The mood was upbeat at this week’s NYU hotel investment conference, unless you were listening to real estate mogul Mort Zuckerman of Boston Properties, who had the guts to worry aloud about the United States’ anemic economic growth considering the enormous fiscal stimulus it has received.
News such as Virgin’s planned entrance into the New York City market, Marriott’s importation of its chic select-service AC brand from Spain, as well as assorted rumors and off-the-record comments about pending transactions, helped verify that the industry’s health, at least temporarily, is as robust as anyone has seen in five years. Of course, there were complaints about inability to drive rate on group business and still limited financing options for all but the mighty, but another wellness and confidence indicator for me was the sheer volume of lavish cocktail parties.
However, the story that most caught my attention had nothing to do with investment — at least not directly. It was the short-sided news reporting from New York dailies on Monday about the 1,000-plus room New York Hilton discontinuing room service and cutting 55 union jobs. In fact, it became a global story with the BBC calling HOTELS for our comments based on the news.
Here is what the papers failed to report: Hilton is running a business, and room service is an incredible drain on profits and today’s consumer preferences. The New York Hilton will open its slick Urban Kitchen concept sometime this summer, and I expect it will deliver to the rooms — just as it has done with a similar concept at its Hilton Hawaiian Village Waikiki Beach Resort in Honolulu, and I am told with a lot of positive feedback from guests. Plain and simple, it makes economic sense and better addresses today’s customers wants and needs. Of course, someone will need to deliver from Urban Kitchen, so one might also assume not all of those 55 jobs will be lost.
Hilton CEO Chris Nasetta told assembled reporters at the NYU conference that traditional room service is a “dissatisfier.” Guests don’t like it, nor use it all that much, and owners hate it as it is a big drain on resources and profits.
The plan for the Hilton New York is simpler, easier and offers the guest more control over what they want, when they want it. Despite the spate of negative press Hilton has received the past few days, I say kudos to Hilton for stepping out and taking a chance to fix a delivery system that really works for no one. It feels like the start of a trend, even though others have been trying the same thing without customer resistance. But because of the high-profile nature of this story in New York, it could actually provide the impetus for a bigger change for the better.
A change like this makes sense to me and likely has been long overdue. What do you think?