Reading the industry press over the last couple of months, I could not help but notice, all the upheaval about the large chains and the mergers and acquisitions happening. After Marriott acquired Starwood the industry is talking about the era of the mega hotel chains.
However, I see actually rather a big opportunity for the independent hotels in the current marketplace. Independent hotels thrive currently and from my experience are outperforming chain hotels in results.
Actually looking at Conde Nast and Travel and Leisure, the leading luxury travel magazine's, independent luxury hotels tend to outshine the chain hotels. Going through offers on popular lifestyle travel websites like Mr&Mrs Smith, Voyages Privé or Secret Escapes, all are focussed on authentic experiences incorporating mainly original boutique hotels and luxury independent hotels.
Millennials, the golden market segment everyone has been raving about, also seems to appreciate more authentic and original personalized experiences over a cookie cutter, of the shelve type of product. So for the years to come I would say this is quite a good outlook for independent hotels.
And this does not only count for the high-end or luxury market. In the mid-ed and budget or economy segments independent hotels are making in-ways as well. Refreshing concepts with original design, personal guest service are popping up and moving up the charts everywhere. Even in the youth hostel market we have seen a product upgrade happening over the last few years with some cool new places to stay.
What has inspired or triggered this phenomenon? The world has changed, people have become more aware and expressive of their needs. The modern consumer is much more conscious of what he appreciates and wants. The consumer is not looking for a standardized industrialized product. He is looking for a fun time at a nice place. And the industry is catching on.
Review scores and OTA have levelled the playing field when it comes to distribution reach of an independent hotel vs. a chain branded hotel. By leveraging the online travel agencies and distribution platforms, independent hotels gain a global reach. And the original experience of an independent hotel drives very good review scores, giving your hotel an immense global reach and exposure.
Key advantages of independent hotels over chain properties:
- More focus on what the guest wants, vs. focus on chain brand standards.
- More space for original design, product creativity and a unique identity.
- Less bureaucracy and more attention to original guest experience and unique initiatives.
- Less overhead cost in terms of chain revenue contributions and marketing fees.
- Freedom in commercial and distribution strategies, without chain regulations holding back the individual property over the chain strategy.
- Stronger and more unique local experience oriented marketing efforts.
- Original concepts drive higher guest review scores, which brings more exposure.
There is a huge gap in the market left by the chains for independent hotels to capitalize on.
From managing a portfolio of 50 independent hotels, all with their own unique identity, we can clearly see that these hotels are outperforming competitors in their market and bringing in a higher RevPar and NOI % (EBIDTA) than normal.
The freedom an independent hotels give, allows for assets to be created to drive a far better return on investment and bottom line than we would be able to achieve with chain hotels. Not only can an independent hotel differentiate in its concept and service, but we use guerilla techniques in terms of revenue management, distribution and marketing strategies to drive financial results.
I foresee that in the next 5 to 10 years we will see many more independent hotels being developed than ever before.
We might even be at the beginning of the end of the hotel franchise model. When speaking to hotel owners in Asia, they are getting fed up with the chain rules, regulations and costs, and limited resolve to drive business volume to an individual property. Many are doing their math, and are figuring out, that the cost might not be worth the returns. The first few have even started with removing their brand flag, and the results are very encouraging.
In my book, independent hotels rule!
It comes down to a great quirky or authentic concept, and a passionate team with a true hospitality DNA to deliver a unique and personal guest experience.
If your hotel is a story worth sharing, your property will flourish, and rank at the top of the review score charts.
Case closed ...
Patrick Landman @ Xotels