Select-service hotels may not have a swanky spa on premises or a restaurant commandeered by a big-name chef, but what they do have is a steady stream of clientele and a reliable business model — and that’s nothing to balk at.
From an occupancy-demand perspective, they’re performing well above industry norms,” says Brian Stanford, national managing director of Toronto-based PKF Consulting, of the highly desirable segment. “Despite the fact the average daily rate (ADR) might be a little below the average, it’s well above limited-service segments, and, in a lot of markets, select-service hotels can command a price well within five per cent of the full-service asset in their own system,” he says. “They generate good demand and a good top line for the hotel operator.”
According to PKF data, occupancy in select-service hotels (brands such as Marriott’s Courtyard, Fairfield Inn & Suites, Hilton’s Garden Inn and IHG’s Holiday Inn Express) grew from 69.6 per cent to 70.9 per cent from 2013 to 2014, with an ADR of $130.95 to $134.64, respectively.
Select-service hotels, which are typically located on the outskirts of the city, are less expensive to develop and to run than full-service. “You don’t spend as much to build them, and they’re pretty operationally effective, so they have a strong appeal to hotel owners and developers,” says Stanford.
Mark Fraioli, SVP with San Francisco-based JLL’s Hotels & Hospitality Group, spoke about the segment at the New York University International Hospitality Industry Investment Conference last year. In a recent story by Cleveland-based Hotel News Now, Fraioli extolled the select-service model itself, “specifically, the clarity of the expense profile and the margins these properties produce,” he said. Rajiv Trivedi, EVP and chief development officer of Irving, Texas-based La Quinta Inns & Suites agrees. “The segment does better [than others] because of the low cost of construction and operations,” he says. As for guests themselves, they appreciate the no-fuss character of these hotels. “They know they’re going to get a consistent product at a good price,” adds Stanford.
Predictable as they may be, that doesn’t mean select-service hotels are dull. If anything, they can provide an exacting experience for the traveller. That’s the goal at the Quebec City-based Le Germain’s six Alt Hotels across Canada, which offer an “innovative no-frills-chic concept combining modern design and eco-friendly features at the same affordable rate, every day, all year round,” according to the company’s tagline.
But first, let’s lose the select-service stigma, which is a misnomer, says Liane Reeves, GM at the chain’s newest hotel, Alt Winnipeg. “I like to call it essential service, rather than select- or limited-service, so the guests receive everything they need for their stay but nothing over and above that,” she says of the 160-room, 10-storey hotel, where the fixed rate — in keeping with the other Alt properties — is $149 a night. “You have to concentrate on certain things rather than on everything a five-star hotel would provide,” says Reeves. “If we provided everything, we wouldn’t keep our rates down.”
While there may not be a valet or a spa, Reeves emphasizes that the essentials, from front-desk services to housekeeping, are executed to perfection. It’s all in the details. For instance, the hotel’s smartly packaged “Altcetera” grab-and-go snacks are displayed in an inviting, slick showcase. While guests can pick up the usual suspects — a Coca-Cola or a Mars bar, say — regional snacks make the experience special. “We offer lovely, local touches. Our guests are getting the products Winnipeggers love,” Reeves says, noting an alliance with area suppliers means guests have access to yogurt and granola or juices unique to Winnipeg. As for the rooms, these are simple, bright and clean and feature fresh white linens — Egyptian cotton and goose-down comforters, to be specific — for a modern look.
Reetu Gupta, managing director of The Gupta Group, (a newly launched brand by the Markham, Ont.-based Easton’s Group of Hotels, where she serves as VP) is another hotel professional who would like to lose the select-service distinction. “I prefer affordable luxury, which has a nicer ring to it,” she says. And don’t call the Easton’s hotels no-frills. “That makes it sound like a cheap place to stay,” she laughs, noting her portfolio’s Hilton Garden Inns even offer a fitness room and a pool — hardly no-frills.
At the Easton’s Group of Hotels, the select-service segment has been such a strong performer that earlier this year it opened a hybrid property in Markham. “The hotel is a dual-branded Marriott — Courtyard by Marriott and TownePlace Suites all under one roof. It’s quite fantastic,” says Gupta. “The Markham area really needed this type of service,” she says of the property, which is attracting business travellers, whether they’re consultants working on construction projects or extended-stay visitors involved in the Pan Am Games. The rooms’ kitchenettes are a big draw. As it’s heavily geared to the business set, the hotel also has a Starbucks located in the lobby. It’s a small detail, but Gupta says guests love it.
While the hotel doesn’t have cushy extras, like a spa, it meets the discerning needs of a customer who has homed in on what matters: value for his or her hard-earned dollars. “A lot of customers are focused on value as opposed to price,” says Gupta. “Maybe a couple of years ago, people were really looking for cheap rooms, and they didn’t care where they stayed. Now, in the age of millennials, they’re looking at value, so they’ll pay a price as long as they can get the most they can.”
Competitive rates aside, Gupta says value comes down to spiffy hotel rooms with smart, contemporary style. The interior design of the queen or king guestrooms, for instance, can rival the best of them: modern grey platform beds, cool watery blue abstract wallpaper and modular case goods that lend panache and make it clear the select-service model can give other segments a run for their money. Additionally, Gupta notes guestrooms are also smartly rigged for today’s wired guest. “Those with three or four devices can enjoy super-fast Wi-Fi on all of their devices at once — that’s not even always offered at luxury hotels,” she says.
They’re economical to build and staff and boast competitive interior design, it’s no wonder hotels in the select-service segment (or whatever you fancy calling it) are leading the pack.
Volume 27, Number 4
Written By: Iris Benaroia