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Why Hotels May Want To Be Polarizing

With so many new hotels popping up in Chicago over the past few years, operators may need to work harder to differentiate themselves from the competition. The days of simply presenting relatively bland, but well-made, hotel product may be behind us, especially as millennials and Generation Z have made it clear they demand real experiences from hospitality providers, rather than just a place to sleep for the night. That kind of demand has already transformed the workplace, and the transformation of hotels is underway.

In the face of different demands from different generations, to craft a brand that will stand out and bring in guests, it may pay off to be fearless.

Skender Chief Design Officer Tim Swanson, Marriott International Vice President, Distinctive Select Brands, Toni Stoeckl and Atomic Hospitality’s Toula Georgakopoulos

“It’s OK if it’s not for everyone,” Marriott International Vice President, Distinctive Select Brands, Toni Stoeckl said at Bisnow’s Chicago Hospitality Summit.

Since older travelers typically have very different expectations from hospitality providers than younger generations, a successful hotel may elicit very passionate responses, both positive and negative.

Marriott touts its Moxy Hotels, now located across the country, including ones in Chicago, New York, Washington, D.C., and New Orleans, as millennial-friendly and “made so you can play.” It promises guests jam-packed schedules, filled with games, parties and a social scene, an atmosphere that probably would not appeal to someone who just wants to put a “do not disturb” sign on the door and get a good night’s sleep. 

“Moxy is one of our most polarizing brands, and that’s a good thing,” Stoeckl said.

The kind of amenities provided by Moxy may be the future of hospitality, but Skender Chief Design Officer Tim Swanson cautions against nickel-and-diming guests for all the little perks, especially for ones many people, especially millennials, now consider a regular part of their home lives.

“I should just be able to run my Netflix on a screen, and get the things I’m used to,” he said, summing up the attitudes of many younger guests.

The cost of providing guests with free cocktails on arrival makes a minor impact on a hotel’s bottom line. But it can help make a hotel’s public spaces into areas with buzz and activity, and that can be worth far more than raking in a few dollars for a drink.

“That has an impact on your room rates,” Stoeckl said. “Don’t just focus on the commodity aspect.”

Bisnow's June 26 Chicago Hospitality Summit

But don’t give away too much free food and drink; hotel bars and restaurants can create buzz and atmosphere for hotels, and strongly impact the bottom line.

“Who would have thought 35 to 40% of your revenue would come from food and beverage,” Rebel Hospitality principal Gene Kornota said.  

Kornota’s company runs the ACME Hotel Co. in Chicago's River North neighborhood, a former motel gutted and transformed into a high-tech boutique hotel, and he has seen the impact the right kind of amenity can have. In 2017, it opened the Bunny Slope, a hot-tub bar in the basement that generated 2 million hits on Buzzfeed when it opened, he said.

The basement venue is more active then ever, and hosts dozens of events each month. It has helped make the hotel a gathering space for people who aren't even guests of the hotel.

Kornota said that helps illustrate a truth about today’s hospitality industry. The actual rooms you provide don’t change much, even if there is a significant difference in prices, and potential customers will likely evaluate your property using different criteria.   

“It’s about what happens at the bar.”  

Expanding the amount of space dedicated to amenities could be an expensive endeavor, and nearly every panelist at the summit raised concerns about rising construction costs, especially in the Chicago area, where commercial property is widely expected to be taxed at higher rates. 

Fulcrum Real Estate and Construction Consultant Mitch Lund said it is time for developers to cut costs by embracing new ideas such as modular construction.

Although most people think this technique is best suited for multifamily development, it is also a perfect fit for hotels, he said, largely because individual rooms are essentially the same.

Using modular units, prefabricated in an off-site factory, and then quickly assembled on-site, will drastically cut down on construction times and costs, leaving more funds available to create the massive amenity spaces guests now demand.

Marriott International has already embraced the trend. Mortenson Construction used the technique to build the seven-story citizenM Hotel in Seattle, and said it cut four months off total construction time. 

Hopefully, 2019 “will be known as the year that modular construction disrupted the hospitality industry,” Lund said.