Mr. Habeeb

Guest Service / Customer Experience Mgmt

Quasi-Service Hotels Carving Out a New Niche

The Sweet Spot

By Robert Habeeb, President & Chief Executive Officer, First Hospitality Group, Inc.

There are growing numbers of quasi-service hotels that are carving out a new niche between select-service and full-service properties. Select-service hotels have been a hot hotel industry segment for several years now. From new concepts to new developments, it has established itself as a clear front-runner in the hotel category horse race. That being said, a recent uptick in full service hotel development clearly shows that segment remains vibrant, as well.

But, what's interesting is that the lines have become increasingly blurred between what we as an industry see as the various types of hotels all together as more and more hoteliers look to be focusing on an approach that falls somewhere in between select- and full-service hotels. These properties occupy a category that has not yet been formally named, but they are select service by brand nature, while also featuring full-service components. This hybrid concept, which some are calling quasi-service, often relies on a standout restaurant or dining feature to deliver some of the experiential punch and luxurious elements typically associated with full-service properties, and to help establish a memorable and defining sense of place. Whether it is a rooftop bar, an outstanding lounge area or a creative and dynamic drinking or dining space, the result is a hospitality experience that may not be full service, but instantly stands out above its select-service competitors.

A New Generation

The Hilton Garden Inn Louisville Downtown Hotel is a classic example of this type of unique dining feature in action. The hotel is home to the 8UP Elevated Drinkery and Kitchen (8UP), an indoor-outdoor all-glass venue that offers progressive American cuisine and outstanding views of downtown Louisville. 8UP is a 90-seat facility with an open kitchen and distinctive dark wood paneling that conveys a sense of opulence and comfort while giving diners a peek at the energy and activity taking place "backstage." Perhaps unsurprisingly, 8UP has become a regional destination that appeals to area residents as well as hotel guests: a venue that captures the culinary spirit and sense of fun that is such integral part of Louisville's identity. It is a testament to the impact that 8UP has had on the local dining and hospitality market that the restaurant was recently recognized in OpenTable's 100 Hottest Restaurants in America 2016 compilation, achieving an overall rating of 4.4 out of 5.

There are plenty of hotel management companies looking to incorporate more of these types of exciting and popular dining facilities into their hotels≠. Other examples of restaurant and bar environments that will be a part of existing properties and upcoming properties currently in development across the Midwest include an open-air rooftop bar and eatery in what was formerly the Toledo Grand Plaza Hotel. Opening in spring, as a Renaissance by Marriott, the hotel's distinctive dining rooftop space will offer spectacular panoramic views of the Maumee River and the Toledo skyline. Rooftop bar and lounge space is also in the works for a new dual-branded hotel opening in early 2018 in a mixed-use development in the Illinois Medical District, and for the world's first tri-branded Hilton hotel complex at Chicago's McCormick Place (on track to open late 2018).

Additionally, a creative new hotel property on Chicago's iconic Navy Pier, which will feature two full stories of dining space and at least one full-service and high-energy restaurant, is scheduled to open later in 2017.

The rooftop bar seems to be the popular choice for many new hotel properties. Rooftop bars are inherently exciting and offer something new and different that few traditional drinking or dining spaces can match. The drama of the rooftop bar, the aesthetic and experiential power of a spectacular view, and the corresponding sense of exclusivity and luxury that comes with a space that often has its own dedicated elevator just to get to it has helped make the rooftop bar concept an extraordinarily popular choice for hoteliers and guests alike.

Why Now?

The interesting piece of all of this is not so much what is happening, as it is why it is happening. What factors are behind the rise of the quasi-service hotel trend we're seeing? Part of it is the logical result of an industry that has become more savvy and more sophisticated when it comes to F&B. Hotel owners and operators have come a long way from the chain-style dining options and generic bars and restaurants that were so common 10 to even 20 years ago. As the industry has evolved, hoteliers have recognized the value of a great dining experience, and they have become better at delivering that experience in ways that are both appealing to guests and consumers and-critically-profitable and sustainable for the hotel. This new generation of bars and restaurants are not loss-leaders, they are dynamic sources of revenue, even before you factor in their appeal and their destination-making status. Operational efficiencies and growing numbers of hotel professionals who specialize in F&B have made this one of the most creative and fastest-growing segments of the industry.

