When you need groceries, do you go to Walmart? Or do you go to the farmer’s market and family-owned neighborhood grocery? Do you eat at Red Lobster, or the hot local Italian joint with 15 tables?
The world seems to be trending away from big box names to smaller, more intimate options. Part of that is because people want something that has character. It’s not just about getting what you need, it’s about building a lifestyle.
Hotels are no different. Look no further than the immersive and experiential properties that everyone is posting on Instagram. People want to stay in local, character-driven lodging over a room that looks the same no matter where you go.
After all, what’s the point of traveling to a beautiful destination if you have to go back to a bland, dry, and boring room at the end of the day? Even if it’s got a king size bed in it, wouldn’t you rather have something that matches the lively aesthetic of your trip?
Recently, there have been a lot of big box hotel chains acquiring smaller, independent hotel brands. It may be due to the fact that they’re also aware of this hospitality trend, and they’re trying to stay two steps ahead of the game.
However, the end-result of these hotel brand consolidation efforts leads to the evaporation of everything that made the independent lifestyle hotel unique in the first place. Below, we’ll walk you through this industry issue and then show how we at Luxpitality are fighting back.
The Issue
Over the past few years we’ve seen a lot of mergers and acquisitions in the hotel industry. From AccorHotels purchasing Fairmont Raffles Hotels International to Marriott swallowing up Starwood, these moves are ruffling a lot of feathers in the hospitality industry.
These acquisitions are happening because the big box hotels are primarily set on two goals:
- They want to monopolize the hotel options in a city
- Kickoff a hotel brand consolidation just to strengthen their loyalty programs, which then affords travelers more options to gain more points
The niche, boutique, and luxury hotel community is wondering how to get their identity back, and rightly so. Names like Thompson, Kimpton, and Alila were once hailed as lifestyle brands and part of the four or five star category.
They specialized in something unique. But now they’re lumped in with the boring big three, and even limited service brands.
And someone who works in a global sales office won’t understand the intricacies of selling these niche, high-end hotel brands. They’ve got to paint a very specific picture of this independent hotel that fits together near-perfectly.
A global sales office selling a range of hotels, from limited service up to five star properties, can’t effectively do that. It’s like getting overseas tech support on an American based product when you call for help: it feels completely disconnected.
The Pain It Causes
Aside from the potential damage to an independent hotel’s brand, hotel brand consolidation and mergers also directly impacts the hoteliers themselves. They’re upset because it’s harder to book business, which means they don’t receive their fair share of the pie.
Specifically, the friction points lie in group sales and meetings. With all their acquisitions, the big guys have effectively cut the industry standard of 10% commission on group business down to 7%.
True, they allowed some of the big third-party agencies to stay at 10% commission for a period, but now they’re down to 7% as well. Quite literally, this cuts business by 30%.
By extension, this makes life hell for sales managers, because they’re having a harder time closing business. If a third-party can still make 10% at an independent property, or small brand that doesn’t fly the big box flag, then they’re going to steer their customers in that direction.
So, think about the budget of an independent property, and then the budget of a big chain hotel. In an ocean of competition, the hard work and dedication of these independents have built a small island upon which they can stand.
However, as big chains consolidate more and more brands with their purchasing power, it becomes harder for independents to maintain their island. Over time, the water level rises and consumes more beach.
The Solution
Luxpitality was started to give these guys a fighting chance. We help them push back against the raging waters.
And we love rad hotels that reek character, charisma, culture, design, and architecture, which is why independents and small brands get 100% of our focus. In many ways, we’re an extension of their sales team and we help drive group sales.
And while the rest of the world focuses on selling to fortune 500 companies, we focus on providing an experience for the young, privately held companies in the throes of massive growth. Plus, our sales team operates all over the globe to put independent gems on the map, like:
- Public Hotel in New York City
- The Resort at Pedregal
- 1 Hotel South Beach
- Ace Hotel & Swim Club
Our corporate clients trust us to book their business retreat, event, or trip at one of our truly unique partner hotels, no matter where they go in the world. In fact, they frequently tell us: “If you love it, and they’re your partner, then we love it.” In closing, I feel that today is more entrepreneurial.
At the end of the day, a lot of this boils down to loyalty in the form of service standards, character, and charisma. It’s about feeling at home, even when you’re not. It’s not about points, and numbers. It’s about mutually beneficial partnerships and a rising tide that lifts all ships.
The big box hotels better sleep with one eye open, because independent brands that stand together have the power to rival any of the behemoth chains. We encourage anyone who feels the same way to join our movement today. If you’re interested, reach out to us: we’d love to partner with you.