2010 U.S. Hotel Chain Survey: Hampton Nearly Runs Table, Captures Midprice Category
Hampton Inn this year strengthened its position at the top of the U.S. Hotel Chain Survey's midprice tier, improving its overall score with a near-sweep of every criterion.
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The brand, the largest in the Hilton family, also increased its lead among its competitive set. La Quinta Inn & Suites also significantly improved its score from 2009, moving from eighth place to second. InterContinental Hotels Group's Holiday Inn Express and Holiday Inn and Marriott's Fairfield Inn rounded out the top five.
Phil Cordell, senior vice president of brand management for Hampton and Hilton's global head of focused service brands, said the midprice tier benefited from sitting on the "sweet spot of value" during the economic downturn. While 2009 occupancy dropped at Hampton year over year, average daily rate remained relatively steady, he said.
"It's like the consumer who used to shop in an upscale department store who now shops at Target," Cordell said. "Last year was the most challenging year our business has ever recorded, but we had Hampton's fundamental cores of position and value."
Even with rate deterioration from other tiers putting Hampton on an equal rate level in some markets with upscale or even upper upscale properties, the brand still resonated with business travelers because its rate includes add-ons that come with a charge at upper-tier hotels, he said. "The actual rates may be the same from all segments to some degree, but if I can be provided high-speed Internet for free at a midscale property, why should I pay for it at an upscale property?" he said.
La Quinta CEO Wayne Goldberg said his properties are seeing both new business travelers who have traded down from upscale tiers as well as more travelers from companies with whom La Quinta had established relationships but now mandate travel to the midprice tier. "These are companies that are saying, rather than stay in six hotels that are full-service on the upper end, now they're mandating that they stay in three midprice without food and beverage options," he said.
While Business Travel News stopped differentiating between midprice with and without food and beverage for survey purposes several years ago, industry research firms still measure the tiers separately. The chains without dedicated F&B offerings, such as Hampton and La Quinta, generally are outpacing those with F&B, said Jan Freitag, vice president of global development for Smith Travel Research. The midprice without F&B tier in 2009 actually achieved a higher average daily rate than did the with F&B tier, and the midprice with F&B tier was the only one to see a supply decrease last year, he said.
The hotels without dedicated restaurants also enhanced their breakfast offerings. Hampton, for example, is bringing waffles to all of its hotels this year, Cordell said, and its offerings were sufficient to earn it the tier's top food-quality score.
"Road warriors are choosing the midscale without food and beverage brands, and chances are they're looking for Starbucks for breakfast, Chili's for lunch and T.G.I. Friday's for dinner," Freitag said. "They need a clean room, Internet and some reward points, and that's what sells."
To that point, Hampton has spent the last several years upgrading the beds, showers and entertainment offerings in its rooms. "Hampton has always been a leader as it relates to physical product," Cordell said. "It shows as we see one or two of our largest competitors going through a brand refresh now."
La Quinta, meanwhile, has invested significant resources into its Internet service, Goldberg said. "It's a major requirement to have high-speed, but today, you really need to provide consistent high-speed with bandwidth that delivers capability," he said. "If you go back a few years, we could have been an innovator and spent millions, ending up with a platform and solution that is obsolete today, but we combined some innovation ability with the ability to adapt quickly."
The Holiday Inn brands are nearing completion of their own brand relaunch, including better bed and bath products, better exterior lighting and signage and removal of properties that do not meet brand standards. Gina LaBarre, IHG's vice president of brand delivery for the Americas, said the brand has relaunched more than 1,800 hotels globally, and following property removal, about 40 percent of the brand is now less than 10 years old.
While the midprice tier faces supply growth declines, they are not the same level as the upper tiers, Hampton's Cordell said, as midprice hotels often can be financed through local banks, rather than the large banks that are reluctant to finance large hotels and resorts. "We're going to see declines in development this year, but not fall-off-the-cliff declines," he said.
Hampton plans to open 80 to 100 hotels this year, compared with 150 in 2009, Cordell said. The brand is focusing on urban markets, such as Chicago and Manhattan, as well as its first hotels overseas in Europe.