Mr. Trump Jr.

Luxury Travel

Redefining Luxury for Today's Hotel Guests

By Donald Trump Jr., Executive Vice President Development & Acquisition, The Trump Organization

Co-authored by Jim Petrus, Chief Operating Officer, Trump International Hotels Management LLC

There is no question that the hotel industry has, historically, been cyclical in nature. When the economy expands, so do travelers' expectations and we find that former "nice-to-haves" become "must-haves". Astute operators are quick to respond, and the better operators actually intuit, or anticipate, the demand for more and better amenities. The reward in good times is that operators are able to aggressively move rates upwards and reap the rewards of a robust ADR.

Conversely, when the industry goes into a downturn, as we have in 2009, many operators retrench, paring, or at least tweaking, amenities and services to ensure they are aligned with the prevailing rates in their category. Although this process is as much art as science, and is characterized by a certain degree of risk, in the past it has seemed to work.

This particular market downturn is certainly more dramatic than any of us have ever experienced. It has impacted all geographies, all industries and all socio-economic classes. As a result, our industry has been handed the additional challenge of dealing with a consumer whose mindset has changed relative to buying habits. The paradigm has been broken as hotel guests rethink what is meaningful, essential and "of value" to them today. In doing so, many of the connotations associated with the word "luxury" have also been redefined.

A study by the Pew Research Center's Social and Demographic Trends showed people are trending back to basics and willing to live with less. The April 2009 survey found that about 50 percent of respondents indicated that don't really need items they once considered essential. Yesterday's necessities have become today's luxuries, with the hard times forcing many Americans to change their minds about which goods and services they now consider essential and which ones they are willing and able live without. The impact of these changes have been evident: it is now chic to be frugal. Conspicuous consumption is considered in many circles to be in poor taste. "Stealth wealth" is more apropos for these times.

The ripple effect in the hotel industry has already been significant. Yes, there will always be a demand for luxury travel, but going forward luxury may look and feel different from what it does today. The luxury hotel market which we all recognized was growing at an exponential pace in recent years is becoming reduced in size to match consumer needs. In the future, we will expect to see luxury hotels only in locations where the operating economics make very good business sense. Hotels whose economics do not make good business sense will be swooped up and repurposed by new developers and management companies to meet specific consumer needs.

For those of us in the luxury hotel sector, the reality has set in very quickly that we cannot afford to provide guests with the same set of "goodies" at a $300 ADR that were provided a year ago at a $500ADR. Like all other economic downturns, savvy operators and developers are already at work asking questions that center around the reality of what makes good business sense. For instance, is a five-fixture bath absolutely required? Will 300-thread-count duvets be acceptable over the current 600-thread count? Can a 40-ounce bath sheet be replaced with one that weighs 22 ounces? The list of questions goes on and on.

What is most interesting is that these questions are being asked not just by hotel developers and operators, but by our guests as well. As our guests alter their value system and perhaps opt for simpler luxuries and a more reasonable ADR, their opinion is ultimately the one that counts.

Donald J. Trump built Trump Hotel Collection based on the concept of providing exceptional service for guests who value luxury and have the means to pay for it. His three decades of experience as both an owner and operator has reinforced a concept of "sensibility" that resonates especially today considering our economic challenges. Despite the reality that our industry has fallen into the trap of one-upmanship and amenity creep, Donald has always believed and reinforced the simple concept that what people really want is great service provided by dedicated individuals who share his passion, drive and enthusiasm. Although there has been an ongoing focus in the luxury hotel sector on providing over-the-top amenities, Donald's view - that having the right people in place matters most of all - may seem a bit contrarian. However, it works, and it has been our focus in building our brand, and never more so than in 2009.

This view was reinforced recently when we invited an executive from Forbes Travel Guides (formerly Mobil Travel Guides) to provide a trends presentation at our Trump Hotel Collection Leadership Conference at Trump Tower in New York City. We were told that the Five-Star criterion used for evaluating service is that "Staff are intuitive, engaging, passionate, and eagerly deliver service above and beyond the guest's expectations." Likewise, we were instructed that in today's economy, guests want great service, first and foremost, and that "it's not about the free newspaper or high-thread-count sheets."

It is in times such as these that those owners and operators who study the dynamics of today's consumer and understand what is most important in making buying decisions will prevail and prosper. Perhaps this is the best time to make an investment in time and resources to be absolutely certain we truly understand how our customers define the word luxury in the value proposition and what they are willing to pay for. Armed with that knowledge, we can examine our own operations, amenity by individual amenity, and determine what is really necessary right now and what can be tossed or at least tabled for the time being.

There is nothing like a period of economic hardship to get all of us to refocus our attention on what is really important to our guests and as an industry, redefine luxuries that work in today's world. Given the choice between a five-fixture bath and the warm smile of a staff member who is truly in service to guests, we know what ours will be.

Jim Petrus contributed to this article. Mr. Petrus is Chief Operating Officer for Trump International Hotels Management LLC, the operating arm of Trump Hotel Collection. To contact Mr. Petrus, email him directly at jpetrus@trumporg.com.

Donald J. Trump Jr. is an innovator and leader in today's young business world. As an Executive Vice President at The Trump Organization, he works in tandem with his siblings Ivanka and Eric to expand the company's real estate, retail, commercial, hotel and golf interests nationally and internationally. His extensive real estate development experience, rigorous education and inherent business sense add a level of detail and depth to the management of all current and future Trump projects. Mr. Trump Jr. can be contacted at 212-832-2000. or donjr@trumphotels.com Extended Bio...

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