Meet the New Embassy Suites

Mature brands are like battleships: strong and secure but difficult to quickly steer in a new direction. Of course, few battleships have captains like Jim Holthouser, Hilton's dynamo full-service brand leader who never met a challenge he didn't like or think he could overcome. When Holthouser took charge of Embassy Suites in 2006 after a successful run leading Hilton's Homewood Suites flag, he saw the brand faced a dilemma built, ironically, on 25 years of uninterrupted success.

"Long ago, Embassy Suites won the hearts and wallets of consumers, but over time developers had become convinced that it was a product they couldn't cost-effectively build any longer," says Holthouser, who in April was elevated to Hilton's global head of full-service brands. "We really only had one customer [uber developer John Q. Hammons] who could still build the traditional Embassy Suites model."

After consulting with developers, existing franchisees, architects and others, Holthouser and his team launched its Design Option III concept, a new prototype that incorporates the feel, amenities and brand essence of Embassy's signature atrium property in a new box that's greener, more intimate and, as an answer to developers' concerns, more cost-effective to build and operate.

"The trick was to develop a property that's more compelling to developers but stays true to the core attributes of Embassy Suites," says Holthouser. "What we didn't want to do is create a two-tier brand."

Indeed, a recently opened property in suburban Minneapolis is pure Embassy in the ways that count. The 175-unit Embassy Suites Brooklyn Center, built and operated by Duluth-based Oliver Companies, exudes a welcoming ambience the moment guests step into the property.

"The atrium is the key to the hotel's warmth," says CEO Seth Oliver of the three-and-a-half-story space (versus eight stories in a typical Embassy Suites). "It creates a lot of visual interest with varying heights and depths and different floor coverings throughout the space."

While the smaller atrium may be the property's primary energy- and cost-saving feature, it's not the only one. Other efficiencies built into the Design Option III design include its mid-rise exterior (requiring a less-expensive smoke evacuation system than in high rises), cheaper light-gauge-steel construction, double-loaded corridors and a side-by-side suite design that mandates just two sprinklers in each guest unit instead of four.

In all, a Design Option III property has a total square footage of 870 square feet per key versus 890 square feet in a traditional property in the chain (assuming 5,000 square feet of meeting space). The land requirements are also lower for this option: less than three acres (about the same as a Hilton Garden Inn or a Homewood Suites) versus four-plus acres for a standard Embassy.

EMBASSY IN EVERY WAY
"While this option is a much-more efficient box, the core offerings and sensory cues that are part of the brand haven't changed," says Holthouser.

Indeed, the Brooklyn Center property offers the Embassy brand hallmarks: free cooked-to-order breakfast, nightly manager's reception, 850-square-foot fitness center and a business center. The suites feature two flat-screen TVs, the Embassy Essentials Bedding Collection and its unique rolling desk and chair that allow guests to configure their living space to their needs.

Flying Spoons, the brand's new f&b concept, is an informal café and coffeehouse that offers snacks, sandwiches, gourmet coffee (it's Caribou-branded at Brooklyn Center) and full meals. Hilton says the concept is 30 percent cheaper to develop than a traditional atrium restaurant because of its smaller size, flexible labor model and the shared use of equipment with the breakfast service operation.

Another recent brand innovation available at the property is Requests Upon Arrival, an online concierge service that allows guests to order free or paid services and amenities that are in place when they arrive.

The property primarily serves the meetings market, along with Embassy's traditionally strong weekend business. The hotel has 5,000 square feet of meeting space and is attached to the city-owned Earle Brown Heritage Center, a regional conference and events center with more than 36,000 square feet of meeting space. As a perfect complement to the Embassy Suites, the Center hosts more than 100 wedding receptions a year.

The property, managed by youthful GM Anthony Leitz, has a staff of 90. Not surprisingly, the hotel had its pick of applicants for all of the positions.

"We had more than a thousand applicants for front desk agents alone," says Leitz. "In general, we hired based on character, aptitude and personality, rather than on hotel experience."

According to Oliver, his firm first considered developing the hotel in 2000 after another developer had worked on a deal for 10 years prior. "Sept. 11 was a set-back for the project, but we continued to pursue it," he says. "Eventually, the city provided the land for the property and we were able to get the deal done."

