The need to reach a new generation of customer is driving innovation in the branded-hotel sector. David Churchill reports
WHEN THE FIRST Moxy Hotel opens in Milan in early 2014 it will firmly be aimed at so-called ‘millennial’ (or ‘Generation Y’) travellers: the young, internet-savvy professionals who want hotel accommodation with style but on a budget.
The name Moxy says it all: internet urban slang for those with a gutsy, spirited attitude towards life – a good name for a edgy new hotel brand with plans for 150 or so properties to open over the next few years in key European cities.
Yet what marks the nascent Moxy Hotels apart from other new wave urban hotels – such as Z Hotels or Citizen M – is that it is a brand developed by iconic American hotel chain Marriott International, perhaps better known over the past seven decades for the Mormon beliefs of its family management (at least five family members are in senior executive positions) than its cutting edge approach to hotel branding.
But Marriott, where 81-year-old JW ‘Bill’ Marriott Junior is still chairman despite finally giving up the CEO role last year after 40 years in the job, has reinvented itself in recent years. Once a rather staid business-focused hotelier, it is now one of the hotel world’s leading exponents of expansion via branding, rather than owning hotels.
Moxy Hotels will be Marriott’s 19th hotel brand – and there are more on the way. This month (September), for example, Marriott is expected to open in London only its second hotel under a new upmarket global boutique brand called Edition (the other is in Istanbul). This will occupy a Grade II-listed building off London’s Oxford Street, formerly the home of the long-established Berners Hotel.
But Edition is no cookie-cutter Marriott brand. Like Moxy, it is aimed at business and leisure travellers looking for something stylish and different – but willing to pay five-star prices. In fact, it was as far back as 2007 that Bill Marriott turned to American hotel style guru Ian Schrager to develop the concept, a move considered surprising at the time because of their disparity of backgrounds. Schrager was the co-founder of the iconic Studio 54 New York nightclub in the 1970s and is generally credited with creating the design-led boutique hotels of the 1980s onwards. It was these design credentials that attracted Marriott and will make the London Edition opening this autumn a closely-watched event.
CHAIN REACTION
But Marriott is not alone in pursuing an aggressive brand expansion policy among global hotel chains, with the top ten global operators already accounting for some 110 individual brands, with more on the way. Intercontinental Hotels Group (IHG), for example, is pushing ahead with its newest brand called Even – whose focus will be on ‘health and fitness’, with the first two properties due to open in the US next year.
Meanwhile, the UK’s biggest hotelier – Whitbread-owned Premier Inns, which has some 52,500 budget rooms on offer each night – is launching a sub-brand next year called Hub by Premier Inn. Hub rooms will typically be about half the size of a Premier room, but with cleverly designed space along with the addition of hi-tech facilities such as pre-set room environment controls. (see overleaf, What’s new?).
Like many of the new generation brands, the appeal of Hub and Moxy will be to the tech-conscious younger traveller on business or pleasure, but also looking for value. This means that many of these new generation brands are pitched at the crowded and competitive mid-market sector.
But it is not just new brands that are capturing the limelight. The big hotel groups are also reinvigorating their existing brands. Accor, for example, is simplifying its budget brands by grouping existing value properties under the Ibis brand as Ibis, Ibis Styles or Ibis Budget properties. October sees the first of the revamped Ibis Styles opening in central Liverpool as the new brand’s UK flagship. Accor is also refocusing its mid-market Mercure brand to make it more guest-friendly, such as by opening up its lobby space for work or socialising. Its UK design flagship is the Mercure London Bridge which opened in the summer.
AHEAD OF THE GAME
Hotel analysts acknowledge that the surge in new brands being developed reflects the need to remain competitive in a market where innovation and novelty is the flavour of the month.
“I think that in a large part this is driven by targeting Generation Y customers,” says David Bailey, a senior director at hotel consultancy CBRE. Yet he also sees “a response to the realities of development economics, which require smaller rooms in urban areas where land is expensive, but with more appealing public areas and an emphasis on lifestyle factors”.
Additionally, the growth of brands is also a symptom of the structural shift away from hotel companies actually owning hotels, rather than just managing or franchising them, with income provided by fees from owners or franchisors. Marriott, for example, is believed to hold title to just six of the 3,700 hotels carrying its brands; at IHG, only ten out of the 4,600 hotels it manages or franchises around the world are understood to be directly owned.
BEST OF BOTH WORLDS
Hotel companies are also looking at ways to leverage up their brand strengths. Choice Hotels International, for example, has developed a ‘brand-lite’ strategy for independent hotels with its Ascend Collection.
This now embraces 105 hotels, which retain their individual names and management but pay monthly fees to Choice to receive sales, marketing and online distribution support under the Ascend brand. It has proved such a success for Choice since being launched in 2008 that Marriott followed suit in 2010 with its similarly-structured Autograph Collection, now embracing 50 independent hotels, including the St Ermin’s Hotel in London, and the Glasshouse in Edinburgh.
