High interest rates and a current lack of attractive deals coming to market will encourage hotel investors to maximise revenue from their existing assets. To make this happen, investors will need to shift their attention away from FF&E and design, and concentrate on the teams working in the hotels, said Giorgio Ribaudo, managing director, Thrends, a research and business intelligence company.
In recent years, brands such as The Social Hub, Mama Shelter and Jo&Joe, have been successful at attracting a mix of locals, students, business travellers and tourists into their venues. Many new brands have adopted this approach too, opening hotels with high-ceilinged lobby and bar spaces, aiming to entice locals in for drinks and events. However, in Ribaudo’s experience, their ability to do this has been very hit and miss.
“A few are successful, but the others probably still need to promote their promise to local communities. We are good at promoting hotels to hotel guests, but I don’t feel like anybody is promoting such products to Berliners, Romans, or Parisians,” he said, adding that even when one venue is a success, it doesn’t mean there is a formula that can be easily replicated elsewhere.
Apart from cocktail hour, others are looking at a range of reasons for locals to come into hotels. To successfully attract local community revenue, the entire hotel team – from housekeepers to maintenance workers – needs to act like sales and marketing agents, said Kendra Plummer, founder, Elise Capital, an investment firm dedicated to giving women and minorities the opportunity to own hotel assets.
“We give incentives to all our employees to refer the hotel to their local communities, not just for staying over in rooms. If you’re a housekeeper and your child has graduated, why not host your graduation party in our meeting space? Or a family member is having a retirement party or a baby shower. Show your family where you work but also help our hotel to continue to boost revenues and be a local advertisement to the community,” she said.
Interest rates have forced some churches and other religious premises to downsize, so they need to find alternative places to host meetings. Plummer said that religious events, as well as farmers markets, are hosted at Elite Capital’s hotels: a Hampton Inn in Douglas, Georgia; and a Hampton Inn & Suites in Birmingham, Alabama.
“Keeping the economies growing and having scalability is very important and we all see that within our communities. It’s about the hotels helping other businesses and not just standing as their own entities as we tend to in separating hospitality from everything else,” Plummer commented.
Off the beaten track
In a previous Hospitality Investor article Thomas Magnuson, CEO, Magnuson Hotels, highlighted the opportunities in SMERF (social, military, educational, religious and fraternal) group bookings: “All of these micro markets of little groups, not so much in the big cities, but in secondary, tertiary, rural and highway.”
He added: “Sam Walton, the founder of Walmart, said: ‘You will never believe how much business there is in small towns,’ and we take that further to say: ‘You will never believe how much business there is right under your nose.’”
The general manager has a key role to play in attracting local community business, said Arlett Hoff, director of development, SV Hotels AG: “We have eight Moxy Hotels and I very much see differences as to how they’re able to capture that external business. And to me, it really boils down to the GM. If the GM on property is very much involved in local associations and is part of the local fabric, then you can achieve that.”
An alternative approach would be to employ specific people with specific skills for a limited amount of time. Richard Valtr, founder, Mews, said: “I really believe that the hospitality industry should be much more like a gig economy where we have people coming in for specific uses – targeted types of people actually working in the hotel that will bring in those communities.”
Hotels do not tend to use social media to the fullest, reckoned Valtr, so specific social media campaigns would be suitable for gig economy-style contracted work.
All those quoted in the article appeared on stage at the International Hospitality Investment Forum held in Berlin between May 15 and 17, in a session called - Always On: Increasing Asset Utilisation for Maximum Revenue