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Is the Hotel Model Still Relevant?

How many times have you walked through the doors of a hotel to be greeted by a sterile echoing hotel lobby and a deep sense of déjà vu? How many hotels have melded into one and the same in your memory no matter which city you were in?

When I think of hotels I am often reminded of Tom Hanks stuck in The Terminal. Why you ask? Because no matter where I have been in the world, as soon as I enter a hotel I feel like I am stepping into the same type of limbo space. Underneath the different wallpaper and upholstery patterns- and even some splashes of hip and trendy millennial interior design- when it comes down to it, all hotels are built on the same stale model which creates a cookie-cutter experience.

It’s like groundhogs day over and over again.

Why is this?

Is it because hotels stand as ‘bastions of the other’ within the vibrant, character-filled hustle and bustle of the cities they inhabit as places designed for tourists? These are not places that are stitched into the fabric of the city, and the lives of its people. It is no wonder that Airbnb managed to gain such a great market share so quickly. Because why stay in an impersonal (expensive) hotel when you can have a more homely (cheaper) local experience?

I hear you argue that hotels do not only offer beds. They also provide an oasis within the urban cacophony for business deals to be done. But surely this just serves to further their isolation as glorified boardrooms? And why close a deal in a same-old-same-old hotel, when you can impress a client so much more with a fancy restaurant, whiskey or wine bar, exclusive membership-only club, etc?

The problem here is that the service offering of one hotel is the exact same as its competitors down the road, just with different gift wrapping and selection of bows. Because of this, hotels end up competing on a lowest-price-for-quality model. Which is why booking engines have been able to disaggregate bookings away from hotels so easily. Hotels do not exclusively own their market real-estate anymore, despite their core source of revenue (on the most part) being bed-nights.

It seems to me that the traditional hotel model needs more than a cosmetic refurbishment, or the creation of hip millennial brands, to address all these pressures that are impacting their bottom-line.

The hotel model needs a rethink. It is an asset model that has not yet been fully utilised. It has a limited ‘mono-crop’ service offering, when there are so many revenue opportunities that lie ready for the taking.

How can hotels unlock all the money they are leaving on the table you ask?

It is no longer good enough to be a branded stalwart. Hotels need to adopt a hyper-local approach if they want to

  1. Diversify their income streams

  2. Maximise their revenues, and

  3. Compete based on unique offerings rather than price

What does this mean?

Brands need to tap into the fabric of their city beyond using it as inspiration for their interior decoration. This means serving more than just tourists or business people. It means cracking-the-code of becoming a “living-room” for the city.

How you ask?

Hotels can maximise their asset model by following this simple 5 step process:

  1. Seek to understand what the “lived environment” of the city is so that gaps and opportunities can be revealed.

  2. Seek to understand the local market and what their needs and desires are.

  3. Combine the findings to identify the social functions the hotel can provide within the city.

  4. Design these as overlays of service-based offerings to create multiple forms of revenue generation

  5. Design a compelling engagement (not just marketing) strategy to draw your local market into the “living-room” you have created for them.

One question I hear you ask is whether the hyperlocal approach can be used when a hotel is already existing? The answer is yes. Without a doubt existing hotels can use this approach to expand their offerings to generate more revenue for brands, investors and shareholders.

What gives me the right to say such things what do I possibly know? I am fairly confident that I have earned my stripes as a tourism product development expert with over a decade of global experience. But I am not any tourism expert I am an architect, urban designer, town and regional planner, and creative problem-solver. Who decided to throw some business acumen in there with a dual MBA.

Want to know more? Need some help? Have some questions? Reach out to us and let's connect.

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