Asure sign of prosperity in the lodging industry is the appearance of new brands. As hotel performance improves, brand companies look to expand their market reach by creating new flags in underserved or emerging market niches. Such has been the case in 2005, which so far has seen the debut of a half-dozen or so new flags as well as several brand extensions. It remains to be seen, however, which of these chain wannabes will be able to create sufficient critical mass to compete on a national basis.
At The Lodging Conference in Phoenix in September, three new brands — aloft, NYLO and Hyatt Place — were formally introduced, while Marriott announced a national roll-out of its Renaissance ClubSport concept and Red Lion reinforced its aggressive new growth strategy. (See pgs. 52-56 in the October issue or
Also, a week before The Lodging Conference, InterContinental Hotels Group unveiled a new prototype for its Holiday Inn Select brand as well as a plan to reconfigure and redesign IHG's iconic — some say passé — Holidome concept.
Nearly all of the new brands claim to meet the needs of the fastest-growing segment of the hotel market — the Gen X business traveler — while they plan to steal share from mid-priced giants Courtyard by Marriott and Hilton Garden Inn. Global Hyatt is no different, with the launch of Hyatt Place, a recasting of the 146-unit AmeriSuites chain it purchased late last year from The Blackstone Group.
The fact that Hyatt is working with a flag already at or near critical mass gives the company a leg up in the battle of new brands. Through ownership and management, Hyatt says it controls the fate of 102 of the properties (the rest are franchised), ensuring a quick start in redoing the chain with the new concept.
“At the outset, we have skin in the game and that separates us from others in the field,” says Jim Abrahamson, a Hyatt senior vice president and quarterback of the Hyatt Place team. The company relied heavily on extensive psychographic research and multiple rounds of consumer focus groups in several cities to develop the look and feel of the new product.
Hyatt quickly realized that technology is a key factor for the Gen X business traveler, which its research shows will soon overtake the Baby Boomer as the dominant consumer of business travel services.
“Part of a new paradigm that's imbedded in this customer is that guestroom technology is expected,” says Abrahamson. “Also, guests must be able to control it, and the technology must be free or inexpensive.”
Hyatt married that concept with a home-away-from-home brand essence that's relaxing and comforting yet current. One could call it the anti-boutique; it's hip but also homey.
Another advantage for the brand is the suite-like guest units in the existing AmeriSuites properties. New-build Hyatt Place hotels will include the oversized room bays that allow for distinct sleeping and living areas. The rooms have Hyatt's signature Grand Beds, wet bars, walk-in showers in king rooms, Hyatt's proprietary Portico amenities and a unique roller bag storage station.
The heart of the room is its media center: a 42-inch plasma TV that integrates with laptops and other electronic devices so guests can simultaneously watch a variety of entertainment programming and their laptop all on the same screen. A second, smaller TV unit sits on the desk.
In the public areas, Hyatt aims to create what Abrahamson calls a “third place,” a combination gathering spot, registration area and food and beverage space. Light food offerings available 24 hours a day will include breakfast items, sandwiches, salads, snacks and coffee. A wrap-around coffee/wine bar joins to the registration desk, so agents can serve both.
The brand will also experiment with a variety of check-in offerings, including a self-serve kiosk, hand-held devices employees can use in the lobby as well as the traditional front desk.
Hyatt says it will spend $175 million to convert the 62 properties it owns, a process that will begin before the end of the year. Others will follow in 2006, and the company expects new-build franchised units to open beginning in '07.
Abrahamson says a typical new-build will have 127 rooms and sit on 2.5 acres. Development costs will be $90,000 per key, plus land.
Easily the most cutting-edge (bleeding-edge?) concept introduced in Phoenix is NYLO, also a mid-scale, largely suburban product but with the sensibilities of an urban loft. This concept's point of difference, aside from its bold, ultra-hip design, is the players involved, notably ex-Cendant Hotels honcho John Russell and Mike Mueller, a refugee from Starwood and its W team. The other founding partners are Chris Jones, a development and construction expert formerly with Jones Lang LaSalle, and award-winning hospitality designer Stephane Dupoux.
And much like Starwood's aloft brand, NYLO embraces what Russell calls “a loft lifestyle but in a fully functional business hotel at mid-priced rates. The goal is to create a boutique-like, new-build product that is as efficient as a Courtyard or Hilton Garden Inn.”
Design is the defining element in the NYLO offering. Although new construction, the red-brick-and-glass properties will resemble retrofits of older buildings often found in gentrified urban areas. The 300-square-foot guest units feature 11-foot-high ceilings, large windows and exposed brick and concrete walls. Other amenities include a semi-platform king bed, sofa, large open shower area, movable desk and ergonomic chair. Obligatory technology includes flat-screen TV, CD and DVD players and free high-speed Internet.
Centerpiece of each property will be The Loft, a public space Russell says will be designed individually to fit each hotel's market. Common elements will be a gathering area guests can use to work in, order cocktails or coffee, check e-mail, etc. Other facilities and services: 24-hour restaurant, bar, business center, free wireless Internet access, library, sundries store, workout room and game room.
NYLO officials say properties will have between 130 and 200 rooms and cost $90,000 a key to develop. They expect the hotels to command ADRs between $115 and $135.
“The loft-style, new-build construction makes for substantial savings,” says Jones. “Exposed surfaces not only enhance design; they also conserve labor and resources, making limited use of crown mouldings, drop ceilings, dry wall and floor and wall coverings.”
