How investors want brand standards to shift
 
How investors want brand standards to shift
18 NOVEMBER 2020 9:07 AM

Owners and asset managers are looking for a shift in brand standards that lead to a positive impact on the bottom line for investors.

REPORT FROM THE U.S.—The focus for brand standards needs to change, with firmer attention on making sure owners get a return on their investments, hotel owners and asset managers said.

Speaking during a meeting of the Lodging Industry Investment Council in early October, Aik Hong Tan, principal at Greenwood Hospitality Group, said the brand standards now should focus on helping guests feel safe while traveling.

“What we’ve been focusing on and (what) the (brands have) been doing is trying to lead from the front on the standards from the hygiene side, the safety side,” he said.

He said those are the types of standards that make sense because management companies like his aren’t going to be able to trumpet things like partnerships with Johnson and Johnson.

“I don’t know if (management companies saying that) carries the same weight with consumers,” he said.

Ultimately, he said he expects “better dialogue” between the two sides about making standards effective and meaningful.

Brands “tend to be more willing to listen,” he said. “Before they’d tell you to add an extra five throw pillows in the room. But now that’s a virus problem. I think things like that will change.”

Speaking during that same meeting, Julienne Smith, SVP of development, transactions and asset management at InterContinental Hotels Group, said brand standards should reflect the larger world where “everything is changing.”

“What happens to shower curtains in a post-COVID world, right? I mean, how do you clean those effectively,” she said. “What about the amenities in the rooms? How do you clean those? How do you make sure that you have the appropriate amenities? How do you deliver the food and beverage in a post-COVID world? What about check-in/check-out? You know, all of that is at the forefront of our innovation and thinking. And then also, we have to balance that with the promise that we’re trying to go light on plastic. All the companies are trying to do that and announced that about a year ago. So it is a balancing act in terms of priorities.”

Here’s a closer look at how some asset managers are looking at the landscape for brand standards, based on email interviews:

How do you think brand standards will have to change based on the current environment?

Larry Trabulsi, EVP at CHMWarnick and VP of the Hospitality Asset Managers Association: “For many of our hotels, we have reduced services to at/near zero in the current environment. Slowly and with careful consideration, certain amenities have been added back based on volume and profitability analysis. Perhaps the best example of this is in F&B. In many hotels, all outlets were closed entirely. Then, maybe we added back something on weekends only (when demand is higher). We forced our operating teams to identify breakeven for these added operations (i.e., daily revenue targets) to ensure alignment with owners on the decision to add something back, with the agreement that if it didn’t work, we would re-evaluate.”

Dave Butler, president of PostScript, HotelAVE’s operational efficiency division: “As consumer preferences change, brands will need to adjust their brand standards accordingly. Contactless service, relaxed cancellation policies, enhanced cleaning protocols, reducing F&B requirements.”

How have you seen brands grow more flexible with brand standards?

Trabulsi: “We have seen some flexibility on brand standard implementations. Key areas include in-room entertainment and renovation programs that were scheduled for the next 12 to 24 months. That being said, there will likely be more of a push (both from brands and customers) for things like remote key access (open a guest door with your phone). In addition, owners need additional flexibility to address increased costs from COVID-19 (cleaning, PPE, plexiglass, air system upgrades, etc.).”

Butler: “Overall, brands have been very flexible with reducing typical hotel services and amenities during the pandemic but have been strictly enforcing COVID-19 cleaning and social distancing protocols (whether through physical or virtual quality evaluations). As the brands see their loyal customers shift to (online travel agency) platforms, the brands have been more aggressive with enforcing pricing parity and ensuring their members are getting the best rate by booking direct. We would expect to see the brands become less tolerant and start enforcing standards/penalties for promoting lower rates on the OTAs.”

If so, do you think that will be a long-term or short-term phenomenon?

Trabulsi: “There will likely be creep over the next few years, but (standards) will likely (hopefully) not (A.) get back to where they were pre-COVID-19, or (B.) will only get brought back if there is improved profitability.”

What should be the focus of brand standards to drive ROI for owners?

Trabulsi: “At this point, brands are (and need to be) focused on gaining customer confidence that it is safe to travel. All standards right now need to be focused on cleanliness and safety. Hotels (like airplanes) have probably never been cleaner!”

Butler: “Technology enhancements to reinforce contactless service delivery. Enhancing frequent guest programs to entice booking direct vs. OTA platforms. Enticing F&B programs and offerings to replace typical low-return 3 meal restaurants.”

What are the brand standards that are becoming or should become a thing of the past?

Trabulsi: “Executive lounges may need a re-evaluation. In many hotels (pre-COVID-19), we had more guests getting a free breakfast in a lounge than were paying in a restaurant. With downward pressure on (average daily rate), the cost of these lounges will be difficult to justify. Room service is also worth a re-look. Even in luxury hotels, 24-hour access to a full and broad menu (hot and cold) was extremely expensive to owners and will be more difficult to justify in the next few years. In addition, customers are likely extremely cautious on the idea of a stranger coming into their room in this COVID-19 environment.”

Butler: “Emerging brand standards include:

  • acceleration of contactless service touchpoints like check-in/out, digital key, e-concierge/guest request platforms;
  • convenient, quick, high-quality F&B options;
  • frequent guest programs lowering/revising thresholds to achieve higher/elite status, personalized recognition;
  • wellness programs including in-room fitness activities/fitness equipment, yoga;
  • enhanced meeting and conference technology to accommodate hybrid and virtual meetings;
  • activation of outdoor spaces, seating areas;
  • virtual hotel support, quality evaluations etc.; and
  • enhanced staff training and compliance sanitation and cleaning.

“Brand standards likely to change are:

  • large breakfast buffets;
  • three-meal restaurant requirements;
  • concierge/club lounges;
  • bell services including on-demand transportation;
  • removal of in-room collateral, menus, pens and notepads;
  • newspaper delivery; and
  • reduced stayover/turn-down services.”

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