With the budgeting skills of a Wharton graduate, it’s no surprise that in a fidgety economy where consumers are cash-strapped, getting value for money is the cry of many.
Hilton thought so. Earlier this year, the company launched its 19th brand in the megachain, a “premium economy” model, Spark by Hilton, after years of considering entering the economy space.
“Why now?” According to chief brand officer Matt Schuyler, there was something as simple as “the right time” behind this move: 68 million people are going into economy hotels. It was a move backed by a series of studies and strategic data that pointed sharply to choosing to stay in, but every year across America.
Schuyler said the All-Conversion entry “meets a market need and fills an untapped space in our brand portfolio”, allowing the company to expand into untapped markets while serving more customers in existing markets. said to be able to provide “There are hundreds of markets where Hilton doesn’t exist, so there’s a lot of opportunity,” he said.
improve their game
But many of those markets are filled with legacy economy brands, most of whom have been successful in that lane for over 50 years by sticking to the basics. In fact, players in the veteran segment know that consumers who book (or just show up) an economy property will find that their stay is not an extra, bring their own shampoo and be well served. You can remember the times when This dynamic has changed markedly, being teased by franchisors like Hilton who define their offerings as premium, upscale or just value brands, and making guests question what the economy’s “experience” should be. Expectations continue to evolve. (The STR hasn’t further broken down the segments along those lines, but the numbers for the end of 2022 show 24,767 properties and 1,307,993 rooms in the US economic space.)
Stakeholders in the economy segment have recognized the potential opportunity and are looking to enhance public spaces, curb appeal, food and beverage services, technology and in-room conveniences to attract today’s generation of travelers. While no one has been indifferent to the post-pandemic industry’s buzz about the need for a clean room, some observers describe it as an amenity on steroids for the space. So what do guests want?
“Clean, comfortable rooms and friendly service, which were once the hallmarks of this division, are extremely important,” said Shilpan Patel, Vice President of North America Franchise Operations for Wyndham Hotels & Resorts. “Guests today expect that, and they also expect reliable, fast Wi-Fi that can support multiple devices: mobile check-in, texting at the front desk, digital chips, and more. ‘s modern phone features and, of course, we also offer a rich and generous rewards program that shows your loyalty with every stay.”
With five historic economy brands—Days Inn, Howard Johnson, Microtel, Super 8 and Travelodge—Wyndham is a leading player in the segment with 5,291 hotels worldwide (as of year-end 2022).
“Guests don’t think about budget hotels or mid-range hotels. The industry does, but guests don’t,” he added. “They are thinking in terms of price, location and amenities.”
“We don’t know if the name is the main issue, but it could be,” said Matt Hostetler, chief development officer at Red Roof, adding that the description “luxury economy” is the company’s trademark. I immediately admitted that I was. “That’s our tenure. Red Roof Inn is an economy brand. Our Red Roof PLUS+ properties thrive in luxury economy. These differences can impact customers’ booking decisions, and Red Roof PLUS+ properties offer sleek, modern upgrades and amenities like 100% smoke-free rooms at great prices,” he said.
Hostetler observed that people checking into the company’s 530 inns or 80 PLUS+ properties “are most interested in affordable, clean and comfortable rooms.” This also applies to the more experienced traditional family travelers and ‘business warrior’ travelers. ”
Beyond the basics, Hostetler said, travelers want a frictionless booking experience, and the company is improving the ease of booking through better service and smarter technology, resulting in better relationships between guests and travelers. He noted that the company is investing in creating a better experience for its owners.
crush the party
Six months after opening, Hilton will offer a so-called premium economy experience complete with Spark’s suite of haptic and ambient features, giving it an early edge in what Schuyler claims is a “very inconsistent” market segment. We hope to give the brand some traction.
“We will focus on core service elements of reliable service, thoughtful food and beverage service and smart design to take care of our guests,” he said. The brand’s range includes monochrome looks with big pops of color. Special bagel bar. 24-hour coffee/tea bar. Retail from quick bites to full meals. and a public space called “The Yard” where guests can have breakfast, work and socialize.
“We also thought through small design elements to enhance your stay: charging stations with easy access to both the room and common areas. [and] The room has a ‘swivel’ desk that provides more space to work and eat, whether you’re a solo guest or a family,” Schuyler said.
Consumers certainly know the Motel 6 keeps the lights on, but they’re unlikely to find the bells and whistles some competitors bargain for.
