Industry & Brands

Capturing the Impulse Buy

For years, hotels relied on in-room minibars to satisfy guests’ last-minute cravings for a candy bar, can of soda or bag of potato chips. Whatever time of day, although especially in the evening following a long day of meetings and appointments or sightseeing, guests would turn to the minibar to satisfy their sweet tooth or quench their thirst.

Minibars still have their place in the lodging universe because they’re convenient and excel at capturing impulse purchases. Room service, on the other hand, offers a more extensive menu but typically requires 20-30 minutes for delivery, if not longer.

Another recent option that has gained traction with hotel owners, operators and the brands is the lobby market, a scaled-down convenience store near the hotel front desk that sells food, beverages and other frequently requested items. These mini stores offer a far wider range of goods, appealingly displayed, than ever could be squeezed into a minibar.

Market

The Market at the Fairfield Inn & Suites New York Manhattan/Central Park

Convenience doesn’t come cheap! The candies and beverages for sale in the lobby market – like at minibars — are priced at a premium.

Ideally, the market is located in close proximity to the front desk for two reasons. First, it allows the front desk agents to keep an eye on the merchandise. Second, the proximity makes it easy for guests to pay for purchases, either with cash, a credit card or putting the charges on the guest room folio.

Like minibars and room service, lobby markets represent an additional revenue stream for hotels as well as widely appreciated guest service. Considering that many analysts expect the lodging industry to enter a downturn in the next few quarters, any additional revenue stream, however modest, is welcome. That said, there’s also a larger benefit that plays to the core of the concept of hospitality: satisfying the guest’s wants and needs.

front desk attendant writing on card

Cross Training and Job Sharing: The Pressure Is On

In its annual two-year forecast of the U.S. lodging industry, CBRE Hotels Research predicts revenue growth to be sluggish through 2021. Drawing on historical hotel performance data from Smith Travel Research and economic forecasts from CBRE Econometric Advisors, the firm expects hotel managers to be challenged in their efforts to control rising labor costs.

Meanwhile, many states and municipalities are moving toward raising the hourly minimum wage to $15, which impacts businesses like hotels that rely on entry-level employees. The economy is also enjoying a period of high employment, putting an added upward pressure on wages, especially when it comes to recruiting high-caliber applicants.

While recruiting is expensive, recruiting candidates who have a greater likelihood of remaining in the job is extraordinarily difficult. Consequently, it makes sense for any hotel hiring managers to take the time and resources to focus on seeking out candidates who are interested in building a career in hospitality, rather than simply “looking for a job.”

Candidates who meet the bill may, in fact, be considering multiple offers. Hotel hiring managers would be wise to promote cross training and job sharing as perks that are essential to moving up the ladder in any major hotel. Unfortunately, cross training and job sharing are not commonplace in the hospitality industry.

Cross training and job sharing allow new hires to dream about broadening their on-the-job experience at a faster pace than they otherwise could. Looking ahead to their long-term career in hospitality, cross training and job sharing expose them to different aspects of operations, in the process allowing them to enhance their resumes.

At the same time, implementing such practices benefits management by making sure the hotel has sufficient coverage “on the floor,” both front and back-of-the-house, at all times. The hotel can operate at peak levels without skipping a beat, ultimately ensuring the guest experience isn’t compromised.

Cross training, for example, means an employee is prepared to perform two or more types of job on a given shift. Depending on the situation at the moment (i.e. an unexpected absence), the manager on duty can slot the person into a position where he or she is most needed and can add the most value. It provides management with the opportunity to maximize flexibility.

Similarly, job sharing benefits both the associate and the hotel. When the front desk guest services agent can also pitch in as a server at the lobby food and beverage outlet in a pinch, it’s a win-win for all parties involved, including the guest.

The Chinese Visitors Who Never Arrived

Untitled design

Five years ago, expectations were high that the travel industry would see a huge increase in Chinese travel to the U.S. In anticipation of such a spike, Marriott International and Hilton Worldwide were among the major hotel companies that rolled out elaborate programs of amenities designed to welcome the wave of Chinese visitors.

The rise of a thriving Chinese middle class with disposable income to spend suggested that hundreds of thousands of tourists could afford to travel outside China for the first time. High on their list of destinations: American cities, starting with Honolulu, Los Angeles and San Francisco and spreading east to Las Vegas, Chicago, New York, New Orleans and Miami.

Arriving at their hotels, these visitors would find welcome letters in Mandarin, Chinese slippers, tea served in authentic Chinese tea pots and other Chinese-themed amenities. All the pieces were in place save one thing: the legion of Chinese visitors failed to materialize, at least not in the numbers projected.

