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On tour: three hoteliers capitalising on the innovation trend

Innovation in a fragmented hotel industry has resulted in accommodation types to cater for all tastes and occasions, but ownership of familiar brands is actually consolidating.

31/08/2016

Ben Forster

Ben Forster

Equity Analyst, Global Real Estate

This is something we previously talked about in our post What the US election means for Washington hoteliers. To dig a bit deeper into the topic we recently visited a number of Washington sites to assess how hoteliers are defending against the threats of digital disruptors like Airbnb.

Marriott's growth ambitions

Should the pending acquisition of Starwood by Marriott International complete, it will create the world’s largest hotel business, with more than 1.1 million hotel rooms, across 30 brands in over 100 countries.

We met with Marriott’s management team and learnt that this scale could help it redirect consumers away from the online disruptors and towards its booking portal.

Alongside the efficiencies that scale brings, Marriott should also gain access to a larger share of its customers’ wallets by building loyalty through offering greater choice.

While at Marriott HQ we also had the opportunity to tour its Innovation Centre. Unit growth is a key driver of Marriott’s revenue growth strategy and it was interesting to hear how the company plans to accelerate the roll out of new concepts such as the Moxy brand, through new modular building techniques.

Marriott social media centre

Marriott manages social media full-time from its headquarters in Bethesda, Maryland

Pebblebrook Hotel Trust

At the other end of the spectrum, we toured boutique hotels with the management teams of Pebblebrook Hotel Trust, a Real Estate Investment Trust (REIT).

Pebblebrook’s focus is on offering a unique experience, through design-led hotel formats. Unlike Marriott and Hilton, Pebblebrook owns rather than leases the physical real estate enabling it to reposition its hotels and maximise its earnings potential.

The Hotel Monaco is an example of where Pebblebrook has revived one of the oldest buildings in the city with unique interior design. Built in 1842, the neoclassical building originally housed the General Post Office and was named as one of the best new hotels in the world by Condé Nast Traveler when it was reopened as a hotel in 2002.

Management is currently in the process of transforming the historical courtyard into a new leisure concept to enhance the old restaurant offering. When complete it will serve visitors to events at the Verizon Center opposite, further driving revenue. During big events the hotel can charge up to $500/night for lower ground rooms and often hosts celebrities such as Taylor Swift and John Legend. 

Hotel Monaco courtyard

Adding value to the courtyard at Hotel Monaco

Mason & Rook

LaSalle Hotel Properties is another REIT, and we visited their latest hotel offering: the Mason & Rook hotel. The hotel has just reopened following a $24 million refurbishment.

Its understated interior and relaxed roof bar aim to attract business travellers looking to retreat for meetings and drinks away from Capitol Hill. Occupancy sits at over 80%, with strong demand for meeting space, but it will take time for room rates to catch up with its peers.

We left impressed by the efforts of management teams to differentiate in an ever more competitive industry, but we remain cautious on supply growth and weak business demand.  

Mason Rook rooftop

Mason & Rook hotel pool and bar

 

 

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