NYLO will be aimed primarily at suburban, secondary and even tertiary markets. The company will build the first six or so to jump-start development and, as Russell says, “to establish a service culture our franchisees can follow.”
The company hopes to break ground on the first property within six months and start construction on four hotels within the coming year.
Renaissance, Marriott's upscale design-oriented brand, has a sleeping giant in the San Francisco Bay area that it is ready to wake up. The Renaissance ClubSport in Walnut Creek, CA was an instant hit when it opened in October 2002. The property was developed as a fully integrated, seamless combination of a 175-room business-class hotel and a 75,000-square-foot upscale membership fitness club. Through August of this year, the hotel has achieved a RevPAR index of 185 versus its competitive set. The fitness club has 4,200 memberships totaling 9,000 people with a long waiting list.
In late September, Marriott acquired the ClubSport brand name from its partner Leisure Sports and plans to open as many as 15 similar properties in the next five to seven years.
“This should be a great growth vehicle for Renaissance,” says Anthony Capuano, executive vice president-hotel development for Marriott's full-service brands. “It's a natural brand extension and will be perfect for many suburban markets.”
The combined operation — with one general manager, shared public and back-of-the-house areas and other efficiencies — creates operating advantages for both the top and bottom lines of the business. At the Walnut Creek property, for example, both hotel guests and club members have access to the property's several food and beverage outlets.
“The fact that it is two businesses in one gives more opportunities for our employees, making recruitment easier,” says Scott Pickert, formerly with Leisure Sports and now a senior vice president of Renaissance ClubSport. “Also, there are a lot of cross-sell opportunities between the hotel and club. At Walnut Creek, 40 percent of the memberships are sold through some type of corporate entity.”
Future ClubSport properties will be between 175 and 250 rooms, with development costs $55 million to $60 million. The fitness facilities, which Renaissance officials call lifestyle clubs instead of fitness clubs, will be as large as 175,000 square feet and have a wide selection of facilities, services and amenities. At Walnut Creek, the offerings are more like those of a resort than a gym:
12,000 square feet of cardiovascular, circuit and free weight equipment,
NCAA-regulation basketball gymnasium, along with volleyball, racquetball and squash courts,
an outdoor aquatic area with swimming pools, whirlpool, bocce courts and garden patio area for special events,
group exercise classes in step, cycling, yoga, Pilates, tai chi, kickboxing and more,
a 7,000-square-foot supervised childcare center and
a 3,000-square-foot full-service day spa.
Renaissance hopes to court multi-unit developers, especially those with office-park experience, to build the new ClubSport units. Development targets are suburban business parks with lots of surrounding residential areas.
The first three properties are planned for the Phoenix suburb of Chandler; Rockville, MD; and Aliso Viejo in Orange County, CA. Construction on the first two will begin in the second quarter of next year with a two-year build-out.
RED LION AND MORE
The newly named Red Lion Hotels Corp. used The Lodging Conference to tell the industry about its aggressive and optimistic growth plans. The 60-hotel chain, previously known as WestCoast Hospitality Corp., wants to expand to more than 100 markets (from 50 today) in the next five years. The company plans to achieve its goal through a mix of company-owned, joint-ventured and franchised properties.
Since buying Red Lion from Hilton four years ago, the company has been busy revitalizing the brand's service and product standards. In the past year, the company has been selling non-core real estate assets to fund $40 million in renovations at its 31 company-owned Red Lion properties.
Among cities targeted for expansion are San Francisco, Phoenix, Los Angeles, Minneapolis, Dallas, Chicago, Albuquerque, Tucson and Colorado Springs.
While he didn't use the conference to make the announcement, Horst Schulze also recently added a brand to his luxury hotel stable at West Paces Hotel Group. The former Ritz-Carlton chief, who recently debuted Solis Hotels & Resorts, announced plans last month to launch Capella Hotels & Resorts, an international collection of boutique-style properties that emphasize personalization of the guest experience.
“Today's luxury hotels require their guests to choose in advance the type of experience they will enjoy,” says Schulze. “The hotel's style and service determine the experience. It's time for the customer to determine the experience.”
Schulze hopes to accomplish that lofty goal through a combination of architecture, interior design, privacy and attention to detail. Each property will have 100 units or less, and most will be a combination of hotel rooms, fractional or timeshare units and whole-ownership residences.
The chain will debut with four properties — two in Mexico and two in Ireland.
THE BIG IDEAS
Most but not all of the recent brand announcements are aimed at the newly coveted Gen X customers, particularly the business travelers in that age group. The offerings to meet the needs of this rapidly developing new market have a number of common elements:
Technology is the linchpin. Flat-screen TVs are a must but only serve to coordinate the other available technology. Control panels like those offered by Hyatt Place allow guests to plug in MP3 players, DVD units as well as their computers and link to the TVs. Split-screen technology enables business travelers to more easily do what they've always done: work on their computers and watch sports or Desperate Housewives at the same time.
Value is king. Gen Xers don't like to be nickel and dimed, so nearly all new brands (as well as many existing brands) offer lots of free or inexpensive amenities, but most crucially either wired or wireless Internet access.
Public spaces need to be open, relaxing and tech-friendly. Wireless net access is a must, as is availability of coffee and at least light food offerings most of the day or, better yet, 24 hours a day.
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