Hotels as Global Explorers
Joe Sharkey, The New York Times, 10/21/2007
All over the world, people are traveling internationally as never before. And major hotel chains are aggressively planting the flags of their various brands in cities and suburbs around the globe — so that a Chinese traveler who likes the Holiday Inn in Guangzhou, for example, might be inclined to stay at a Holiday Inn on a trip to Los Angeles.
The idea is to "create brand loyalty, which requires brand presence" in a global marketplace where travel is surging, said Bjorn Hanson, the head analyst at the hospitality division of PricewaterhouseCoopers. This explains, for example, why Hilton Hotels recently announced a plan to open 25 of its Hampton and Garden Inn hotels — familiar brands on American highways — in Russia and across Eastern Europe.
"The Internet and low-cost airlines have been massive enablers of travelers" worldwide, said Stevan D. Porter, the president of the Americas division of InterContinental Hotels, which, with more than 560,000 rooms in 3,800 hotels, has the most rooms of any hotel chain in the world.
Like most major hotel companies, InterContinental has a portfolio of brands, each intended to appeal to a certain segment of the market. Typically, a hotel company will have a top luxury brand (Ritz-Carlton, for example, is Marriott International's) ; a big urban luxury brand with space for meetings and conventions (Hilton Hotels' flagship Hiltons, for example); and an array of limited-service, midmarket lodging (Hilton's Hampton Inn and Marriott's Courtyard and Residence Inns). Some also have brands in the budget categories.
Thanks to assiduous marketing, most frequent travelers have a good idea what to expect from a particular brand in the United States, where there were more than 47,000 hotels with 4.4 million rooms at the end of last year, according to the American Hotel and Lodging Association. Domestic hotel profits were $26.6 billion on revenue of $133.4 billion, up from $22.6 billion in profit on $122.7 billion in revenue in 2005, the trade group says, citing data from Smith Travel Research.
That is a lot of spending, and it isn't confined to the budget traveler. As hotel companies raise their flags globally, some of the most aggressive growth is in luxury properties.
Marriott, for example, has 30 hotels throughout China representing most of its brands, including three Ritz-Carltons and three JW Marriotts, its other luxury brand. Six more Ritz-Carltons are scheduled to open in China by 2010, Marriott said.
Whether it is business or leisure travel (and sometimes a combination of the two), the biggest single travel-spending demographic group is the baby boom generation, not only in the United States and Europe but also, to a lesser extent, in Asia. This group, in turn, has spawned a generation of savvy travelers.
The oldest baby boomers are 61, with years of disposable income for travel ahead. In the United States, they grew up with parents who helped popularize the first major hotel branding success, Holiday Inn. It introduced a recognizable product and a consistent level of service in the 1950s to a market that had been served by individual (and often unreliable) roadside motels.
"In that niche, people still want basically the same experience at Exit 175 as they had at Exit 1," said Mr. Porter, whose company owns the Holiday Inn brand. At the same time, in the United States, InterContinental is aggressively expanding its top-niche InterContinental Hotels, which are generally better known abroad. InterContinental is also expanding a new, younger-market boutique brand, Indigo.
"Our market today, more than ever before, is driven by globalization," said Raymond N. Bickson, the chief executive of Taj Hotel Resorts and Palaces, owned by the Tata Group of India. Taj, established in 1903 in Mumbai, now has 49 hotels across India and 18 in other countries, including 3 in the United States.
Taj's first United States acquisition was the Pierre Hotel in New York, in 2005. This year, it acquired the Ritz-Carlton in Boston and the Campton Place in San Francisco. Taj is now looking for a property in Los Angeles.
"It's just crucially important to have a beachhead in the United States," Mr. Bickson said.
Holiday Inn, the granddaddy of all chain brands, is a quintessentially American icon. But did you know it's also the No. 1 hotel brand in China? It has 44 Holiday Inn and Holiday Inn Express hotels there and 43 in development, a spokeswoman said.
And where is this American icon based? In London, at the headquarters of InterContinental, its parent company.