The 10 Biggest Ways Hotels as We Know Them Are Changing
AirBNB has changed the game.

The last decade has turned the hospitality industry inside out, and not just because of technology (although that's certainly played a part). Who travels, how we travel, even what we bring on the go -- it's all changing pretty fast.

Hotels are working hard to keep up. Here are ten ways that's happening.

10. Less surge pricing
10. Less surge pricing

Uber introduced us all to the term "surge pricing," and it may well be the most hated feature of the overwhelmingly popular app. Yet while Uber may have become the face of dynamic pricing, it really just  put front and center a long-standing hospitality and service practice. When rooms and seats sell out, prices go through the roof.

At least, it's been a previously long-standing practice.

According to Scott Brennan, the president of hotel business for Carlson Wagonlit Travel, expanding competition from homestays and inexpensive hotels has made it harder for properties to charge those egregious prices when Kanye comes to town.

"I do think where Airbnb has really impacted the brand is when a city is in a sellout situation for an event," he said. "In the past a hotel would have gone to the highest rate it could charge. You would see something like a budget brand selling a room for $400 or $600 a night during the Super Bowl."

Now, those customers just rent somebody's spare bedroom.

9. Focused service hotels
9. Focused service hotels

This may be the single biggest change in the entire hotel landscape, and, as we will see further into this article, it has led to sweeping changes in the way hotels open and operate.

A focused service hotel is a property built around doing one specific thing. Instead of trying to operate all the services that a property would traditionally offer, like a kitchen, swimming pool, workout room and more, a focused service property picks one traveler profile and builds only the amenities necessary to cater to her. For example, some hotels may focus on business and conference travelers, where others may do almost nothing but host events.

This model went from not existing a few decades ago to being "the dominant brand today" Brennan said.

"If you go back 30 years you had a handful of brands, and they all tended to be either full service hotels or budget properties, and if you go back far enough roadside motels," he said. "It's a real game changer."

8. Long-term stays
8. Long-term stays

When the Marriott (MAR - Get Report) built its first Residence Inn, the hospitality industry saw it as both experimental and completely niche. At best, travelers who would want to rent a partial-apartment were seen as a small, defined market. Perhaps it would appeal to consultants who travel for weeks or months at a time, but that's about it.

Fast forward to today and the overwhelming success of the long-term stay hotel.

These are properties that come with apartment-like amenities, like a kitchenette, a living room space or a refrigerator built for more than just mini-bar options. They have succeeded among short and long term travelers alike and created a brand new space in the hospitality industry.

7. Occasion stays
7. Occasion stays

"How do I identify a traveler, and what they would like for this particular stay?" Brennan said. "You may have the traveler who, when they're staying for business, prefers full service hotels or focused service hotels, but when they're traveling with their family they may prefer an inn and suite hotel… It really comes down to the traveler and what does that individual traveler gravitate towards, and a little bit of why are they traveling?"

This, he explained, is the logic of building and running a modern hotel.

To an increasing degree the hospitality industry is rebuilding itself around "stay occasions," the specific needs bringing a traveler to town. This is because to an increasing degree, travelers have specific needs. Families, Millennials, business travelers -- there's a profile for each type of traveler on each type of trip. And individual needs have to be siloed.

And that's driving even more specialization in the hospitality industry.

6. Wide ranging hotel brands
6. Wide ranging hotel brands

Time was, just dropping the brand name gave a snapshot of the hotel experience. Brands like the Hilton (HLT - Get Report) , the Holiday Inn, Best Western -- these all had their niches. The hotels emphasized brand and market recognition, and most specifically when it came to the spectrum from budget to luxury.

Today that's not so true anymore.

The Hilton runs everything from its elite Waldorf Astoria to the low/mid-range Hampton Inn. Marriott owns the Ritz Carlton and the Courtyard. While this isn't true for every hotel chain, Choice (CHH - Get Report) , for example, continues to operate almost exclusively in the mid- to budget-range, more and more brands have decided to own the space from luxury to budget and everything in between.

