ST. PAUL, Minn. — For AmericInn, 2015 was a record-setting year. At the company's annual brand conference, held this year here in St. Paul, company president and CEO Paul Kirwin celebrated the growth of AmericInn's systemwide revenue to $287 million, alongside 4-percent growth in revenue per available room and occupancy that reached an average of 57 percent across all of its hotels.
Even more importantly, the company has begun to investigate development options abroad. The midscale hotel chain has 200 locations across the United States, and while new construction and conversions are a priority for AmericInn in 2016, the company also has its sights set on its first developments in the Middle East and Southeast Asia by way of a new development team stationed in Dubai and Singapore.
But if Kirwin was clear about one thing during his opening address to the brand's owners and operators, it's that he likes setting records and wants to continue the trend. The problem, from his perspective, is that in order to continue to best expectations, AmericInn needs to continue to evolve to stay relevant and successful.
"Let's not savor this success for too long," Kirwin said. "2015 is history. It's time to set our sights on the future."
Fortunately, Kirwin has a plan, and it hinges on five major factors that affect the industry today and will continue to influence it tomorrow:
1. Online travel agencies
Just last week we reported on Hyatt's new strategy to drive direct bookings by offering direct discounts, and Kirwin said that eventually AmericInn will follow the same route. This is important because hotels are dead set on using this strategy to circumvent the lockdown online travel agencies have on consumer attention; Kirwin said travelers believe they can find cheaper rates on OTA sites. The bottom line is that this strategy may pay off today, especially because it is legal within the rate parity contracts signed between hotels and OTAs, but operators need to pay close attention to how OTAs react to this technique.
Regardless, loyalty programs continue to prove to be a reliable attractor for consistent bookings. To crunch the numbers, 8 percent of AmericInn's loyalty members qualify for "elite" status, but those 8 percent account for 25 percent of the company's revenue, making those customers costly to keep and even more expensive to lose.
As the largest generation in American history, Kirwin recognizes that millennials carry extensive buying power as they are employed in greater numbers. However, Kirwin also said the millennial fixation with home-sharing services such as Airbnb have legitimized them as a threat, and hotels need to rely on their service and hospitality as a silver bullet. He urged those in attendance to become involved in local and national advocacy groups, such as the American Hotel & Lodging Association, to ensure home-sharing services are abiding by the same rules as hotels in order to level the playing field.
"We must focus on the fact that consumers choose hotels over Airbnb because of service," Kirwin said. "We have a bright future with millennials because of this."
"Mobile is here, and it's changing how we live and work more than we could have ever imagined even just five years ago," Kirwin said. And he's right, with more guests booking via mobile than even on a computer, AmericInn is taking great strides to stay abreast of mobile developments and anticipate changes in the market, and is specifically working on new technology to allow its hotels to interact directly with guests via text before, during and after their stay.
"The texting phenomenon is going to completely dictate how we communicate with guests," Kirwin said. "Also, bandwidth costs are only growing higher and higher."
Mark Masuda, VP of marketing, sales and distribution for AmericInn, said recent studies show travelers book their trips in an average of 50 "micro moments" rather than sitting down to plan it out all at once, elevating the importance of the mobile experience even higher than previously anticipated.
"People have their devices with them no matter where they go," Masuda said. "We are ramping up our marketing across social media and getting our information out there."
The industry is poised for a downturn, but the biggest softening happening right now, according to Kirwin, is in corporate travel. However, just as companies are being conservative with their group travel plans, favorable gas prices and high employment means leisure is expected to remain strong through the summer, meaning it's high time for hotels to lean on rates.
"It's clear the road to higher profits is through increased ADR and strong revenue management," Kirwin said. "Your hotels are full on summer weekends, so focus on how to lift ADR in the coming peak season."
To help with this, the company invested in a digital "Burst" tool to maximize ADR and predict periods of high occupancy. "I'm confident it will make for a strong summer season," Kirwin said.
5. Product improvement plans
If hotels are raising rates, they need to justify them. This is where PIPs come in, with select major upgrades planned for AmericInns across the country, including new granite bathroom vanities and automatic entry doors, which Kirwin said have translated into improvements in online reviews across every property they have been implemented in. The company also commissioned a consultant to improve its breakfast program, which determined consistency of delivery and service are key.
"The customer experience continues to grow more expensive, and they always ask for more, but that's the circle of life in the hotel business," Kirwin said. "We need to reinvest and grow, because the world around us is changing at a dizzying pace."