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Building a new legacy
Spotlighting hotel brands from the ground up.
By Dan Marcec
With nearly 200 hotel brands in six different segments in the United States — not to mention many more around the world — the hotel industry is ever-growing more dynamic. As new brands continue to launch into the marketplace (Hilton’s Denizen being the latest of which to do so), differentiating themselves becomes even more of a challenge. AAHOA -Lodging Business recently spoke with executives from four hotel companies focusing specifically on new-build projects — whether they be new prototypes or new brands entirely — to pinpoint their plans for growth and their expectations for building long-term success.
Home2 Suites - Hilton
Launched at the Americas Lodging Investment Summit (ALIS) in January 2009, Hilton’s new midscale extended stay brand Home2 Suites is prepared to forge a new path in its segment. Bill Duncan, senior vice president of brand management for Homewood Suites by Hilton and Home2 Suites by Hilton, explains that the impetus behind growing this new brand is not only to grow Hilton’s brands and distribution, but also to build on the success they have with Homewood in the upscale segment.
“Owners and developers simultaneously were coming to us and saying they wanted us in the midscale extended stay segment, and as a result, we started developing Home2,” says Duncan.
According to Duncan, the conceptual phase for the brand was rather quick, beginning in early to mid-2008.
“A lot of times when you’re developing a concept you have to stop, reanalyze, reevaluate and reinvent something you’ve already done, but everything we presented for Home2 was met with overwhelming enthusiasm,” says Duncan.
As a development product, Home2 Suites requires a minimum two acres for construction. The prototype calls for a four-story, 108-room average, with 80 percent studio and 20 percent one-bedroom suites, as well as approximately 4,200 square feet of public space. Initial plans for brand growth is 100 properties by year-end 2012, and 60 to 70 per year thereafter.
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In its early stages, Home2 is 100 percent franchised, and looking forward that remains the plan. With the two-acre site requirement, Home2 is flexible in where it can be built. As a result, deals for the product have been signed in a wide variety of markets already, including Nevada, San Antonio, Baltimore and even an adaptive re-use in Manhattan.
More importantly, says Duncan, Home2 is built for the guest. The target audience is primarily business travelers, which typically tend toward extended stays more than leisure travelers. But, the functionality of the space allows individual properties to be flexible in targeting leisure stays as well.
Overall, the descriptive phrase “hip and humble” has served as the overlying concept of the design and culture of the brand.
“‘Hip and humble’ combines a couple things that guests are looking for in a modern, contemporary product,” says Duncan. “People want to be up to date and have all the modern conveniences, which we most definitely offer, but oftentimes ‘hip’ can be associated with uncomfortable. That’s all right for an evening at a night club, but for an extended period of time, the ‘humble’ part is where we bring it together by providing a space with no attitude, a place that’s very inviting.”
Initially designed for the younger traveler — generations X and Y and the millenials — testing for the product revealed what the brand team hoped it would: that people of all ages saw a well-designed, modern, comfortable space.
“How do we get the momentum going and keep it? It’s really about talking to owners and developers and making sure they understand the products and positioning, and how to leverage them and operate them once they’re open,” says Duncan. “We feel like we have a great story, so it’s really an enjoyable message to get to carry out.”
Aloft - Starwood Hotels & Resorts
In 2005, what became the Aloft brand team for Starwood Hotels & Resorts was faced with a decision — either to acquire an existing brand and reposition it, or to start a new product from the ground up.
“Essentially, we determined it was best to create our own brand,” says Brian McGuinness, global head of the Aloft brand. “We were inspired by the success of W Hotels, and that became our guidepost over the next couple years as we developed Aloft.”
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“College towns, lifestyle centers and airports have been attractive to us this far — places with a lot of traffic,” says McGuinness. “That said, we also like new trendy areas that don’t necessarily have to be right in the CBD; a second or third ring road works well for us, especially in China where those kinds of areas are a bit more cutting edge and stylistic.”
In North America, 99 percent of Aloft hotels are franchised, with two being corporately owned by Starwood. By owning and operating its own Aloft hotels, the brand team understands what its franchisees are experiencing, since it is familiar with the dynamics of running the property.
“We thought it was critical to get in the game so we could speak to our owners and our operators on a regular basis, certainly during the build cycle, and then from an ongoing operations standpoint,” says McGuinness.
The key to Aloft’s success on an individual level is that it has been commanding a full-service price point built at a select service price. Therefore, early indications from the properties that are open have yielded a significant ROI. According to McGuinness, a $10 or $15 rate premium goes straight to the bottom line without having to employ a valet parker, a doorman or room service staff, for example.
More than that, Aloft is unique with its design-oriented and tech savvy focus. “The core of the brand is about urban cool and unexpected place,” says McGuinness. “These hotels are scoring the way our luxury brands are, so in that their likelihood to return value for price is extremely positive.”
Looking toward the future, McGuinness would like to see 500 Aloft hotels in 10 years, representing a global footprint and a powerhouse in the select service category. “We want to drive rates and occupancy by giving customers the same experience globally, and you don’t always have that in select service,” he says. “Our competitors tend to go up market when they go outside the U.S., but we want to make sure that when foreign travelers come to the States, they get the same experience here that they get in Beijing or Bombay.”
