhaul of the company's loyalty programme could be an indication of the general direction the industry is moving in. Peter Strebel, the president of Omni, mentioned to TPG during ALIS that the company is working on implementing a scheme that is based on total spending rather than hotel nights. You should anticipate learning more in the course of a comprehensive rebranding that is scheduled for later on in the spring.
According to Strebel, "Our devoted consumers are not as much traditional business travellers as they are leisure tourists." "They are people going on vacation with their families, people going on golf vacations or spa excursions, and people going on girlfriend weekends." Therefore, we are going to focus the loyalty programme more on the client base that comes from the leisure industry.
Strebel stressed that it is different from rivals as well as loyalty programmes that are oriented toward business travellers who frequently stay in hotels; nonetheless, it isn't out of the realm of possibility to assume that the major hotel conglomerates might pursue something similar.
Even though corporate travel might be making a comeback, leisure travel is still the most popular type of travel and continues to dominate the industry.
Competition for the best deals
Although it does not look like there will be a deluge of hotel discounts this summer, it does appear that more of the larger hotel loyalty programmes are moving toward the more budget-friendly end of the hotel spectrum.
Hotel companies like Wyndham and Choice Hotels, which own a more affordable mix of brands like Quality Inn and EconoLodge, might have a reason to lose sleep over this development. Wyndham is the owner of brands like La Quinta and Microtel, and Choice Hotels is the owner of offerings like Quality Inn and EconoLodge. There have been years during which major players such as Marriott and Hilton have shied away from more budget-friendly offers; nevertheless, it appears that the largest hotel businesses are now taking a second look at this type of travel.
Spark, which Hilton positions as a premium economy product, was just introduced, and the company aims to operate the first batch of Spark hotels by the end of this year. As a result of Marriott's acquisition of City Express, which is based in Mexico, industry analysts anticipate that the brand will expand globally to target inexpensive and midscale hotels.
What's the deal? There are several explanations for this. Others contend that it is because established brands typically raise their prices as they grow, necessitating the introduction of additional cost-effective choices to compete. Others believe that this is an effective strategy for competing with internet booking companies such as Expedia and Hotwire, which frequently offer lower pricing than the brands themselves. In the next years, both Hilton Honors and Marriott Bonvoy will introduce a more reasonable starting point for members to begin earning nights at participating hotels.
Make better use of the brands you already own.
It is not yet time to call an end to the period of hotels adding additional brands. Just before the announcement of ALIS came the announcements of Accor's Handwritten Collection and Spark. TPG spoke with hotel executives from a variety of firms about lots of other new brands that are scheduled to roll out in the future months and years. However, we are unable to disclose any details about these brands at this time.
There is, however, evidence that hotel firms are looking at the brand line-ups they already have in place to promote new items.
Do more with what you already have, to put it simply.
This is evident with things like Marriott's Ritz-Carlton Yacht Collection as well as Accor's expansion of the Orient Express brand beyond trains (though, those are coming, too) into hotels and a superyacht of its own. Both of these projects are examples of how luxury hospitality is expanding beyond trains and into other forms. The more traditional brand extension consists of hotel-branded residential developments, such as St. Regis or Four Seasons-managed condo projects. These developments are part of the hotel's brand extension. Even that is being disrupted as newer companies like Virgin try to expand into the residential section of the market.
The growth potential of Virgin
When it comes to Virgin Hotels, TPG did not have the finest experience when we checked into Virgin Edinburgh in September of last year. The hotel did not appear to be completely ready for guests at the time of our check-in.
During ALIS, we had the opportunity to speak with James Bermingham, the Chief Executive Officer of Virgin Hotels. He was kind enough to spare some time one afternoon for an interview in which we discussed the future of the brand. Bermingham also suggested to us, with a smile, that the next time we check into a hotel, we might want to hold off until after the hotel has moved past the "soft opening" period.
Recently, the company underwent a restructuring. The private collection of retreats, hotels, and islands across Europe, Africa, and the Caribbean that are owned by Sir Richard Branson (including his Necker Island) are now unified under the Virgin Hotels Collection label. The collection was previously known as Virgin Hotels and Virgin Limited Edition. The cities of New York City and Glasgow are about to welcome the launch of new hotel properties, while Miami and Denver are now working on the construction of new hotel buildings.
The formation of collaborations between the largest hotel corporations and more nimble, hipper companies is something that piques our interest in the hospitality industry. Accor and Ennismore have collaborated to create a lifestyle division. Together with Studio 54 co-founder Ian Schrager, Marriott established the Edition brand. Even Virgin maintains a property in Las Vegas that is run in conjunction with Hilton and is under the umbrella of the Curio Collection soft brand.
The large hotel chain's parent business brings with it brand recognition, an established booking system, and a customer loyalty network. The smaller brand, on the other hand, lends the establishment a more distinctive persona than is normally associated with the major hotel chains.
Although Bermingham has mentioned to me in the past that this is due in part to the fact that the Vegas hotel is so much larger than a standard Virgin Hotel, you shouldn't rule out the possibility that further collaborations similar to it may take place in the future. It's possible that some of the larger companies need a brand like Virgin to attract younger customers, and that brand may be Virgin.
"If we did something like Atlantic City or a big casino destination in the Caribbean or Central America, I would seriously consider doing that again because it works so well," he said of the Las Vegas partnership with Hilton. "If we did something like Atlantic City or a big casino destination in the Caribbean or Central America," he added.
Reading in this area:
- The top credit cards for hotels
- When is the optimal time to make a reservation at a hotel? The opinions of certain experts, along with some common misconceptions about the topic
- The most effective credit cards for achieving VIP status.
- An analysis of the various luxury hotel programmes offered by credit card companies.
- Which of your credit cards provides the most valuable benefits for spending money on hotel stays?
- The top hotel loyalty programmes available anywhere in the globe