5. The end of the airport hotel
5. The end of the airport hotel

People love Millennial portmanteaus like nerdjacking and the youniverse or heck. To that add " bleisure" travel, the practice of taking a business trip and adding a few days of vacation on the end.

The mixed work and play trip has impacted the travel community as a whole, and hotels no less than any other segment. As travelers, chiefly younger, want to spend some time sightseeing after their meetings they want to stay in places that can accommodate that.

The former era of business travel was dominated by airport adjacent properties that made life convenient for the road warrior. Having a room five minutes from the gate allowed travelers to avoid unnecessary time spent getting to and from an airport that they'd return to as soon as possible. Now the focus has shifted downtown, because that trip into the city is a feature, not a bug.

4. Hotels in more places
4. Hotels in more places

Focused service has allowed hotels to expand enormously, often into markets that had few (if any) options before.

"They are cheaper hotels to build and operate," he said. "When you think about the cost of putting up an 800 room full service hotel somewhere… you're probably looking at north of $50 million to open the doors. A 500 room Hampton Inn or Holiday Inn Express, that's a lot cheaper to open and operate."

"It has allowed hotels to go into smaller markets where a large, full service hotel might not be able to survive," he added. "[For example], there's no full kitchen, so you've eliminated all of the overhead and costs of operating a kitchen. So it's a cheaper operating model, and then they pass that savings along to the traveler in the form of a lower rate."

Today it seems like you can find a nonsmoking, queen-sized bed and beige-toned artwork just about anywhere. That's in large part due to the focused service model.

3. The importance of loyalty rewards
3. The importance of loyalty rewards

"One thing that's definitely changed in the last decade or so has been loyalty," Brennan said. "Consumers today expect to be recognized for their loyalty to a brand, either in the form of perks like upgrades when they check in or just points for the stay that they can use to take their family on vacation at the end of the year."

"That, for me, has gone from probably a little bit of a curiosity in the hotel space to really driving demand and brand preferencing," he added. "There is a segment of the population that would say that brand loyalty is, within reason, the single most important attribute that they look for when choosing a hotel."

As we have reported in the past, this is a trend repeating itself across the travel industry. From airlines to websites and more, customers want their loyalty rewarded and are willing to make purchasing decisions on that basis.

2. Local branding
2. Local branding

The Graduate Hotels runs a chain of properties in university towns across the country and the company builds each property around the theme of the host campus. Ann Arbor's Graduate sports blue and gold at every opportunity with a lobby decorated after the school's famous law school reading room. In Madison, Wisconsin red and gray dominate the walls, with canoes and wildlife prints paying tribute to the school's waterfront culture.

And while The Graduate may do its local branding very well, it doesn't do it alone.

Increasingly, consumers want a sense of local character in their hotel room. It's a trend that has begun to redefine hotels away from the brand uniformity of the past. Instead of looking for a Hilton, today's consumer increasingly wants to feel like he's staying in Chicago.

It's up to the hotel to decorate accordingly.

1. Generational demand
1. Generational demand

"What we're seeing from younger travelers is, it's a little bit of demand for sharing economy, alternative accommodations," Brennan said. "That's probably the biggest impact they've hard on our business, is pushing companies to allow for alternative hospitality options when they go around their trips."

"And we're definitely seeing a trend around leisure," he said. "Anyone around 25 or 30 is far more likely to tack on a day at the end when they go on a business trip just because the company has eaten the cost of putting them on an airplane."

It has been reported time and again that Millennials have changed travel, and that's true up to a point.

As a generation, Millennials want different features from their hotels. As discussed earlier in this piece, they like to sightsee while on business trips and want a hotel that can accommodate that. A more tech savvy generation, they are inspiring hotels to start pushing more smartphone-enabled amenities like keyless entry and text message check-ins.

But as Brennan noted, it's also important not to overstate this difference. Millennials do some things differently from past generations but most things the same. Hotels are working to keep up.

Advertisement