Lodging

Are Hotels Too Focused on Tempting Travelers With Prices?


Hotels are confronting a curious situation when it comes to selling rooms: Price remains the foremost factor they signal to customers, even though travelers increasingly book stays based on other considerations. And brand loyalty? Fewer travelers care about it.

Richard Solomons, chief executive officer of InterContinental Hotels Group (IHG), refers to this as understanding “the consumer vernacular.” Consider, for example, how often you see a price in a Google (GOOG) Play or Apple (AAPL) iPad commercial: approximately never. ”They rarely talk price points,” he says of successful brands. “They talk needs and occasions.”

Hotels are slowly beginning to grapple with the ways location and occasion outweigh loyalty as most travelers—especially younger ones—no longer care much about a hotel’s brand, says Jim Abrahamson, CEO of Interstate Hotels and Resorts, one of the largest hotel management companies. (The Virginia-based company also owns five properties.) “Now it’s about location and experience.”

For many people, Abrahamson adds, the hotel “experience will trump price—or if they can get a new hotel or to get a just-renovated hotel.” An extra $20 or $30 has become irrelevant. Both lodging executives were in New York this week for the annual NYU International Hospitality Industry Investment Conference and spoke with Bloomberg Businessweek.

Travelers’ relative indifference to the major hotel brands is pushing the large chains to create new ones. Hilton Worldwide (HLT) this week launched a new Curio Collection of upscale hotels “created for travelers who seek local discovery and authentic experiences.” One of the first will be the SLS Las Vegas Hotel & Casino at the site of the former Sahara Hotel on the north end of the Strip. Others will be in Houston, Chapel Hill, N.C., Portland, Ore., and Rapid City, S.D.

That nod to a boutique approach also fueled Marriott International’s (MAR) decision to introduce its Autograph Collection (PDF), which now has 62 properties.

“For a brand to succeed, somebody has to not like it,” Solomons says. “You still see little old ladies driving Jaguars and Porsches, but (the automakers) are very clear on who the brand is for.”

Bachman is an associate editor for Businessweek.com.

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Companies Mentioned

  • IHG
    (InterContinental Hotels Group PLC)
    • $36.38 USD
    • 0.22
    • 0.6%
  • GOOG
    (Google Inc)
    • $547.06 USD
    • 14.35
    • 2.62%
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