Luxury Wars: Hospitality Competitiveness and Globalization in the Luxury Segment
By Mario Candeias General Manager, Espinas Hotels | September 28, 2014
As we all know, there's intense competitiveness in every segment of the hotel market and one way to assess that is the increased segmentation brand conglomerates are implementing, rolling out new brands at specific price points to communicate with better identified "slices" of the market (note for example the "re-slicing" of the Ibis brand into 3 brands, now including Ibis Styles and Ibis Budget, in a segment that the market thought as very well segmented already. Or look at Aloft, as a sub-form of W Hotels). Supply goes hand in hand with demand and new supply tends to adapt to and even generate new demand.
There is a bottom to competitiveness in the lower budget and economy segments, and the end of the road there would be ADR zero (don't try it, please…). Convenience, location, cleanliness and limited service seem to cut it for this side of the spectrum. Oh yes, and standardization of product, hard negotiation skills with suppliers and permanently aggressive cost-cutting.
Rolling out new brands, wether as extensions of previous brands or isolated, is also a way to fight against obsolescence, keeping vibrancy in the portfolios, visibility in the marketplace and connectivity to an ever more dynamic demand profile and an ever sharper competition. And to keep investors and stock markets happier, of course.
In the top end of the market, the struggle is even fiercer. In terms of rates, the sky no longer seems to be the limit, the warfare is intense and the weapons used to raise them are ever more potent. News on ever higher rates are abundant (a recent famous example is Miami, where local hoteliers publicly stated that there seemed to be no ceiling to rates there… well, let's see for how long…) and even rankings of the most expensive hotel rooms and suites are now somewhat frequent and newsworthy. Higher rates are also a means to a higher positioning and market command and dominance .
In the Luxury Segment, Striving for Supremacy is No Easy Fight