PHOENIX—The battle for the niche is on, at least according to a panel of hospitality leaders giving their "View from the C-Suite" during The Lodging Conference held here this week at the Arizona Biltmore, A Waldorf Astoria Resort.
The industry may be gradually growing desensitized to large-scale portfolio acquisitions, what with the number of hotel brands changing hands in the past few years and the biggest names in hospitality acquiring single-segment leaders to plug the holes in their brand offerings. However, Greg Mount, president and CEO of RLH Corporation, said there still are a number of opportunities out there for future purchases, particularly at the regional level.
In fact, RLH Corporation recently completed the acquisition of Wyndham Hotels and Resort's Knights Inn brand in April. Mount said Wyndham likely decided to drop the brand partly as a result of high degrees of consolidation. Industry observers might surmise with so many brands under one umbrella, it isn’t always feasible to support all of them in a meaningful way.
“We recently reduced our number of brands from 12 to nine,” Mount said. “We saw [Knights Inn] as a brand that fell off its ledge a little bit, and gave it a new rebirth.”
According to Mount, the size of an organization is no longer as great a factor in how much “shelf” space it can occupy because data giants such as Google now control who is seen in the marketplace. Instead, it’s an organization’s ability to differentiate and occupy as many corners of the shelf as possible.
“Google has 90 percent of the search traffic in the world,” Mount said. “If Google wants to put you out of business, they can. So as big as some of these acquisitions have been, it’s still about understanding how to leverage that and where those consumers are going.”
Ken Greene, president, Americas at Radisson Hotel Group, said the impetus behind brand acquisition is no longer scale, but the ability to fill customer segments. Having multiple brands is good, Greene said, but having too many brands in the same segment is a waste.
“If you define a shelf as a segment, having a lot of brands is good,” Greene said. “Having a lot of brands under every segment is not good.
Behind the Bandwidth
Introducing new technology to both the front and back of house remains a priority for hoteliers, but only if it can be effectively deployed. Greene pointed to Radisson’s Emma, a unified system designed to encompass all technology platforms that run a hotel, as one such innovation that the industry needs going forward.
However, Hitesh Patel, the current chairman of AAHOA and president of Capital City Hospitality Group, said keeping pace with increases in bandwidth remains a pressing issue behind the scenes.
“If you don’t have the bandwidth, your technology is useless,” Patel said. “With labor costs rising, technology is one area where we need to focus. But we have to have that infrastructure in place to make sure we are using technology as we should.”
As is common, Airbnb emerged as a topic, albeit toward the end of the discussion. Keith Cline, president and CEO of CorePoint Lodging, said the hospitality industry welcomes additional competition that drives innovation within the industry as long as companies like Airbnb “play by the rules,” by now a familiar sentiment among hoteliers. Cline said it is most important to get a grasp on distribution concerns as they relate to Airbnb, and to better understand how to navigate the home-sharing market as it evolves.
“Around that conversation for the battle for distribution, that’s all about honing the guest experience,” Cline said. “Regardless of where your distribution is coming from, it’s up to us to hone that.”
Thomas Magnuson, CEO and co-founder of Magnuson Hotels, expressed interest in shopping his hotels across home-sharing platforms.
“We would love to distribute across Airbnb; it’s a low-cost model with great reach,” Magnuson said. “They are here to stay, and I expect soon they will be at the table here with us. I tend to love any company that breaks the chains on a lot of traditional structures. When that happens, everyone has to respond differently, and it opens up the playing field to a lot of different competition.”