Experiences Take Center Stage As Hotels Work To Woo Travelers
Consumers are flocking online for everything from grocery shopping to dating, but in the real world, they are spending more of their money on experiences over material items.
Hoteliers are banking those trends are in their favor and are investing significant time and effort into creating the kind of experiences that will set them apart from the pack.
“If you study the growth over the past 15 years, the spend on experiences has outpaced things by roughly three times — that’s only going to continue to perpetuate,” Witkoff Development Executive Vice President Alex Witkoff said at Bisnow’s Hospitality Investment, Development & Management Summit last week. “Spending on the experience economy is expected to reach $8 trillion by 2028.”
As we collectively head online for most of our activities, he said, travel will become an even more precious commodity. And he pointed to Louis Vuitton Moët Hennessy’s $2.6B purchase of Belmond — which closed earlier this year and gave LVMH ownership od a portfolio of hotels, restaurants, train and river cruises — as a prime example of the value of experiences.
“Why did they do that?" Witkoff said. "To be relevant as a luxury company today, they can’t just offer their customers things."
Though most hotel owners and developers say short-term rental companies like Airbnb are not chasing after the same kinds of customers, many in the industry acknowledge the growth of the company has schooled the major players on what travelers of today want.
More and more, travelers are seeking the experience of feeling like a local, not a tourist. The local element is a key part of the offering at the first Equinox Hotel, which opened in Hudson Yards last year, said Andy Bernard, who heads development and acquisitions for Equinox Hotels.
“If you are at an Equinox Hotel, there is going to be an Equinox fitness club in the building — which has a local membership base of 3,000 to 4,000 people,” he said. “So as a hotel guest, you get to be injected into the local community in a way that you wouldn’t otherwise … Offering that local experience is super powerful.”
Virgin Hotels Chief Development Officer Allie Hope said the local flavor is part of the broader trend of guests seeking something authentic, looking for an experience that matches up to the hotel brand.
“If you experience Virgin and it doesn't feel like [Richard] Branson, people call you out,” she said. "People want experience. That’s good for us, but we don’t need to all be the same. Virgin and Equinox are very different. I think it’s [about] staying true to what we are here to develop and create.”
Panelists acknowledged setting themselves apart in a competitive environment is crucial, and many use their restaurants and bars to do it.
“The food and beverage is really primarily the experience and differentiating factor for hotels,” Scott Gerber said. His company, The Gerber Group, is responsible for Mr. Purple at Hotel Indigo in the Lower East Side and the Sunken Lounge at the TWA Hotel at John F. Kennedy International Airport.
Three decades ago, the idea of the boutique hotel was brand-new, Gerber said. Now there are thousands of them, but their rooms do not set them apart from each other, he said — the club and restaurant can make or break a hotel.
“If you can create a restaurant or bar that is difficult to get a reservation in, and you have an option to choose one hotel over another, given they are both upscale, you are likely going to choose the one with the restaurant that you want to get into," he said. "That’s been our fortunate experience.”