erc

It's all about the deal - hotels as hedge funds

Discussion created by erc on Nov 27, 2013
Latest reply on Nov 27, 2013 by erc

http://online.wsj.com/news/articles/SB10001424052702303281504579222492972577848


Given the strong travel recovery (with the exception of large group conferences and a few individual markets like DC) the hotel industry has been able, short term at least, to turn the operating paradigm of "it's easier (and cheaper) to keep a customer than to find a new one" on its head. With the flow of the new target audience everyone is drooling over (millennials), the explosion of the Asian consumer, and the return of the business traveler combined with the lucrative opportunites of financial deals (new market development and acquisitions financed by historically inexpensive debt) it becomes clearer to see why elite offerings of loyalty programs have declined over the years, especially once competitors realize, "everyone's doing it". The ROI is more in how you structure the deal more than how you operate the business. The term 'operate the business' is being redefined, similarly to the successful (as defined by shareholders, not necessarily customers) transition of the airline industry. And similar to Budweiser and Miller/Coors brewing 'craft' beers, the hotel chains are eager to offer 'boutique' properties (where you pay for what once was provided before as service).

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