Smaller lifestyle hotel groups are no longer disruptors in hospitality, so they need to evolve beyond the oversimplified "boutique is better" message.
Is the lifestyle hospitality sector becoming the very commoditized product that its proponents have rallied against since the 1980s?
It feels that way. When every single brand leader for every single lifestyle hotel group is saying the exact same thing in an attempt to differentiate their product, then they’re not really differentiating their product.
Experiential. Authentic. Local. Understanding your customer. Individualized guest attention. Contemporary design. Chef-driven food, cute cocktails, social spaces, cool staff. We’re better because we’re not Marriott.
What lifestyle brand isn’t repeating all of that?
At the NYU International Hospitality Industry Investment Conference this month, one session in particular suggested new insight into the future of the indie hotel sector. “The New Hospitality Lifestyle: Emerging Brands featured four senior execs with Equinox Hotels, Denihan Investments, SH Group (an affiliate of Starwood Capital Group), and onefinestay.
There were sparks of insight here and there, but overall you came away with the sense that something (other than anti-Airbnb rhetoric) is needed to inject some life into the lifestyle hospitality conversation.
For years, small hotel operators have positioned themselves as the scrappy innovator delivering true hospitality in the face of the legacy brands’ uniformity. However, when compared to Airbnb, independent hoteliers are now the traditional incumbents in hospitality, facing pressure from younger demographics to adapt to modern guest expectations.
The most interesting discussion during the NYU Hospitality Investment Conference session revolved around Equinox Fitness Clubs expanding into Equinox Hotels. The company is proposing 75 new properties planned worldwide, beginning with the first property scheduled to open in the new Hudson Yards development in Manhattan in 2018.
The brand story around the hotel group highlights “peak performance” as it applies to guests’ personal, professional, physical, and social lives. That’s a significant emerging message, especially for Millennials, and it’s authentic because Equinox has over 80 gyms in the U.S. and Canada to tap into for wellness insight.
The fitness brand’s membership base also delivers a built-in guest audience to the hotel brand.
“We really saw an opportunity for people who want to reset their body and reset their mind and really enable them to be at peak performance,” said Carlo Becil, EVP/CMO of Equinox. “We see massive consumer trends going toward that, and we don’t see other brands that have the authenticity and credibility that Equinox does to really be able to deliver on it.”
Becil stated that content plays a big role with the fitness brand at the Furthermore from Equinox website. So, he said, expect to see a decent amount of education around issues like sleep science, diet and exercise, and healthy work-life balance management integrated into the guest experience. “We’re obsessed with the science of fitness as you see by our partnership with UCLA that goes to the core of what drives results,” he explained.
Equinox has identified its guest as mostly the same Gen Y demographic that primarily populates the gyms.
“It’s about understanding who your guest is,” said Becil. “Millennials have reprioritized the role that fitness plays in their lives and where they spend their money…. Working out is the new happy hour in some ways.”
Understanding the Consumer
Ellen Ford, EVP of acquisitions & development at Denihan Investments, offered her opinion of the NYU Hospitality conference and the hotel industry in general, which seemingly are discussing two different conversations.
“As I sit through so many of these sessions at the conference, the big talk is about consolidation in the industry, and yet I feel like the market is actually moving toward differentiation and diversity,” she suggested. “It’s about understanding guest preferences and delivering a hotel experience to answer those preferences, which I don’t believe the big hotel groups can do.”
That is the statement that needs to evolve. This argument that small hotel brands are so much better than big hotel brands, because they can engage the consumer in a more personalized manner, began in 1981 with the launch of Kimpton Hotels. That was 35 years ago. It’s time for a new narrative.
What Denihan does well is partner with local cultural and social organizations in cities like New York and Chicago. There is also a distinct brand relationship between Denihan and the non-scenester Creative Class of all ages, somewhat like Le Meridien Hotels but without the corporate Le Meriden playbook.
Those brand nuances offer infinitely more interesting storylines that Denihan has never really done a great job of blowing out to discerning travelers with lots of amazing content.
Next up, Mark Keiser, spoke on behalf of SH Group, which operates Baccarat Hotels and 1 Hotels.
Baccarat opened its first hotel in New York in March 2015, which Keiser said, “stands for perfection and perfect craft,” and it answers the question: “What does the high-end customer want?”
Keiser explained how Baccarat veered from traditional luxury guest room design by forgoing the standard 5-fixture bathroom that industry benchmarking companies like Mobil and Forbes require to earn their 5-star/diamond awards. Instead, the Baccarat bathroom has a large shower and no bathtub because no one ever uses them anymore.
That’s a welcome shift because so many luxury hotels have schizophrenic bathrooms shoehorned into spaces entirely too small for a big jetted tub.
“That gives us freedom to put construction costs in what guests really do care about, like a great fitness area, pool, spa, and food and beverage,” said Keiser. “It will be interesting to see if the rating agencies change their ranking criteria.”
Keiser also touched on 1 Hotels, which is striving to become the first luxury-tier, urban eco-conscious resort brand of note in North America. Eco-themed city hotels have been making noise in Asia for years. He explained that hotels don’t have to sacrifice luxury to be sustainable, and consumer demand for more responsible products continues to rise.
“1 Hotels was really an opportunity for what (founder) Barry Sternlicht wants to be known for, and the sustainability aspect is really undervalued in the hotel space,” Keiser said. “No one has really done this from thought to finish.”
Lastly, Evan Frank, co-founder of onefinestay, spoke about how room-sharing companies such as his are building on the success of lifestyle hotels. The company, acquired by AccorHotels this past spring for $170 million, operates in London, New York, Paris, Los Angeles and Rome.
Frank said he doesn’t really view Airbnb as competitor because most of onefinestay’s units have multiple bedrooms, and the average length of stay is two to three weeks.
Explaining the value proposition for room-sharing, Frank began by saying that W Hotels “turned hospitality conventions on their head” by being local, real, funky and accessible.
“Onefinestay is a continuation of that because we’re a boutique hotel of one,” he said. “It’s a home. It’s a SoHo loft or a West London townhouse. Certainly it’s the desire for what’s authentic, although that is an overused word.”
Tags: boutique hotels, equinox hotels
Photo credit: The first Equinox Hotel opens in Manhattan's new Hudson Yards development in 2018. Equinox