It’s all in the blend 

We have been experiencing polarisation in the sector over the past few years. ONLY LEISURE. ONLY LUXURY. ONLY DOMESTIC. A sign of a return to a more normal economy, with less shouting, has been appearing during this results season, with more balance.

Signs of this first appeared with the launch of Hilton’s Spark, which was not a luxury brand. Those of us who have read a copy of Architectural Digest noted that there was a fair amount of chipboard and you don’t get that in luxury. Also: Chris Nassetta, president & CEO, told analysts that they had more than 200 deals in various stages of negotiation and you don’t get that in luxury either (he also acknowledged that one side benefit was that the brand would help to replace Hamptons exiting the system. Not a luxury thing). 

He also talked about how Spark was useful because Hilton can use it to get skint young people lashed into the loyalty programme so that you owned them for life (we paraphrase), but that only works if you assume that people stop thinking and comparing products after they join a loyalty programme. And while that is very much the intent, the technology isn’t quite there yet.

Technology was a repeated theme at Marriott, where the group said that it expected to invest with enthusiasm in “customer-facing technology” this year. CFO Leeny Oberg said: “The digital experience and the experience for customers and associates is of critical importance over the next few years and forever. Our tech systems will transform the experience for our guests and associates. We’ve already some incredible things on the app and our ability to address customers’ experience and needs has improved meaningfully”. 

Earlier in the call CEO Tony Capuano talked about how a “blended approach” to teams, operating with the help of technology, was working for both owners and franchisees. And we can also enjoy that, particularly in these staff-pressed moments. 

There was more blending with the mention of City Express, the mid-level brand the group bought in Autumn last year. Not quite the step away from luxury that Hilton sparked, but a response to the need to grow in fresh segments and territories. 

The CEO said: “Our growth strategy is driven by owners and guests. What we hear from them loudly and clearly is that, at the right quality level, mid-level is appealing, as are apartments. And that’s where our focus lies in terms of expanding the portfolio.”

Key money, in the meantime, was looking at upper upscale. At Hilton, Nassetta said that 90% of the deals in its current pipeline did not have any key money or other financial support. For those who remember their number bonds, that means that 10% did, although without any more colour it’s hard to drag anything significant out of the comment, other than to keep an eye on the movement next time ‘round.

So with a return to a more blended offering have we forgotten everything we learned about the pandemic? Will leisure guests be cast back out onto the fringes of Airbnb*? Business transient demand was at nearly 90% recovery in the quarter at Marriott and Capuano was chipper about the group’s negotiation of high single-digit special corporate rate increases for 2023. But it ain’t back yet and even the most buoyant of CEOs wasn’t prepared to naysay an imminent recession. From ‘pretend and extend’ to ‘blend and expand’? With caution. 



*image: Airbnb’s idea of an ‘amazing pool’. 

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