Tina Barnett, Chief Development Officer, G6 Hospitality LLC, said: “While some other brands have found it easier to follow their competitors, we keep it simple and stick to a proven model that delivers real value to our guests and franchise owners. We’re sticking with it, and we’ve seen some pushes among economy brands to offer additional amenities for guests, like breakfast, and we’ll continue to stick to that policy,” she said. “The biggest request we receive from the owner is ‘Please don’t change the model’. We can do it!'”
Barnett said that while 1,206 Motel 6 properties have amenity lights, upgraded technology and room designs have improved the guest experience at Motel 6 over the past decade. “Through her investment in technology, Cloud has been able to streamline the guest booking process and ensure a seamless check-in her experience,” she said.
Barnett said Motel 6’s recently updated Gemini room design “offers a timeless look while providing a fun and modern environment for business and leisure travelers.” .
The economy chain also offers a My6 Rewards program that includes 192 extended-stay siblings, Studio 6, giving guests the best possible rates. Members also receive benefits from his My6 Marketplace, a collection of exclusive sales and discounts from over 125 retailers.
Mr. Patel of Wyndham agreed that room design and consistency are more important than ever. “Gone are the days of floral bedspreads and brass-framed watercolors,” he said. “Today’s guests want modern, vibrant rooms that evoke a sense of place while providing unparalleled connectivity to charge and power all the devices they carry with them on their travels. , as a franchisor, “is not only about helping hotels stay on top of these trends, but also about delivering the sleek, modern experiences that keep guests coming back, in a high-quality, cost-effective way.” to find,” he stressed. pay over and over again. And that’s exactly what we do. ”
It’s also important to understand which short-term fads may disguise worthy long-term investments, he said.
Similarly, Hostetler said that while Red Roof has largely sidestepped the challenge of skyrocketing amenities, changes to brand standards are made with both guest comfort and franchisee ROI top of mind.
“Our goal is to ensure that all amenities offered by Red Roof generate revenue for our franchisees, and we are actively promoting smart shopping to create more value for our owners. We are working on it,” he said. “Many of our franchisees are taking steps to further expand our requirements.”
For example, one of Red Roof’s dual brand hotels [Red Roof Inn paired with HomeTowne Studios] One wall has refrigerated goods and the other wall has a dry pantry.
Schuyler said Hilton is prioritizing owners and developers in introducing Spark as a 100% “cost-effective” conversion model. Schuyler said he expects competing brand owners and smaller independents to make deals.
“Conversion is a sustainable form of growth that minimizes environmental impact and creates higher economic efficiencies to increase investment value for owners,” he said. Schuyler said hotels will need to complete a full renovation of all hotel guest-facing areas and have “easy-to-install” guest room packages to create a “more consistent guest-facing experience across brands.” said there is.
G6’s Burnett said he understands why brands are looking for ways to make guests feel they get more than their money’s worth. We are focused on making sure that ownership is accessible to everyone,” he said. Any additional amenities can increase the cost of stays for travelers and the cost of investment for owners, impacting accessibility. ”
Most agreed that while the aftermath of the coronavirus pandemic has changed consumer travel paradigms, it has also forced players to seriously consider brand offerings.
“This gave the hotel an opportunity to really test the amenities,” said Patel. Think about breakfast. “For decades, economy hotels have attempted to offer hearty breakfasts, but despite their best efforts, they have inevitably failed to win over their guests. I’m sure our hotel was aware of this as well,” he said. “For a long time this was believed to be essential, but the pandemic has allowed us to rethink that approach and significantly scale back, reducing costs for owners.”
Impact? Wyndham’s guest satisfaction scores have actually gone up.
Seeking opportunities to monetize underutilized spaces, such as the breakfast area after 10 a.m., Patel said owners echoed similar sentiments: , More and more hotels are allowing food and sundries to be sold24”/7,” Patel said, creating new revenue streams and increasing guest satisfaction.
Overall, the strength and resilience of this sector has made each franchisor bullish on increasing the presence of economy brands in secondary and tertiary markets, where distribution is primarily concentrated. At the time of writing, Red Roof plans to open 50 hotels this year (60% year-on-year growth), and he had 18 hotels (1,252 rooms) in the development pipeline. With 275 properties in the pipeline, G6 Hospitality expects to open over 100 properties, of which he expects nearly 60% to be Studio 6/Studio 6 Suites. Wyndham did not provide opening/pipeline data.
Schuyler said newcomer Spark by Hilton has more than 300 deals in various stages of development, 98% of which are with “Hilton newcomers.” He plans to open the first Spark this year.
The story was contributed by Stefani C. O’Connor.