Atrea - Best Western
With a global footprint and a recognizable name, Best Western isn’t looking to launch a new brand. Instead, the company developed Atrea, a prototype design set up to define itself in the upper midscale segment.
“Atrea has given us an opportunity to get into areas where a typical Best Western probably wouldn’t be top of mind,” says Mark Williams, vice president of North American development for Best Western. “Our goal with this product is to be a mainstay in strong commercial business markets.”
The first Atrea property, located in San Antonio, is expected to open the second week of April, and the second, in Conyers, Georgia, will follow soon after. Currently, 28 projects are on the board to become the prototype, but elements of the design are being used throughout the system even if certain hotels are not using the full prototype and taking the name. For example, Williams says, six properties or so are utilizing Atrea’s interior design but have opted for their own exterior. One property in North Carolina, in particular, is mimicking the local architecture in a colonial theme for the exterior, but is developing the interior according to the prototype standards. In other words, the Atrea prototype is not only about getting the name out there, but about evolving the Best Western culture as well.
Current Best Western members have been incredibly responsive to the new design and are signing agreements in markets where they haven’t been before. On the other hand, 40 to 50 percent of the new Atrea projects are being done by people who have never been in business with Best Western before. “That in itself is very encouraging, because it means people are coming in and seeing Best Western like they haven’t before,” says Williams.
The design concept is akin to the “lifestyle” trend, in that the goal is to bring back the lobby and common space. With a media center and a bar — that may or may not serve alcohol depending on the market — Atrea allows guests to have a more social experience by incorporating a large open space.
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The advantage Atrea enjoys, Williams says, is that Best Western as a name already has such an embedded footprint, it doesn’t have to build itself in the same way that a new brand might. Looking forward, he hopes that the evolution of Atrea will be an industry standard.
“Since we don’t have brands, we haven’t really created something in this market segment for our members and for new investors,” says Williams. “So now, people are really appreciating this and are looking at Best Western in a new light. We hope the same will be true of our Best Western guests, as well as for new guests that haven’t given us a look before.”
Cambria Suites - Choice Hotels International
Originally launched in 2005, Choice Hotels’ upscale brand Cambria Suites is growing strong. Thirteen properties are open currently, 10 more will begin welcoming guests in 2009, and 60 franchise deals have been inked.
Though the prototype works traditionally with suburban sites, mixed-use developments and airport properties, Cambria has found its way into some of the top MSAs as well. Franchisees were impressed with the product and wanted to move it into downtown areas, so the Cambria team worked a way to stack the property keeping all the prototypical elements in tact.
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The lobby area at Cambria greets guests with an open two-story layout, and each hotel features Reflect, a casual gathering and dining areas with a barista bar; Refuel, a 1,100-square-foot fitness center with an indoor pool; and Refill, a 24/7 convenience center. The suites have bathrooms with a raised vanity, granite countertops, and contemporary lighting, and a separate living area with technological amenities such as a two flat-screen TVs and a connectivity panel that allow guests to take their lifestyles with them — whether that be an iPod or a PowerPoint presentation.
“People don’t want to feel like they’re being penalized because they have to be somewhere, and we want to give them a great experience,” says William Edmundson, president of Cambria Suites.
One of the things Cambria prides itself on is consistency. With rigid standards at each of its properties, the brand understands the value of bringing the same experience to all its guests across the portfolio. With an owner’s program designed to teach every Cambria franchisee how to manage their property team and their management company, every Cambria is expected to operate at the same level.
Going into these standards also is the Cambria pledge, which is an unconditional 100 percent satisfaction guarantee. Every employee can invoke the guarantee, so if a guest is dissatisfied for any reason, his or her complaint will be registered and rectified immediately.
“The reason we’re firm on what we’re doing with our brand is because we don’t want to mess up a good thing,” says Edmundson. “Our guest satisfaction surveys are 9.4 out of 10 for return intent, 9.4 for service, and 9.5 for product. I think those numbers speak for themselves.”
Looking forward, Cambria expects to be in markets all across the U.S., with multiple properties in many of them depending on the size of the area. Though the recession has slowed financing currently, it hasn’t slowed interest in the brand. Currently, Edmundson says they are working with a number of franchisees through mezzanine programs and other financial support programs to make sure they can get the right people with the right projects.
“The main difference between the down cycle and the up cycle is the order in which people are doing their business, not in the way that they’re doing business,” he says. “There are a number of things you need to do before getting into the development phase, and in the down cycle, you have people doing their homework and lining everything up before they buy the franchise, whereas in the up cycle you buy the franchise and go from there because financing for the project is going to be there.”
To contribute an article to Lodging Operator:
email lodging@francepublications.com.
© 2009 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For more information on reprints of this article contact Barbara Sherer at (630)554-6054.
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© 2008, France Publications, Inc. All Rights Reserved. Photos in header (from left to right) are courtesy of InterContinental Hotels Group; AmericInn International LLC; and The Courtyard by Marriott-Los Angeles/San Fernando Valley. |
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