New Hotels for Millennials?

The Diplomat, Hollywood, Fla., a Curio by Hilton property

By Suzann D. Silverman, Editorial Director

All eyes are on Millennials these days, and hoteliers should be no exception. With their focus on location over brand, they’re going to change hotel strategy in the next few years, declared James Wiseman, president of Margaritaville Development, during the hotel panel at the National Association of Real Estate Editors 2016 Real Estate Conference last week.

Generally speaking, that means more experiential brands and a broader menu of options, allowing for greater flexibility to customize at the property level.

Indeed, the new trend toward “soft brands” represents a good fit for their preferences, according to Peter Nichols, national director of Marcus & Millichap’s national hotel group. That approach involves a focus on the local property, with the branding present but secondary, listed in smaller type, and the design offering more of a unique feel, Nichols described. He listed Curio by Hilton as an example of such flexible lifestyle brands.

Reflective of their work and living habits, Millennials also eschew the larger bathrooms that have been making their way into newer properties, instead favoring more gathering places in the lobby areas, noted David Songy, CEO of Songy Highroads.

But Millennials are not the only travelers, and Nicholas Massad Jr., president & CEO of American Liberty Hospitality Inc., believes traditional hotel rooms will always be popular.

Meanwhile, hoteliers are struggling to find the right balance between creation of new brands to grab market share and overbranding in any given market. One solution has been shared hotels, which provide financial savings (potentially around 20 percent) and improved operating efficiencies. Terming this a good way to combine select-service hotels in particular, Massad pointed to a Hampton Inn-Homewood Suites situation, where the two hotels share everything but their breakfast areas, even being operated by the same general manager. Two to three years ago, he noted, two such brands wouldn’t even have shared a front desk.

Corporate-level consolidation is likely to come in the form of larger companies buying boutique brands, Nichols predicted.