Of course none of that enhanced expertise or improved efficiency would mean much if not for the biggest reason of all for the growth of creative and compelling F&B elements: the growing consumer demand.

Hotel owners and operators have recognized the importance of appealing to guests wants and needs as they evolve, and the direction of that evolution has been clear for some time now. Consumers crave more value out of their hotel investment-and they want more experience. The influential Millennial demographic is leading the way in that respect, as they are willing to go out of their way and even pay more for a unique and defining "extra" that makes their stay more comfortable, more enjoyable, and more memorable.

The distinctiveness and differentiation that a compelling and experiential dining element can bring to a hotel becomes even more important when you consider the fact that room products have actually been trending in the opposite direction: becoming more standardized and less of a differentiator than in the past. Consumers are voting with their dollars, and what the average consumer increasingly wants is a basic clean and comfortable room paired with a high-level connectivity and outstanding F&B options.

The Sweet Spot

As a great many experienced hotel professionals can attest, identifying the quasi-service "sweet spot" that characterizes this new influx of hybrid hotels can be more of a challenge than it seems on the surface. In some ways, the popularity of the concept has become a liability, as there is no shortage of industry professionals who seem to believe that building a rooftop restaurant, bar or lounge is simply a matter of getting some furniture up there. The reality is far more complex. The logistics alone can be formidable-not every property is a good fit for such a feature-and there is much more that goes into a successful rooftop drinking or dining feature than meets the eye. A great menu and an appealing list of drinks is just one of the pieces to the puzzle. Like all great entertainment spaces, you need to create and maintain the right aesthetic and the right environment, and you need talented and experienced professionals running the place.

Consequently, proven professionals in this space are in high demand, and growing numbers of hotels are connecting with experienced operators with a proven track record of establishing and maintaining these facilities in a way that prioritizes the guest experience and maximizes value. The creativity, talent and specialized expertise that a proven F&B operator can bring to the table can help a quasi-service hotel establish its own distinctive identity in the marketplace. The whole notion of a hotel being memorable is predicated on the idea that there is something unique and distinctive about the space. An enjoyable meal is unlikely to be as memorable as the same meal in a dramatic and engaging environment like a rooftop bar. Creating that unique identity is not always easy, particularly for properties that may already be pigeonholed under a brand umbrella in the eyes of the consumer. It takes time, expertise and marketing horsepower-along with no small degree of guest engagement.

The concept of quasi-service may actually be beginning to blur the lines between different hotel segments-both conceptually and linguistically. It will be fascinating to watch going forward if the seeming success of the quasi-service concept makes traditional categorization obsolete-or at least less meaningful-and how those labels affect (and are affected by) consumer expectations and preconceptions.

No matter what we call these hotels and where we draw the lines between different service segments, the integration of creative and compelling F&B features is almost certainly here for the long haul. Consumers appreciate the familiar simplicity and convenience of select service paired with the appeal and excitement of a great dining and/or entertainment feature. And hotel owners, operators and investors are understandably drawn to the concept's ability to drive traffic and boost revenue, serving as a sustainable source of interest and income that helps their property stand out in a crowded and competitive marketplace.

Robert Habeeb has more than 25 years of experience in hotel, resort and food and beverage management. He successfully operated hospitality businesses in virtually every aspect of the industry. He served as the chief operating officer of the U. S. resort subsidiary of Londonís Rank Group, PLC, where he was responsible for a multifaceted portfolio of hotel, restaurant and leisure businesses. Mr. Habeeb joined First Hospitality Group, Inc. in 1997. In 2015. He has won a series of awards, including the Illinois Hotel Association's Hotelier of the Year Award and Global Hotelier of the Year. he was promoted from president and COO to president and CEO. Mr. Habeeb can be contacted at 847-299-9040 or rhabeeb@fhginc.com Extended Bio...

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