Why the Embassy brand? "I've always enjoyed staying at them, and it made perfect sense for the market and the property's connection to the Earle Brown Center."

The family-owned Oliver Companies started in the hotel segment in the 1980s, then backed away from the business for a number of years. It returned to lodging in the 1990s and had two properties by mid-decade. Today 16 are in its portfolio.

"Our historical vision is long-term when it comes to hotels," says Oliver. "Typically, we look at refreshing our portfolio about every 15 years."

MORE CHANGES
Embassy Suites is recasting itself in other ways, too. Another major shift is the introduction of one-bedroom versions of its suite product. There are several reasons why this new product type makes sense today. Embassy has always had a strong following among traveling families due to the large suites and the chain's other amenities. However, some business travelers feel that a two-room suite is more space than they need, particularly for a one- or two-night stay. And the introduction of a one-room suite product can help developers shave space and cost from projects, particularly useful where more guest units need to be squeezed into smaller footprints.

The first Embassy with the new room configuration is a 182-unit property that recently opened in downtown Buffalo, NY. The hotel is part of a 15-story mixed-use development created from a former federal office building. The hotel has the first seven floors, with office space and restaurants taking the rest of the space.

The one-room suites, as Embassy calls them, are 370 square feet, or about 20 percent smaller than the traditional guest unit. Centerpiece of the unit is a "smart wall" that guests see as they enter the room. The wall helps give the illusion of a two-room unit and has a variety of compartments for guest use and a charger for cellphones, PDAs and iPhones. The suite has a walk-in shower, microwave, refrigerator and one 42-inch flat-screen TV. At all properties, the one-room suites will connect to two-room units, creating three-bedroom suites as needed.

The one-room units won't replace the two-room suites as the Embassy standard, however. In fact, developers will be allowed to allocate no more than 20 percent of the house count to the one-room model. A property with the 20-percent maximum can reduce its square footage per key to 830.

"The one-room suite has put us over the goal line with some developers looking to build Embassy Suites properties," says Holthouser. "The key is that we now have a kit-of-parts approach to the brand. The Design Option III and the one-room suite enable developers to move around components of the brand to create the mix that's right for them, but true to the brand statement."

Holthouser give an example of that flexibility: "The developer of a typical Design Option III property with 156 two-room units could instead create 168 keys if he includes one-room suites or he could shrink the size of the building."

Another benefit of the new-look Embassy is the ability for the brand to flag more conversion properties. The Buffalo hotel is a good example, as well as other recent ones in Ft. Worth, TX; Washington, DC; and St. Louis.

"The brand is now positioned as the undisputed all-suites expert," says Holthouser. "No matter the occasion, we can offer suite configurations with one, two or three bedrooms."

THE PIPELINE
The brand's pipeline, which for many years has been dominated by the still-developing John Q. Hammons, has expanded with the advent of new options for developers. According to Holthouser, 55 new Embassys are in the pipeline, 15 of which are under construction. He says all but three of the hotels under development will be Design Option III properties. The Brooklyn Center property is the second Design Option III in the system; the first opened in late January in Ridgeland, MS, near Jackson.

"A significant pipeline such as we have sets us free to keep the system healthy," says Holthouser. "It gives us the leverage to run the business with integrity."

The new concepts, particularly the one-bedroom suites, will help the brand grow overseas, especially in high land-cost urban locations. "It's a little trickier overseas," he says, "because while we must be in tune with the local business environment, culture and customs, it's still crucial that we protect the integrity of the brand.

"While many brands are on the five- and six-star level outside the U.S., we plan to stay true to what Embassy is all about. We believe our value proposition works in all markets."

Embassy occupies a unique place in the hotel segment spectrum. Smith Travel Research places it in the upper upscale segment, but it has no all-suites competitors that match it on an amenity or facility basis. In fact, the brand accounts for two-thirds of the all-suites inventory in the U.S.

"We view this as an advantage," says Holthouser. "Guests understand that we're hard to categorize and in fact it helps increase our perceived value. We spend about $6 per suite to provide our cooked-to-order breakfast, but guests believe the value is much higher.

"The same advantage holds true within the industry, as many developers view us as a full-service product that's operated with a focused-service model."

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