Search

×

From co-working to yachts, hotels redefine disruption

The hotel industry might not like Airbnb, but its existence, along with the likes of WeWork, has served as a needed wakeup call. Hoteliers are answering the bell by launching businesses that Hyatt Hotels Corp. has dubbed “adjacent spaces.”

Hyatt furthered its position in wellness with acquisitions of Miraval Group and the Exhale gym brands, and it jumped into luxury vacation rentals with Oasis — handpicked homes in 20 cities that include fresh linens and familiar hotel toiletries, as well as loyalty program differentiation. Its plans to develop these businesses are not just about improving the hotel experience.

A rendering of Ritz-Carlton's yacht product, set to debut in 2019
A rendering of Ritz-Carlton’s yacht product, set to debut in 2019

Rather, Hyatt wants to market its wellness services in freestanding spaces or provide service inside corporate offices. “We’re looking at how we can care for our members in new ways and new places,” says Hyatt Senior Vice President Marc Ellin.

It’s a way to reclaim ownership of the guest relationship, says Bjorn Hanson, a professor at New York University’s Tisch Center for Hospitality and Tourism. They can do that by offering different amenities and experiences — and even reimagining hotel design.

Another way into adjacent spaces: throwing a lot at the wall to see what sticks. During the past few years, AccorHotels has added a digital booking business for independent hotels. It also created AccorLocal, which provides concierge-like services for the community, part of a plan to make its brands part of consumers’ everyday lives. “You have to accept that you’re not going to be right all the time,” CEO Sébastien Bazin said in an interview last year.

Others are building rental businesses. Madrid-based Room Mate Hotels in 2014 launched BeMate.com for short-term apartment rentals. It manages more than 10,000 units in a dozen cities and sold more than 80,000 nights last year, the company says.

“It’s a challenge for lodging companies to find an economic model that works in the sharing economy,” Hanson says. Hotel owners negotiate management contracts that typically peg 12% to 16% revenue. Franchise agreements typically involve fees of 7% to 12%. “In the shared economy, operators don’t get that much, plus the transaction value is lower,” he says. “They can ignore it or accept the lower margin. Some brands will be more valuable than others but they all contribute.”

Marriott International’s Ritz-Carlton is taking a plunge into luxury yachting. Through a partnership, it plans to sail three cruisers beginning in 2019. Yachts are free of some of the constraints on hotels such as limited site options, competitors and market saturation, says Lisa Holladay, global brand leader for Ritz-Carlton. “Yachts are essentially floating, re-deployable resorts.”

With all the market upheavals, hotels are scrambling to expand their brands and spur growth. Others are diversifying into co-working, co-living businesses, excursions and more education-related concepts. Will all the moves into adjacent spaces stick? “The next downturn will reveal the weak links and shake them out,” says Suzanne Mellen, senior managing director for HVS in San Francisco.

 


Read about more game-changing trends in HOTELS June Hot Issue.

Comment