“Many transient travelers draw little distinction between full-service and limited-service hotels,” says Clough. “As a result, many of these new limited-service hotels have also grabbed a share of demand from nearby, full-service hotels because they often are cheaper, better located, and offer more enticements like free breakfast and free local calls than the larger, full-service hotels in the market.”

The most successful full-service hotels are those successfully managing shifts in their marketing focus from transient to group demand, Clough adds.  As more limited-service hotels are saturating the market, this marketing shift will likely intensify at many full-service hotels in the larger metropolitan markets.

Owners and operators of full-service hotel wishing to cater to this market should evaluate many factors. HVS International’s Clough has determined the following key factors.
 

As most metropolitan markets become more developed, the complexity of marketing a full-service hotel intensifies, says Clough. For transient travelers a full-service hotel typically competes with both limited-service and full-service hotels in the immediate neighborhood.  For group demand, on the other hand, a hotel may compete with other full-service hotels in an entire metropolitan region. 

Moreover, hotels which cater to nationally based group demand compete with group-oriented hotels in other major metropolitan cities.  Often, full-service hotels will rely partly on nationally based marketing offices which deal with national associations and corporations which require meeting space nationwide.  Therefore, if your hotel relies on this national demand, it is a good idea to keep abreast of what other areas’ current market conditions are.

As more limited-service hotels are built in metropolitan markets, larger full-service hotels will likely have to rely  more heavily on group business. Compared to the transient segment, the group segment is much more complex, requiring a higher level of coordination among sales staff, the upkeep of meeting space, and a competitive marketplace which reaches beyond the boundaries of a local neighborhood.  If properly assessed, full-service hotels can continue to perform well, despite an area’s hotel construction boom.

HVS International offers consulting services in feasibility and appraisal, executive search, environmental concerns, food and beverage, gaming, technology, asset management, operations, strategic planning and investment counsel.  Offices are located in Boulder, Colo., New York, Miami, San Francisco, Vancouver, Mexico City, New Delhi and London.