Hotel brands check into new verticals

Hotel companies are seeking fresh revenue streams from bespoke experiences and strategic partnerships.

Leading hotel companies are stepping beyond the traditional hotel stay to offer bespoke experiences and strategic partnerships that benefit both guests and their bottom line.

Take ultra-luxury hotel group Aman, which offers a personalized experience for up to 18 guests to travel on a private, branded jet to their properties around the world. Meanwhile, guests at luxury hotel group Four Seasons can embark on a 95-suite superyacht next year, sailing through the Mediterranean and Caribbean.

Experiences like these are becoming increasingly common as hotels ramp up their non-traditional offerings, particularly since the pandemic.

“The expansion into new verticals isn’t a new development, but the pandemic spurred hotel brands to unleash their creativity,” says Marina Bracciani, Vice President, APAC Hotels Research, JLL Hotels & Hospitality Group.

“In the face of disruption, hotels had to innovate to wow and retain loyal guests while diversifying their revenue streams,” she adds.

Building loyalty beyond the lobby

Several brands are venturing into the realm of branded residences.

For luxury hotel groups catering to high-net-worth individuals, such as Four Seasons and Mandarin Oriental, it’s a natural evolution and extension for the business, Bracciani says.

“Branded residences allow these hotels to seamlessly transition loyal guests from staying to owning,” she says. “It’s about extending the brand experience beyond the hotel stay, enhancing it at every touchpoint of the customer journey.”

However, the pursuit of customer loyalty isn’t exclusive to luxury chains. Other hotel brands are exploring creative strategies, including co-branded partnerships with retail and service providers.

Hospitality giant Marriott’s loyalty program, Marriott Bonvoy, partnered with ride-hailing giant Uber to let members earn points for Uber rides and food orders. InterContinental Hotel Group’s co-branded credit card with Chase entices travelers with a welcome bonus and the ability to redeem points for free nights.

“These collaborations broaden their offerings for existing customers, while potentially attracting new segments,” says Ophelia Makis, Senior Analyst, Americas Hotel and Retail Research, JLL.

Brand extensions are another popular alternative for hotel brands to deepen guest relationships. A prime example is hotel chain Hilton, which sells its custom-designed beds by mattress manufacturer Serta online to bring the hotel experience into homes.

“Having an extensive range of products and experiences enables hotel brands to create an ecosystem that integrates into all facets of life,” says Makis.

Maintaining standards

But these new ventures also come with the inherent risk of falling short of expectations and not delivering on the brand’s promises.

“Innovative experiences and partnerships can elevate a brand’s value and perception, but only if done right,” warns Jessica Jahns, Head of EMEA Hotels Research, JLL Hotels & Hospitality Group. “Poor quality and execution can just as quickly erode trust in the brand.”

Despite the potential pitfalls, hotel brands, driven by the need for diversification and fresh revenue streams, are undeterred from embracing these non-traditional verticals.

With tourism on a strong recovery track in 2024, the opportunity for growth is massive, Bracciani adds. In 2023, global revenue per available room (RevPAR) exceeded pre-pandemic levels by 12%, with further growth projected this year, JLL data shows.

“Hotels will continue to stay true to their core focus and remain dedicated to guest accommodation and experience,” says Bracciani. “But at the same time, they’re adding value through these new ventures that enrich the guest experience and build loyalty.”

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