CEOs who work with lifestyle hotels note there is growing interest from investors, consumers and big branding companies, but hoteliers must commit to being truly authentic to thrive in the segment.
LOS ANGELES—The hotel industry seems to be going through something of a lifestyle boom, with many companies looking to grab a bigger piece of that uniquely crafted, experience-driven space.
Still, hoteliers with experience in the lifestyle segment believe there is room to grow and thrive.
Speaking during a panel at the 2017 Americas Lodging Investment Summit, Niki Leondakis, CEO of hotels and resorts for Two Roads Hospitality, said the increase in lifestyle supply has coincided with a significant increase in guest interest in those types of properties. She said this has been largely driven by increasingly sophisticated consumers and the availability of more information about properties online.
“In the past, you’d have pictures of a five-year-old guest room, but today reviews and social content gives (guests) a really deep inside glimpse,” she said. “That’s an opportunity—especially for smaller brands, collections and independents.”
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Jay Shah, CEO of Hersha Hospitality Trust, said conditions are better today than ever for independent, boutique and lifestyle hotels to thrive—in part because the distribution landscape puts them in front of more consumers’ eyes without the need to tie into the big brands. However, he said, there still needs to be improvements in ecommerce tools and platforms in the space.
“I think independent hotels have a great opportunity,” he said. “They can move faster and be more nimble than larger brands.”
But Ryan Totaro, CEO of NYLO Hotels, said there is “a lot of saturation in the lifestyle space,” and hoteliers have to find ways to differentiate themselves in the market.
“Every brand that gets launched today is what we might call a lifestyle brand because that’s what the consumer wants,” he said. “Our challenge is to deliver authenticity. It’s not just about taking four or five buzzwords and attaching them to a brand and there you are. The consumer today is very, very savvy.”
He echoed Leondakis’ belief that the preponderance of available information works to the benefit of true lifestyle hotels.
“There is so much information out there, and you can tell the difference between the companies doing it well and those who are doing it superficially,” Totaro said. “And the wind is at our backs from a demand point of view. That’s why it’s exciting.”
Fredrik Korallus, CEO of Generator Hostels, said achieving that goal comes down having a laser focus on providing guests with the platform to have great experiences at attractive destinations.
He said everything about the hotel—or hostels, in his company’s case—should be focused on getting guests to interact with the world around them. That includes design. He said his properties often offer incredibly active lobbies and public spaces. His guests are interested in community engagement, not secluding themselves to big rooms with plush beds, he added.
“The interesting thing with hostels is we’re selling beds, and (for) people living in these shared accommodations, the least important thing about it is the bed,” Korallus said.
The impact of soft brands
Shah, whose company owns both independent and branded hotels, said that on a few occasions Hersha has looked at the possibility of soft-branding properties, but often the numbers just don’t make sense.
“We’ve studied it for properties under 150 rooms, and the math doesn’t work for us,” he said. “You can (sign with a soft brand) if it’s a little bigger than that, but at that point it’s not really boutique.”
Shah said his company’s stake in independent properties has grown significantly in recent years, up to about a third of the company’s earnings before interest, taxes, depreciation and amortization compared to roughly 5% around 2011.
He said the power of soft brands is in helping to drive midweek business; however, he is uncertain if that boost is enough to overcome the additional fees and costs from affiliating.
“I think the jury is still out,” he said. “And it varies market by market.”