Select-service brands take experiential tack

Select-service brands are increasingly using unique design and experience-driven offerings to create a boutique atmosphere. Photo credit: MaximFesenko / iStock / Getty Images Plus (Bartender flaming an orange peel over a cocktail)

More new hotel brands likely will launch in 2019 and expect an increasing number of them to fall into the select-service segment.

During this cycle, top global hotel companies have increased the portfolio of hotel brands they offer by more than 30 percent, with presence across more markets and a larger variety of concepts from which guests can choose.

According to JLL’s Hotel Investment Outlook, branded full-service hotels in mature economies accounted for approximately 32 percent of existing rooms but only 19 percent of rooms under construction. On the other hand, these top hotel companies are focusing their development of new brands in the select-service segment, with 33 percent of rooms under construction in hotels that will be flagged by brands launched this cycle.

While it’s important to remember that no single brand model fits the needs of every investor and/or owner, or will be effective in every market, much of the shift toward developing brands in the select-service category is being driven by lower development and operating costs, leading to appealing return on investment potential. And many select-service brands still offer comforts that guests desire and features that appeal to the modern traveler.

For example, these brands may offer locally sourced snacks and drinks on a 24/7 self-service basis, with some  selling at the regular supermarket price rather than their prices being marked up, and common areas that feature space to work and socialize and full-size video walls. Rooms may have smaller square footage totals, but the Wi-Fi is free.

Ultimately, we are seeing more select-service brands incorporate unique design and experience-driven offerings, providing a boutique, lifestyle feel. Although not exclusive to the select-service segment, JLL has seen a 98 percent increase by room count between 2014 to 2018 in parent-brand-affiliated lifestyle rooms. The sense is that lifestyle-driven concepts will maintain their popularity and be factored into new brand launches.

What’s key to remember is that regardless of hotel asset class, the brand of a hotel must be defined. If owners and operators understand what differentiates their product and what audience they are trying to connect with, they are much better positioned for success. 

Andrea Grigg is executive VP and head of North America Asset Management for JLL.