|By Kathleen Lynn, The Record, Hackensack,
N.J.McClatchy-Tribune Business News
Nov. 5, 2006 - The AmeriSuites hotels in Fair Lawn and Secaucus are not even a decade old, but they're both about to be completely renovated, transformed into a hip new brand -- Hyatt Place -- aimed squarely at younger travelers.
Hyatt Place is an example of the lodging industry's hottest trend: the pursuit of the Generation X guest.
In addition to Hyatt's new brand, Starwood Hotels -- best known for its Sheratons -- is adding a brand called aloft, and InterContinental Hotels is adding a brand called Indigo.
"We're seeing a lot of courting of younger travelers," said Amy Patti, a Hyatt spokeswoman. "Design is really a big part of it."
The introduction of the new brands comes at a time when hotels are enjoying record profits -- more than $25 billion this year. The industry has rebounded smartly from a downturn in travel, especially business travel, after the Sept. 11 attacks. With occupancy rates up and demand strong, hotels have been able to raise rates almost 7 percent over the past year, to an average of $96 a night.
"Our business is cyclical, and right now everyone is doing quite well," said Peter Marino, senior vice president of the Paramount Hotel Group in Fairfield, which manages more than two dozen hotels in 10 East Coast states.
The lodging industry is pouring profits into improvements. This year, U.S. hotels are expected to spend a record $5 billion on renovation, according to Bjorn Hanson, a hotel consultant for PricewaterhouseCoopers. They're adding extra-comfy beds, bigger desks so business travelers can work in their rooms and high-speed Internet access, among other amenities.
The most significant industry trend may be the introduction of contemporary brand names designed to appeal to the next generation of travelers -- people in their 20s and 30s.
A couple of steps below luxury hotels, their rates are described as "middle-market," which generally means $120 to $220, although they'll vary widely by location.
"They're trying to be more hip, urban, boutique," said Jan Freitag, a vice president at Smith Travel Research, which analyzes the lodging industry. Because they're aimed at the next generation of travelers, these hotels have to have the most up-to-date Internet connections.
"That customer is extremely tech-savvy," Freitag said. Younger hotel guests also demand flat-screen TVs that can swivel, so they can watch sports while working on their laptops.
"Generation X wants to work and play at the same time," Freitag said.
The décor in these brands leans toward warm tones, wood trims and contemporary style. The aloft brand, for example, will offer high ceilings and oversized windows, trying to replicate a city loft feel.
At the Hyatt Place hotels, the lobby will be replaced by a "gallery" that features contemporary design and, Hyatt says, "a comfortable, coffeehouse vibe." Hyatt is converting its AmeriSuites brand -- which it bought about two years ago from Prime Hospitality Group of Fairfield -- into Hyatt Places. By the end of 2007, there are expected to be more than 125 Hyatt Places in the U.S.
Starwood's aloft brand uses snappy names, such as "Train" for the fitness room and "Splash" for the pool.
These hotels fall into the category of "select service," which means they offer a free continental breakfast but don't have a full restaurant on site. However, the new brands will offer café- or deli-style food for extended hours. At Hyatt Place, for example, guests will be able to get a limited menu of sandwiches, salads, soups, chilis and pizzas around the clock.
The youth-oriented hotel brands are the cutting edge of a wider trend toward renovation in the industry. One recent example is the $17 million face-lift of the Meadowlands Sheraton in East Rutherford, a hotel that appeals mostly to business travelers. The renovation includes a new Starbucks cybercafé as well as retro-chic décor in the lobby and restaurant.
In addition, the major chains have been engaged in what industry insiders call a "bed war" for a couple of years. The new beds at most chains have pillow-top mattresses, fancy sheets and comforters, and cushy pillows.
"Everybody has put in better beds and better showers," said Jeff Weinstein, editor in chief of Hotels magazine.
"Beds in hotels are much more comfortable than the beds most people have in their homes," Marino said.
Hotels are also offering fancy TVs, high-speed Wi-Fi Internet access and bigger desks for business travelers. And once one chain adds an amenity, the others feel obligated to follow.
"If you don't continue to stay competitive, you don't get your fair share of the market," said Keith Pierce, head of the Ramada, Baymont and Wingate brands, which are all part of Parsippany-based Wyndham, the nation's biggest hotel franchiser.
Many chains target business travelers, who account for about half of lodging-industry revenues. Of course, features that are aimed at business travelers -- bigger rooms, Internet access and complimentary breakfasts -- also attract leisure travelers.
"Business travelers and leisure travelers are really the same people," Pierce said.
His company's parent, Wyndham, started out as a franchiser of mostly economy hotel brands, such as Days Inn. But a year ago, it bought the Wyndham group of luxury hotels, and is focusing much of its attention on that chain, said Wyndham CEO Steven Rudnitsky.
That's a strategy that could pay off, since luxury hotels are enjoying occupancy rates of 72 percent, well above the industry average.
"People are always aspiring to trade up," Weinstein of Hotels magazine said.
But travelers don't always have to pay luxury rates to find fancy extras any more. Guests in mid-price hotels are finding flat-screen televisions, Internet access and high-thread-count sheets. Even some discount motel chains like Red Roof Inns are adding luxe touches, such as curved shower rods (allowing more elbow room when you soap up) and granite sink tops.
Chekitan Dev, a professor of marketing at Cornell University's hotel school, calls this "amenity trickle-down."
"Amenities that used to be found in higher-end brands now are also in middle- and lower-tier brands," he said. That, in turn, pressures luxury hotels to ramp up their offerings to justify their higher rates, he said.
Overall, rates have moved up, as a result of the renewed demand for hotel rooms. Room rates are up 6.8 percent so far this year, about double the inflation rate, Freitag said.
The supply of hotel rooms is especially tight in New York City, where many rooms were converted to condos over the past several years.
"Supply [of rooms] is increasing, and so is demand, but demand is outpacing supply," Dev said.
The industry is building new hotels and motels as fast as it can, but since it takes a few years to get a hotel approved and constructed, supply and demand are likely to be out of sync for a while. As a result, hotel rates -- and profits -- are expected to stay high for at least the next couple of years.
"'Great through '08' is kind of the mantra," Freitag said.
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