“CONFUSION IS A RISK”
Yet while the proliferation of brands has raised the stakes for the hotels that operate them, there is perhaps a danger they can lead to confusion for the corporate buyer and traveller. “It is a little confusing with the number of hotel brands that are now available,” admits Stacey Negus, travel coordinator for the Godolphin Management Company. “New ones are being added all the time – I couldn’t always say which brand belongs to which group these days.”
Even veteran hotel consultant David Bailey acknowledges that “confusion is a risk”, particularly in the US given the “current proliferation and profusion of brands”. He points out that this emphasises the growing importance of social media for hoteliers who need to find innovative ways to reach their target customers.
Negus, however, does believe that brands are useful to travel buyers, especially when booking in unknown locations. “It does offer reassurance regarding quality and enables you to have confidence when sending people to the hotel,” she points out. An additional benefit of booking via brands, she believes, is that “they are more willing – unlike independent properties – to do special deals, such as free nights, room upgrades and offering reward points.”
However, a travel buyer for a major European mobile phone operator believes that outside North America and Europe, the branded hotel sector is not so easily able to commit to corporate deals. “The Middle East market is a good example of where local hotel deals offer better rewards than a global brand deal, although admittedly not at the luxury end of the market,” he says.
THE FUTURE IS...BRANDED
Yet despite of such reservations from corporate travel professionals, hoteliers are unlikely to give up easily their current obsession with developing new brands. And the good news for them is that, in spite of some concerns about ‘brand fatigue’, hotel analysts believe there is still plenty of scope for many more branded hotels to open before the global hotel market becomes saturated. You have been warned.
HOTEL BRANDS: WHAT’S NEW?
Even Hotels
Intercontinental Hotels Group (IHG) insists it is not taking a risk with its planned new Even Hotels brand – the first major hotel brand focused on travellers who want a healthier lifestyle while on the road. IHG says one-in-four American travellers – about 17 million people – have indicated they feel their hotel stay does not meet their ‘healthy lifestyle’ needs. Even Hotels will, not surprisingly, offer a modern fitness centre but no pool (because of lack of space for the large pools most guest want), while rooms will feature exercise mats and equipment such as exercise balls. Menus will have a healthy focus. At present, IHG is launching Even in the North American market – with two Even Hotels due to open in Maryland and Connecticut next year, followed by two in Manhattan in 2015 – but will probably bring the brand to some European cities, including London, once up and running.
GLH
Singapore-owned Guoman Hotels has been rebranded as GLH. The Guoman brand name is to be phased out from such landmark London hotels as The Cumberland and The Grosvenor. There will be three new brands to be unveiled in the coming months in the luxury, four-star and select service markets – the first of these new brands will be Clermont with its debut property to be a rebranded and refurbished Royal Horseguards in London which will be renamed the Clermont London. Thistle Hotels, which accounts for the majority of GLH’s 36 UK properties, is expected to remain as a brand because of its long history.
Hub by Premier Inn
Whitbread has built Premier Inn over the past 25 years into the UK’s biggest hotel chain, with over 650 hotels, by the simple strategy of focusing on a single brand to provide quality budget accommodation. Now that strategy is being diluted with plans for a sub-brand, called Hub by Premier Inn, due to launch next year. Its compact rooms will maximise space with savvy design, such as desks that fold into pocket-sprung beds under which luggage can be stored. An app available to guests when booking enables them to pre-select room temperature and light settings before they arrive. Five hotels with a total of 1,000 rooms are set to open over the next three years, starting with St Martin’s Lane in central London next summer. Room rates are expected to be set at just under £100 a night in central London, about 25-30 per cent below a comparable Premier Inn.
Moxy Hotels
Marriott is planning a speedy roll-out for its new lifestyle brand, Moxy Hotels, with the first opening in early 2014 in Milan – but thanks to a modular construction design, a further dozen hotels are expected within 12 months. Although Marriott has created the three-star brand, the hotels will be owned by IKEA’s property division and managed by Scandinavian hotel operator Nordic Hospitality. Current plans are for 150 hotels over the next decade in the UK, Germany, Italy, Belgium and Scandinavia. Room rates are expected to be about €65-90 per night depending on location.
Virgin Hotels
Sir Richard Branson’s new four-star ‘lifestyle’ brand, aimed primarily at the US market, has taken some time to get up and running after he initially announced his plans in 2011. The first Virgin-branded hotel is due to open in Chicago next spring, a 250-room property rumoured to have a new-style Virgin Clubhouse on the top floor of the former Dearborn Bank building. Next up will be a 300-room hotel in Manhattan, due to open in 2016, although the pace of development is expected to pick up, with London another target city.