As a frequent flyer living in Toronto, the city’s Pearson International Airport is a routine commute. One of the newer additions to the vicinity’s landscape has been the ALT Hotel, logo brightly illuminated atop his modest rectangular rise. Passing this structure on my return drive home via the airport expressway is a constant reminder of this emerging brand and my thoughts on how the hospitality industry will segue from the prowess of baby boomer businesspeople to the millennial traveler.
The ALT Hotel brand is a part of a new niche that also includes such soon-to-be-household names like Citizen M, easyHotel, Pod Hotel and Yotel. Catering almost exclusively to the aptly-dubbed “No-Frills Chic” audience, these brands focus on delivering minimalist product with several near universally-appealing services and all for a very competitive rate.
These no-frills brands appear to have sharpened their allure around the few top-of-mind features that matter to young, independent travelers – comfortable beds, quiet rooms, good lighting, a small workspace and free WiFi. Everything else is extraneous. The rapid proliferation of these newer brands within an overall forecast that we’ve long considered stagnant proves that there is indeed a market for these stripped-back accommodations, and that less really is more.
There are other doodads these hotels incorporate to better differentiate their brands within the budget caste. Limited, multipurpose, ergonomic furniture keeps the 200 to 300 square foot rooms from inducing claustrophobia. Self check-in and check-out are mainstays, further expediting mobility. Additives services are regularly 24-hour offerings, such as the common area lounges and cafés with their rolling fresh food selections or a gym at an ALT Hotel property. Lastly, drip pricing is a familiar practice; start with only the most elemental features to qualify as a ‘night’s stay’ then trickle in everything else a la carte.
Understanding the Modern Traveler
This genre of hotels has flourished in large part due to their strict targeting of several core demographics and psychographics lionized as the ‘Modern Consumer’ – young, smart, thrifty and electronically fluent. Let’s brush over some of the basics.
Young travelers have manifold choices to select precisely where they will stay. Oftentimes, given income constraints, price is the key determinant, and with inexhaustible online resources, it isn’t hard to be scrupulous. By eliminating features to substantially lower the price tag, these hotels streamlines the decision on two fronts to further motivate bookings; cheaper rates are easily apparent in any cross-comparison and fewer features simplify this mental balance act.
Apart from being self-sufficient, internet-savvy researchers, this cluster also spends far less physical time in their rooms (an exception being crunch-time computer work). Much like their smartphones, laptops and tablets, these travelers truly are mobile. With 3G/4G services and public WiFi carriers aplenty, the modern traveler has everything they need to stay out and about until the eyelids cave.
And why wouldn’t they? When you visit a foreign city, do you remember the city first or the hotel first? No-frills hotels aren’t fashioned to be resort-style, fit-for-lifelong-memories locales. They serve a function – give guests some shuteye – and they execute it to a tee.
The entire conceit of the capsule hotel (Pod Hotel a notable provider) is that the guestroom – or guest-closet as might be more appropriate – is designed for sleep and not lavish vacationing, entertaining, introspective soul-seeking or pampered rejuvenation. You sleep, you wake, you get ready, and then you hit the road. In Tokyo, where capsule hotels have long made their mark, it isn’t uncommon for a weary worker burning the midnight oil to rent such a room instead of journeying all the way home. Capsule hotels are typically far closer to the office, and for the convenience of purging the commute times, they are well worth the price.
Which raises another important issue: the dissolution of nine-to-five work hours. With email accessible everywhere along with tools like video conferencing and cloud-based group workflows, the modern employee or entrepreneur can fulfill their duties anytime and anywhere. And indeed, if they want to make it in this digital world, they better ready to do just that!
The notion of leaving work at the office is gone. There are more people working from home, working long, erratic hours and working from their hotel rooms (with variable flight times as a central adjunct to this). This irregularity accumulates, demanding a readjustment of the service industry still in sync with the nine-to-five doctrine. Stores are open later, banks are open earlier and hotels must follow suit. Heed the adage, “Go where your customers are,” and you’ll quickly realize that sticking to the outdated system of limited hours of operation won’t earn you any bankable word-of-mouth. In a world that never sleeps, the 24-hour hotel is king.
More Notes on the No-Frills Chic Success Story
To state the obvious, the binding force of all these progressions is the internet. It’s an essential service and providing it for free is a cardinal tenet of the modern traveler, both for business and leisure. These contemporary brands thrive in large part from their simplicity – one easy bill that includes WiFi with no surcharges.
