Rooms Hotels

Limited-Service Hotels are Enjoying a Renaissance Among Travelers

@denschaal

Sep 06, 2013 12:52 pm

Skift Take

The five-star hotels may be glamorous and prestigious, but the Hampton Inns and the Extended Stay Americas may generated more profits, and the latter is rapidly gaining favor among travelers.

— Dennis Schaal

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Yossarian Holmberg  / Flickr.com

At Hampton Inns and other limited service hotels, it's good to have a car with you because chances are you'll have to take a drive to find a restaurant. Pictured is a Hampton Inn in Mesquite, Texas. Yossarian Holmberg / Flickr.com


Limited-service hotels are a hot commodity these days as investors view them as larger profit generators than full-service hotels, and their increasing popularity among U.S. travelers was reflected in a recent study.

In fact, a recently released MMGY and Harrison Group survey found that 31% of respondents, who were leisure travelers residing in the U.S., preferred limited-service hotels without restaurants to full-service hotels that have dining establishments.

While those travelers preferring limited-service hotels are still in the minority, their ranks grew 55% from 2012 to 2013, according to the survey, and was the fastest-growing trend among the categories about hotel preferences in the table below.

Leisure Travelers Hotel Type Preferences

Hotel Type 2010 % 2011 % 2012 % 2013 % % Change 2012 to 2013
Chain Hotels/Resorts 78 76 78 74 -5.12%
Independent Hotels/Resorts 22 24 22 26 18.2%
Economy 17 15 12 15 25%
Moderate 64 63 62 64 3.2%
Luxury 19 22 26 21 -19.2%
Full Service 75 77 80 69 -13.7%
Limited Service 25 23 20 31 55%
Hotel/Resort < 300 Rooms 66 65 63 75 19%
Hotel/Resort 300+ Rooms 34 35 37 25 -32.4%
Traditional 61 56 58 63 8.6%
All-Suite 39 44 42 47 11.9%
Source: MMGY Global/Harrison Group, a YouGov Company • 2013 Portrait of American Travelers

Investors are certainly becoming enamored with limited-service hotels as margins at five-star properties face pressure.

Blackstone’s hoped-for IPO of Extended Stay America will gauge the durability of limited-service hotels as investments.

In a parallel trend, the Travel Channel’s Anthony Melchiorri sings the praises of 3.5-star hotels over 5-star lodging choices for hoteliers.

While far from a limited-service hotel, Hilton New York Midtown’s decision to eliminate room service is not unrelated.

The MMGY survey, which was conducted in February and covered leisure travelers in the U.S. with household incomes of $50,000 or more, also points to leisure travelers’ increased preference (75%) for hotels with less than 300 rooms. Their ranks grew 19% in 2013 year over year.

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