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Hotels/Lodging: Check-out Time

Innovation & Rising Rates

Hotels are redoing their rooms, lobbies and even restaurants to appeal to tech-savvy travelers. However, the changes come at the cost of higher rates and prices, and hotels continue to add hidden fees to the mix.

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Wyndham

If you look for a hotel room in 2013, you should prepare to be surprised in pleasant—and not so pleasant—ways.

In 2012, U.S. hotels sold at least 1.1 billion rooms—a record, according to industry tracker Smith Travel Research (STR). The outlook for 2013 is equally robust.

The good news is that hotels have been on an unprecedented renovation spree. Consumers now will find modern designs in hotel rooms, bathrooms and lobbies, such as more-open floor plans, regardless of the price of the hotel room. Meanwhile, generic hotel restaurants are being replaced by food options that include casual fare that’s served in different places, such as a lobby lounge.

However, these welcome renovations have worked to drive room rates higher in many locales, and hotels have used the boom as an opportunity to make even more money. The result is that hotels are trimming the value of loyalty points and getting bolder about charging fees for goods and services that aren’t included in the daily rate.

From luxury urban hotels to budget chain motels, when it comes to today’s lodging, you have to pay to play.

NEW LOOK. U.S. hotels will renovate a record 400,000 rooms in 2013 and a total of 1.2 million over a 3-year period by the end of 2014, according to Bruce Ford who is a senior vice president of industry tracker Lodging Econometrics. What can you expect as these hotels complete their transformation? A focus of many makeovers has been to incorporate power outlets all over the hotel—in each hotel room, particularly next to the bed, and in the lobby—for gadget-craving customers. Hotels also are adding outdoor areas and expanding their bar space.

This mix is particularly evident in new chain hotels—Aloft, which opened its first hotel in 2008; Hilton’s Home2 Suites, which started in 2011; and CitizenM in Europe, which began in 2008. The formula is prevalent, too, in older chain hotels. For example, the midpriced Country Inns & Suites is abandoning its traditional country image for a European style that includes an open floor plan in the lobby and an outdoor patio that has a fire pit and chairs.

Even budget chain hotels where customers can expect to pay typically less than $70 per night are sprucing up. Choice Hotels’ 400-location Sleep Inn chain is about one-quarter of the way finished with giving its hotels more-fashionable bedding (think: coordinated bed scarves) as well as sleek furnishings and ergonomic chairs. The 350-location Red Roof Inns chain is about halfway through renovations that are aimed at making its hotels modern. That means flat-panel TVs and faux-wood flooring, among other changes.

Click chart above to view full presentation

Click chart above to view full presentation

Nowhere is the facelift more apparent than where hotels serve food. Today, it’s increasingly common to walk into a hotel and find a lounging area near to the lobby where you can order coffee, tea, a salad or a sandwich and log on to free Wi-Fi service. In some locations, you might place your order on a touch-screen table.

“Customers want to live their life at home while on the road,” says Jim Abrahamson, who is the CEO of Interstate, which manages about 350 hotels that are under multiple brands and price ranges.

THE RIGHT MENU. Revenue from restaurants, lounges, room service and catering decreased in 2008, says Robert Mandelbaum, who is a research director at PKF Hospitality. In fact, revenue remains down even though room bookings are at record highs, he says. To regenerate that revenue, hotels across the price spectrum have experimented with changes not only in the food that they serve (read: healthful and sourced locally) but also in how it’s served.

Hotels always have provided vending machines or even kiosks where a consumer might grab a quick bite, but a growing number of hotels now are adding fast-casual restaurants. Hilton in particular is making a push into fast-casual restaurants. It launched Made Market in its Doubletree by Hilton hotel in Tulsa, Okla., in January 2013.

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