Marriott’s four lifestyle, select-service brands are growing at a fast pace while bridging a gap between traditional select-service and full-service, says the chief development officer for the brands in North America.
NEW YORK—Marriott International’s select-service brands, particularly in the lifestyle chain scale, are on a fast development track, with more than 70 projected openings and nearly 450 signings globally for AC, Moxy, Element and Aloft in 2019.
If completed, those signed projects will more than double the company’s lifestyle select-service portfolio (currently at nearly 400 open hotels) over the coming years.
Fueling this growth is high interest from developers, investors and owners, who see the opportunity to drive incremental revenue by bridging a gap for guests, said Eric Jacobs, Marriott’s chief development officer for select-service and extended-stay brands for North America.
“Obviously I think it’s probably the hottest segment beyond extended stay right now in terms of developer focus. This opportunity to activate public space, drive incremental revenue through beverage and food, and I say it that way, in a select-service environment is very appealing to our owners and investors,” he said during an interview recently at the NYU International Hospitality Industry Investment Conference at the New York Marriott Marquis.
Marriott’s lifestyle brands in the segment are redefining select-service for many guests, Jacobs said. He likes to call it “selective-service,” he said.
“When you think about traditional select-service, you build public space that traditionally got used three to four hours a day. … an amazing guest room and a great breakfast, little bit of meeting space, a pool and a gym, that’s the traditional sense of what we deemed in the industry as select-service. … Now we’re talking about activating that space throughout the day and heavily in the evening when, generally speaking, it’s been unused,” he said.
“Today, we’re talking about AC, Moxy, Aloft all having activated public space, all three leaning in with bars and more light foods, snack food, but activating this public space throughout the day in a way this segment hasn’t done traditionally. So it’s driving incremental food and certainly beverage, really leaning in on the beverage piece. We are choosing to add some services that really drive revenue in spaces that have not been used in the past in this segment.”
Those activated spaces are unique to the property and market it serves, he said. For example, a rooftop in an urban location, “when you can get a great view of the city skyline over the river, into a city ballpark or something like that,” Jacobs said.
“We’re kind of bridging that gap a little bit; it’s not full-service, all the services and amenities, and the big meeting space, full-service lounge and restaurant, but it’s not just a free breakfast and a good night sleep. It’s somewhere in the middle.”
Aloft, acquired as part of Starwood Hotels & Resorts in 2016, is driving this trend in many respects.
Starwood was “leaning hard on it with Aloft, and their launch of that brand, in many ways seeing it before other people did,” Jacobs said.
“We’re excited about having that as part of the lineup. When you lay (the brands) out, you get different experiences at different price points. Public space activation’s really different in each one of the brands, and it allows us to play in a lot of different places.”
Aloft fits “in the middle” of two other lifestyle select-service brands, AC and Moxy, in terms of development strategy, Jacobs said.
Moxy, which has been focused primarily on North America, is at its core urban, and fits well in markets that serve international airports, such as San Francisco, New York City and Toronto, he said.
AC is more “metropolitan urban,” appealing to broader markets, with a “much more elevated” and sophisticated feel, he said. It’s less focused on the transient, single traveler, he added.
“These are not going to be mega-brands in terms of distribution as we’ve traditionally done with Courtyard or Fairfield. I have no plans to build 200 Moxys in North America. It will lose its flavor as being a bit of an independent boutique-style inspired brand. … But each one while having some similarities allows some flexibility with design and location,” he said.
Aloft, “which has a much broader distribution strategy, can play in those suburban, secondary and urban markets,” he said, adding the brand has the potential to grow to a portfolio in North America of 700 to 800 properties.
“That would be a dream come true to get it that big in the states, but I think it has that opportunity,” Jacobs said.
Modular construction is helping to keep development pace accelerated, he said, adding that it’s a “better product, faster and more cost-effective,” while being “quicker to market and earning money.”
He said the strategy for all of Marriott’s brands are to “right-size” them.
“Is the portfolio too many brands? (Not) as long as you segment them properly, grow them to the appropriate size. Sometimes the industry says Marriott is going to do what it’s always done: You have Moxy, you have 10,000 of them. That is not the distribution strategy for all of our brands,” he said.
“We’d love to have a couple of thousand Fairfield Inns open, but that is a really broad hotel brand that can live at street corners and exits, just the way people travel in the states. It’s the road warrior brand. That’s a little different than the AC, Moxy, Aloft positioning.”
Homes and villas
Jacobs said Marriott’s new home-sharing platform, Homes & Villas, poses no competition to its select-service or extended-stay brands, and instead represents an opportunity for his portfolio.
He said there has been some initial response from owners, asking “are you just seceding to the enemy?”
“But we’re not going to play in that space. (With Homes & Villas), Marriott is trying to play in the upper-upscale positioning, really targeting those travelers who are generally traveling as a tribe. We’re trying to hit markets, some of the islands along the Carolina coast for example, where nobody could afford or would build a traditional hotel because of the seasonality of it, but there’s lots of homes to rent,” he said.
“Our guests are going there. They’re asking, ‘Can I earn points and burn points by renting somebody’s house?’ That’s a good thing for our consumers. It becomes an amenity to the Bonvoy program.”
The travel purpose and needs are different, he said.
In select-service, while there’s “a communal efficiency kitchen, I’m not making dinner for a family of eight in here. It’s a shared space with a place to warm up some pizza, get some grab and go, that kind of thing, versus the homes and villas,” he said.
“I don’t believe that business-to-leisure traveler, most are not looking for a villa or home midweek. … It’s really about how many people are they traveling with.”