Speaking at the annual Lodging Conference in Phoenix in late-September, Marriott International president & CEO Arne Sorenson noted that the Chinese are still traveling abroad, but they are steering clear of the U.S. His explanation: Beijing, concerned over rising tariffs and other political hot potatoes, is deliberately discouraging travel to the U.S.

U.S. Travel Association data supports Sorenson’s argument. Following seven years of double-digit growth, visitations from China to the U.S. declined by 5.7 percent in 2018, according to the USTA.  The Association called the decline “staggering.”

Thankfully, the rest of the world continues to visit the U.S., suggesting that China’s loss can be everyone else’s gain. Enthusiastic travelers still arrive daily from the United Kingdom, Japan, Australia, Canada and Mexico, among every other country in the world except China.

The travel industry learned three hard lessons from this turn of events: First, it makes no sense to single out one country, when other regions can generate impressive numbers. Second, it doesn’t pay to bet on global politics. Third, always have a contingency plan ready to implement.

Hoteliers also are rethinking the wisdom of making their hotels feel more Chinese than American. The truth is, the Chinese visitors who never arrived probably would have been more delighted to receive baseball caps and popcorn than tea and slippers.

woman with luggage checking in to hotel

Employment and the Next Lodging Industry Downturn

Speculation continues to swirl around the lodging industry regarding the likelihood of a slowdown beginning as early as 2020. Fueled by panels at industry conferences and commentary in the trade press, questions remain as to how widespread and long lasting such a downturn might be.

Given the industry is essentially cyclical, an eventual downturn appears to be more or less inevitable, although the next contraction will follow an unusually extended period of growth and profitability.

Complicating the industry situation is the strength of the national — and even global — economy, along with consumer confidence, employment data and the impact of ongoing trade wars, all in light of the 2020 U.S. presidential election.

A recurring theme at the Hotel Data Conference sponsored by STR this summer had to do with employee recruitment and retention in light of a downturn. While it’s true during periods of expansion as well as contraction, the famous dictum attributed to J.W. Marriott Jr. is especially true during downturns: “If you take care of your associates, they’ll take care of your guests.”

Well-looked-after guests result in higher guest satisfaction scores and more positive reviews on social media, which typically translate into more repeat bookings, increased trial usage due to positive word of mouth, higher occupancy and greater profits.

Consider the challenge of finding and hiring people with strong interpersonal skills. The most promising approach is to seek applicants who consider entry-level hotel jobs to be a stepping stone to a career in hospitality.

Considering that international travelers are likely to remain a reliable guest segment in many markets, downturn or not, it makes sense for hotels to pursue multicultural candidates who can help communicate with guests in their languages of choice.

Providing training is essential to retaining motivated employees because it helps satisfy their desire to pursue a career path. Cross-training is a good option because it not only satisfies the employee expectations but expands their ability to handle new and different tasks on property.

Hilton Garden Inn New York Times Square South exterior at night

Why Branded Hotels?

An argument can be made for both independent and branded hotels. Issues including location, price point, target demographics and competitive set all figure into the decision that owners and operators must make when building or acquiring a property.

I witnessed a very persuasive argument for branded hotels during the annual NYU International Hospitality Industry Investment Conference in New York earlier this summer.

The lodging industry collectively took the opportunity to celebrate Hilton Worldwide during the conference in honor of its 100th anniversary.

One hundred years is a significant milestone for a company in any industry. Over a century, the name Hilton has become synonymous with hotels in the public’s mind. Hilton not only is one of the world’s most well-known brands, more important, consumers have a largely positive impression of the company.

Eight years a celebration of similar import will be held when Marriott International celebrates its 100th birthday.

Longevity for Hilton and Marriott has translated into success, both with consumers as well as with hotel owners and developers, the latter of whom literally pay to ride the coattails of these companies’ sterling reputations. The reputation also opens the doors and wallets of banks and other funding sources that provide franchisees with the capital they need.

Strong name recognition has facilitated the international expansion of well-known U.S. hotel brands. U.S.-based travelers, for example, tend to feel more comfortable when booking a recognized hotel brand name when booking accommodations in far-off destinations.

More recently, the lodging industry has gone through a period of tremendous brand expansion, the strategy being to create dozens of new brands to target various travelers’ needs and demographic preferences.

To help ensure the strategy’s success, the companies did not risk the likelihood that some potential consumers would equate the hotel name with its franchisor. So the brands added secondary identification to each hotel that shares the company name. Instead of Tru or AC Hotels, their franchisors dub them Tru by Hilton and AC Hotels by Marriott.

To be fair, this kind of sub-branding has gone on for a while (think Homewood Suites by Hilton or Courtyard by Marriott), but its use with new brands takes the strategy to a new level. Consumers, after all, may not have any idea of Tru or AC’s specific brand promise, but at the end of the day it may not matter; that’s how much they trust the parent company.