Front Desk

Full-Service Hotels Fade From Spotlight

It can be argued that select service has surpassed full service as the most important, most successful, most in-demand and most profitable lodging type. That's a hard statement to comprehend, given the history of the hotel business, at least in the last 40 to 50 years. For decades, probably starting with the 1967 opening of John Portman's iconic Hyatt Regency Atlanta, full-service hotels and resorts have been the sex symbols of the hospitality industry. These were the hotels travelers aspired to because they provided an alluring combination of comfort, luxury, excitement, service and facilities.

Today's traveler, particularly hard-core road warriors but also value-conscious vacationers, are increasingly passing over full-service properties in favor of upscale select-service hotels in the Courtyard, Hilton Garden Inn, Hyatt Place mold. Select-service hotels respond better to what hotel customers want today. These guests seek clean, well-equipped guestrooms with two key components: excellent bedding and top-of-the-line technology (flat-screen TVs, HD programming and, most importantly, reliable, high-bandwidth and free Internet access, preferably WiFi). Just about everything else is fluff, and many guests aren't willing to pay more for facilities and amenities they don't want or need.

New research from Jones Lang LaSalle Hotels reinforces that notion but adds a new wrinkle: select-service lodging has become the favored hotel type for many investors, including institutional players, both private and public. For investors, says JLL, select-service lodging can make a lot of sense, particularly properties and portfolios of hotels in center-city locations. In urban markets, upscale select-service hotels often have higher RevPARs than three- or four-star full-service properties because they can drive higher occupancies.

While construction of any new hotels is a rare phenomenon these days, about the only new development plans making it to fruition, i.e., getting financing, are select-service hotels, particularly in urban areas where construction of new big-box meeting hotels is nearly impossible to accomplish. (The only exceptions are those hotels built through public partnerships. New Omnis in Dallas and Nashville are examples). And forget it if you're thinking of any destination resort development, particularly in North America.

Has full-service lodging forever faded from the hotel landscape in the U.S.? Of course not, at least in the long term. Those flagship meetings properties in key markets (Marriott World Center in Orlando, Waldorf=Astoria in New York, the Gaylords in Nashville and elsewhere and others) will remain industry icons and will eventually become more profitable than ever and more sought-after by certain investors once the economy improves and companies and groups return to their regular meeting patterns.

And at some point in the future—maybe the second half of the decade—developers will once again dare to build new full-service hotels. Until that time, and even beyond, limited-service will continue to be the favored hotel type for travelers, brand companies, owners and investors.

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