I’ve harangued on the free WiFi issue at length in the past. So, without digressing too far into this, let me just say: the modern traveler doesn’t care about your rationale for charging; all they see is a big, separate bill for internet connectivity and it frustrates them, sometimes enough to deter a return visit. Not offering free WiFi is a great tactic for disenfranchising the next generation of consumers. No-frills means no hassle. And this straightforward approach translates to many other important considerations – too much clutter in the rooms, in-room amenities that add cost and aren’t vital, property services that are habitually underutilized.
Mind you, we are talking economy class and consumer behavior changes dramatically as we move up the stratosphere. No-frills chic hotels get by primarily on their price and the services they deem as indispensable, therein drawing a certain type of traveler – commuters, layovers, transient workers, young urban tourists, backpackers and anyone who just needs a quick snooze. For this archetype of traveler, hotels are commodities with situational convenience and competitive rate trumping loyalty to any one particular chain. Luxury is a different ball game.
The common undertones of no-frills brands also serve to reinforce the statement that a hotel’s unique expression of service is rapidly becoming the sole factor of brand differentiation. Able to carve out a healthy base of customers from a crowded space of budget accommodations, obviously, brands in this contemporary subclass are highly conscious of their core appeal. Their strategy is wholly geared around what features contribute the most towards increasing occupancy within a firmly defined demographic. The proliferation of boutique hotels follows the same paradigm but with completely different strategies and tactics.
No-frills chic is not without its drawbacks. Self check-in and check-out are fundamental points of human interaction from guest to staff. Psychologically speaking, their absence removes a critical point of ‘brand imprinting’ on the consumer as well as an opportunity to promote amenities, alleviate concerns or garner feedback. The sparse décor also operates in much the same way; nothing in the clinical furnishings to elicit a strong emotional response. Ditto for the stark lobbies; grand first impressions aren’t likely nor are they a company priority. Contextually, these are all conscious tradeoffs to keep prices down and fit the needs of their target market.
Now Think of Your Hotel
So, what’s your core appeal? What’s your primary demographic? Really narrow it down. If it’s harried business travelers and sightseeing tourists between the ages of 18 and 30, you’re in for an uphill battle as these no-frills chic abodes have already plucked prime real estate and packed each location with enough sardine-sized rooms so that the low-cost, high-occupancy model is actually viable. However, there are dozens of other theatres of war yearning for a revamp that better appeals to the modern traveler.
For application beyond economy hotels, disregard the ‘no-frills’ but keep the ‘chic’. The minimalist approach to furniture can be hybridized to more luxurious accommodations. For instance, a room’s workspace might include an extra monitor and a portable keyboard, both readily attachable to an incoming guest’s laptop, or even a standing desk. Also, what amenities can you convert into 24-hour offerings? Do you have any truly outstanding features that single-handedly command attention, like an avant garde spa, a foodie-raved restaurant, a rapid-response social media team, a rooftop bar with a view or a thoroughly resourceful concierge mobile app? If you’re lost, then spend a night at one of the abovementioned properties to feel firsthand what they are doing to earn their esteem and what you can adapt.
With the deepening diversity of choices within the hotel space, there are two general actions that stretch beyond any individual market segment.
- Continually refine and pinpoint your target consumers. What’s the purpose of your guests’ stay and what are their basic expectations from a hotel? What type of guest is your property destined to accommodate? How can your hotel better fit this objective? How this predefined consumer different from those for your competitor set?
- What works for them may not work for you. If your awareness and loyalty hinge on the quality of services you provide, then simply imitating your competitors isn’t enough. This isn’t a shotgun approach. Be very selective about what services you offer, scouring a multitude of providers to see what unique points of differentiation they add to these services. Through all the permutations, your goal is to select only the services that work for your guests and perform them to perfection.
Larry Mogelonsky (firstname.lastname@example.org
) is the president and founder of LMA Communications Inc. (www.lma.ca
), an award-winning, full service communications agency focused on the hospitality industry (est. 1991). Larry is also the developer of Inn at a Glance hospitality software. As a recognized expert in marketing services, his experience encompasses Four Seasons Hotels & Resorts and Preferred Hotels & Resorts, as well as numerous independent properties throughout North America, Europe and Asia. Larry is a registered professional engineer, and received his MBA from McMaster University. He’s also an associate of G7 Hospitality and a member of Cayuga Hospitality Advisors. Larry’s latest book entitled “Are You an Ostrich or a Llama?” is available on Amazon and Barnes & Noble.
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