Major hotel companies like Marriott and Hilton want franchisees to think bigger is better in terms of signing a branding deal. Standard International wants to show you can stay independent and punch above your weight — but having cool factor and financial backup still helps.
Three hotel openings may not seem like much, but this trio throws cold water on a major hospitality industry argument for getting out of the pandemic.
Standard International plans to open The Standard, Hua Hin, resort in Thailand in December followed by The Standard, Bangkok Mahanakhon, as well as a hotel in Ibiza, Spain, next year. The international growth is the launch of a 10-hotel expansion that will see the brand expand to markets like Singapore, Melbourne, Lisbon, Dublin, Brussels, and Las Vegas, the company announced Thursday.
But beyond a line-up of new hotels, the expansion of The Standard brand — which currently has seven properties — goes against the “bigger is better” pandemic survival argument touted by some of the world’s largest hotel companies.
“It is tougher for independent brands to operate,” Standard International CEO Amar Lalvani said in an interview with Skift ahead of the expansion announcement. “But there are certain advantages [like] the nimbleness and creativity.”
The Standard, Hua Hin, will be the company’s first hotel in Thailand while the Bangkok property will be the brand’s Asia flagship. The 155-room Bangkok hotel is part of the city’s 78-story King Power Mahanakhon tower, Thailand’s second-tallest skyscraper.
Standard International has had its eyes on Thailand for years and had previously announced plans for four Thai hotels by this year. The devotion to organic growth over a link-up with a bigger company is a major diversion from the arguments many hotel executives keep repeating on earnings calls.
The CEOs of major brands like Marriott, Hilton, and Hyatt have all bragged of their respective global distribution networks and vast loyalty programs during the pandemic. Loyalty networks and big-brand reservation systems are a way for hotel owners to quickly gain customers during an uncertain recovery, the thinking goes.
That logic is a major negotiating point in bringing in franchisees as well as entire brands looking for accelerated growth, and it often works: Marriott, Hilton, IHG Hotels & Resorts, Accor, and Hyatt account for nearly 60 percent of the world’s hotel development pipeline, according to Lodging Econometrics.
The pandemic may have cooled off the entire global hotel industry, but Standard International’s leadership team claims the company is in a better financial position than its similar-sized competitors.
Bangkok-based real estate firm Sansiri made an initial $80 million investment in Standard for a 35 percent stake in 2017. Sansiri later upped its stake to just over 59 percent in 2019. That investment helped Standard International, which also includes the Bunkhouse and Peri hotel brands and One Night booking platform, survive the pandemic and forge ahead with growth.
The company plans to quadruple The Standard brand’s seven-hotel footprint in the next five years. Standard International’s overall network includes 17 hotels between all three brands, but a Thursday presentation indicated there is “a pathway to over 35 hotels across the world.”
“Revenue went from 100 to zero, so you have to make a choice there as to really shut down, cut your staff significantly, or sell yourself,” Lalvani said of the catastrophic industry downturn from the pandemic. “A lot of the smaller brands had to do one of those. We were fortunate that we had the backing from Sansiri, so we kept building. We kept marketing. We kept our people together, and we made prudent decisions. We’re coming out of it relative to our smaller competitors in a really good spot.”
The Cool Factor vs. Scale Trade-Off
A company like Standard International has precisely the kind of cool brands major hotel companies want to bring into their bulging portfolios.
Restaurants and bars at The Standard, High Line, are arguably the pinnacle of New York City’s see-and-be-seen scene. The hotel routinely hosts album launches and fashion parties. Madonna even performed as part of a New York City Pride kick-off this summer.
But there is always concern over how much cool ever survives a big-brand takeover. W Hotels were once the poster child of the trendy boutique hotel movement, but the brand has lost a lot of its luster following its absorption into the Marriott brand network post-Starwood acquisition.
Kimpton, another originator of the boutique hotel movement, is now part of IHG. Thompson Hotels is part of Hyatt. Accor has amassed a trove of boutique brands like Delano and SLS thanks to its SBE acquisition, and more are likely with the pending spin-off of lifestyle brands with Ennismore, owner of brands like the Hoxton and Gleneagles.
“I believe as they’re considering adding new brands, they’re debating ‘Should we do that through launching our own or buying a brand?’” Lalvani said of the global conglomerates. “So we get approached by big companies. They want cool brands like The Standard, and there’s just not that many left.”
Companies like Montage, Dream Hotel Group, Loews Hotels, and Omni are all U.S.-based entities unaffiliated with one of the global giants. There are also European brands like Kempinski and Corinthia. But smaller brands are quickly getting zapped up.
Hyatt plans to acquire Apple Leisure Group for $2.7 billion, a deal that beefs up the Chicago-based hotel company’s footing in Europe and in the resort market. Marriott leaders have noted future brand acquisitions would similarly be about gaining geographic footing, like what its AC Hotels acquisition did in Europe and how the Protea Hotels acquisition boosted the company’s presence in sub-Saharan Africa.
But Standard International appears to be sticking to its own organic expansion plans. Cool factor sometimes trumps the idea of rapidly scaling up with hundreds of new hotels.
“Ultimately, there’s a reason the big companies didn’t create most of the coolest brands in the business — because it takes a different DNA to do so [and] a different type of talent than exists within the large organizations,” Lalvani said.
Photo credit: Standard International plans to quadruple its seven-hotel The Standard footprint in the next five years (pictured: a rendering of The Standard, Hua Hin). Standard International