HONG KONG—Taking risks is a common occurrence in the hotel industry, but when it comes to companies trying to reinvent the fundamental way things are done, it takes on additional urgency.
Executives of four companies trying to reshape the hotel industry’s core told attendees at the Hotel Investment Conference Asia Pacific that bucking the trend can be easy to accomplish because long-established hotel companies and brands appear to be eager to follow in their footsteps.
Technology is one primary area many agents of change in the hotel industry make their mark, because technology can distinguish hotels, the
speakers on the “Rebels with a cause” general session panel said.
“Technology is an enabler; it is increasingly important,” said Jasper Muller, VP of development for Amsterdam-based CitizenM Hotels.
But speakers agreed that technology can’t be the sole building block for a hotel brand.
“I don’t think you differentiate your brand with technology,” Muller said. “The brand’s defined by the people.”
“Defining technology as defining the brand is as ridiculous as saying plumbing can do the same thing,” added Todd Wynne-Parry, executive VP of development and acquisitions for San Francisco-based Commune Hotels & Resorts. “At the end of the day, technology is just like plumbing—everybody’s going to have to have it.”
But it is part of establishing an identity and a core value system—which often includes the bucking-the-trend mentality.
“For me, a Room Mate philosophy is to go against everything that’s established,” said Enrique Sarasola, founder and president of Madrid-based Room Mate Hotels.
Wynne-Parry said “unique” is the key word when it comes to burgeoning brands that break the mold. He recalled, when he worked for Starwood Hotels & Resorts Worldwide and helped launch the W brand in 1999, how hungry the market was for something new.
“I was amazed at how the little bits of innovation that happened in the brand created such excitement worldwide,” Wynne-Parry said.
Innovation is a necessity
Moderator David Keen, CEO of branding specialist Quo, said the greatest risk for a hotel entrepreneur is to be different—especially when everyone is trying to do something different. Therefore, constant innovation is a necessity, and it can lead to new directions even for a centuries-old business.
“We did change the hotel industry, or are starting to,” said Muller, whose brand a decade ago pioneered the concept of hotels having small, economy-oriented sleeping rooms and a bustling community-oriented lobby.
Many long-standing companies and newbies have followed that recipe, and when asked by Keen why that is, Muller said it’s because the model works.
“I hope it is because we are inspiring them,” Muller said. “We are creating a hotel for ourselves … a hotel that we as frequent travelers would like to stay in. Our mission is to stay ahead of the pack and keep innovating and improving.”
CitizenM has seven hotels open and 12 in development.
Barcelona-based Praktik Hotels is taking a similar approach in that it is offering something unique at its five hotels, said CEO Jose Maria Trénor Lowenstein. It all starts with the name.
“We wanted the name of the hotel chain that meant something in any language—affordable, simple, smart,” Trénor said.
Each of Praktik’s hotels generates unique content, according to Trénor. For example, one of the hotels is bakery-oriented, one is wine-oriented and one is garden-oriented. The hotels co-brand with “local guys who do it best,” Trénor said.
Owning the “rebellious” hotels makes a difference when trying to build a successful operational model and culture, panelists said.
CitizenM stays innovative by having an ownership stake in all of its hotels that allows it to try new things and test different approaches, according to Muller.
“We constantly make sure every new hotel is better than the previous one,” he said.
Muller said the advantage startups have in this environment is they can build flexibility, the ability to innovate and a certain culture into the business model from the beginning.
Sarasola said empowering employees throughout the company to give ideas is a surefire way to create an innovation-rich culture.
“The best ideas come from them,” Sarasola said.
One example is dealing with the high cost foreign visitors pay in mobile phone roaming fees. Room Mate used an employee’s suggestion to provide a portable router that allows guests to connect up to six devices for a Wi-Fi experience throughout the city where they are visiting.
Sarasola said embracing employee ideas and staff involvement essentially turns the hierarchy pyramid upside down, which allows his company to have a constantly growing culture.
The other executives agreed.
“It’s not about the physical product. It’s about the culture,” Muller said. “The brand standards and brand values are not fixed into a product. It’s in the values of the company.”
Trénor said content at the hotel helps build a company culture.
“Praktik is about offering things, as long as I can offer affordable experiences,” Trénor said.
Wynne-Parry said non-hoteliers are behind a lot of the innovations in the hotel industry.
“Every time there have been people outside the industry coming in … these people look at the industry differently. They ask why. They make the change, then everyone has to follow,” he said.
But not every innovation works, Wynne-Parry said. He recalled the early days of W when the company thought lemongrass plants in each guestroom would encourage guests to water them and pass the legacy along to the next guest. “It lasted about a month because the plants started collecting dust and bugs,” he said.
Loyalty is important, but big programs are not
Another anomaly among the industry’s rebels is that they tend to ignore loyalty programs.
“Loyalty has, despite what big brands say, dramatically changed,” Keen said, adding that there remains some value in loyalty.
“People are not loyal anymore,” Trénor said. “Having a card from a brand doesn’t mean they’re loyal to a brand.
“New loyalty is going back to basics … doing things right and not creating problems,” he added.
Wynne-Parry said the anti-loyalty-club mentality is because new-age guests have a different mentality than those who like to stay at big-box hotels or massive chains.
“We’re in the lifestyle boutique sector; our guests are not points junkies,” Wynne-Parry said. “They’re looking for a great unique experience.”
Sarasola added that the cost of loyalty programs alone is a reason not to have them.
“We came to the conclusion, there’s so many distractions, commissions you have to pay. … We don’t believe in it,” Sarasola said.
Wynne-Parry agreed.
“A rewards program can cost an arm and a leg,” he said. “Loyalty is a customer relations management program.”
A final key piece rebels need for success is a strong social media presence, the speakers said.
Sarasola, a three-time-Olympian-turned-hotelier—has 95,000 Twitter followers and said he uses it because it allows him to interact with clients in real time.
That, coupled with electronically monitoring and measuring guest reviews, can help him spot issues at hotels before they become problems.
“Social media is helping me run my company on a day-to-day basis,” Sarasola said.
Praktik Hotels uses social media to create a buzz in the community when a new hotel opens—and to continue keeping a fresh message in front of consumers who are looking for unique things, Trénor said.