The Economist: A Short History Of Hotels

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The Economist magazine has a very good piece “A Short History Of Hotels” in the print edition this week that is also available on their website (access here).

economist-brief-history-of-hotels

It nicely describe the developments that the hotels have gone trough in the past couple of hundred years from the grand hotels to the recent developments with the IKEA’s partnership with Marriott launching the MOXY brand in Europe.

Here are some tidbits from the piece:

In the 1950s a fast-talker from Texas called Conrad Hilton decided to build hotels abroad, declaring them part of America’s fight against communism. Hilton was right to believe that Western hoteliers were destined to go wherever jets flew their customers: globalisation and the rise of emerging nations have led to a decades-long boom. But he failed to foresee what would happen to hotels’ identity. To go global, chains needed to muzzle their nationalities and abandon the grand hotel model.

Sometimes it is not beneficial for a hotel or company associated with certain country. The bomb attacks against Marriott properties such as JW Marriott or Ritz-Carlton Jakarta come to my mind.

In hindsight two innovations have proved essential. The first was to separate the property business from the business of looking after guests. The growth of debt markets has made it possible to spin off hotel buildings to separate owners, who usually borrow heavily against them. Marriott hived off its real estate in 1992. In 2013 Accor, based in France, became the last global hotel group to embrace this logic.

All the major chains own very few of the properties that carry their flags. It is usually a local company, family or real estate trust that owes them.

A veteran chef explains the grip that SOPs have. From Tokyo to São Paulo all omelettes must match a laminated picture (they should be cigar-shaped). A manager in Dubai says he follows 2,300 rules, including the phrases used to greet guests. A 2010 Hilton manual stipulates that staff must answer phones after three rings, that guests’ pets may not weigh more than 75lbs (34kg) and that scuba-diving boats must provide free pieces of fruit. A 2004 SOP book for InterContinental allows staff to wait until the fourth ring, requires drinks to be refilled when two-thirds empty and specifies that rooms must offer at least four pornographic films.

Standardization is good, but only to certain extend. Do I really need to have the exactly the same breakfast menu at the Grand Hyatt Sao Paulo as in the Hyatt Orange County?

The industrial hotel has been an economic triumph. But over the years its uniformity has made it an emotional failure. Because of its impersonal blandness, frequent travellers have less fealty than pirates. They carry not one but several loyalty cards and spend only half or less of their budgets with one chain, according to Deloitte, a consultancy. “Unless I see a brand sign on the door I can’t tell the difference,” one hotel boss himself admits. Guests scroll through TripAdvisor’s candid camera shots and algorithmic scores as coldbloodedly as hoteliers design SOPs. The website is now worth more than all but two of the big hotel groups.

If you are very frequent traveller, it makes no sense at all to be “blindly” loyal to any one brand or chain. Why not share the stays around and have status and points in number of programs?

If industrial hotels do not have an emotional connection with their guests, can they manufacture one? This hope is behind the modern cult of service. Yet perfect service is a slippery elixir: branding gurus speak in tongues to describe it; hospitality professors crunch regression equations to capture it and every hotel chain swears it is what makes them unlike all the others.

Very few hotels emotionally connect with the guests and I personally prefer that way.

The trouble is that many people do not want to be touched, emotionally or otherwise. The best hotels, thunders one globetrotting banker, are the ones guests hardly notice. Others like the flattery and grovelling but forget who did it. And the service craze may be making hotels less, not more, human. Should guests really expect authentic affection from staff whose weekly wage is less than their minibar bill? A creepy Harvard Business Review study of the 2008 terror attack on the Taj Mahal Palace in Mumbai examined the way staff had protected guests, often at the cost of their own lives. It asked, “What can other organisations do to emulate that level of service, both in times of crisis and in periods of normalcy?

I prefer having transactional relationship with hotels/brands. They are not “living” organs anyway.

A decade later Starwood, a big hotel group, borrowed the boutique idea and created the W chain, which is the biggest new hotel brand in four decades. Now most hotel firms offer an expanding variety of flavours. For a century hotels have been categorised by their guests’ budget, or proxies for it, such as the star scale. This approach is now “nonsense”, says Richard Solomons, the boss of IHG, a hotel firm.

In my opinion, the W brand is left in the 1990’s with fake glitch glitz and glamor without any deeper substance. Likely works best with insecure guests.

Conclusion

This Economist piece is a very good read and food for thought about the developments in the hotel business in the not distant past.

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