Economy Lodging in Continuous Transition

The inception of the economy segment in the lodging industry was predicated on the premise that users looking for just the basics could be serviced through facilities that were fairly Spartan. However, throughout the years the actual definition for “sticking to the basics” has changed dramatically. There are typically two schools of thought when it does come to defining what basic service delivery is in the lodging industry. The first will deal with price and value along with customer satisfaction and market position. The second approach deals with the delivery of minimum services and amenities to the presentation of bare-bones facilities.

Creation Of Intense Competition
Profitability is the goal of any approach when it comes to lodging operations and either of the two above will focus on occupancy although the second approach does recognize the role played by average daily rate (ADR) one creating any room-to-revenue formula. Unlike high-end lodging facilities, and treat into the economy segment has reduced barriers that can provide facilities meeting the minimum construction requirements that can provide an excellent price-to-value four economy lodging seeking guests. Investors and owners will find they face minimal equity requirements while being able to develop a fairly nice 50-room economy facility.

Size Can Matter

This may, on the surface, look like a way to small facility, but in many markets it’s about the exact size. Typically, this type of facility attracts travelers looking for “shelter from the road,” in the form of a cheap place to lay their head for the night. It also attracts owners who are usually newcomers to the industry but not necessarily to the development of properties. Although there will be some type of evolutionary process regarding the operation and services offered by even the smallest hotel, newcomers will learn what old-time experienced hoteliers have known for years that it is always important to improve the mousetrap that you have.

Enhancing The Perception Of Value Versus Cost

Once upon a time finding the amenity of a color television and a morning wake-up call where sought after add-ons that convinced customers they were getting great value for their room investment. With the introduction of any add-on amenity, room rates will have to be raised. However, they should never go higher than what a customer’s perceive level of receiving great value is going to be set. New amenities and services added to economy facilities are usually acted upon when viewing what is offered by their full-service counterparts. Yet, unlike full-service, large budgeted lodging facilities, the small economy lodging operations suffer the constraints of cost, staffing and possibly available land when it comes to adding extra features.

Change in Time/Added Amenities
Although there are some construction constraints faced by many small lodging operators, competition for customers seeking a great price to value has resulted in the addition of such amenities like pools, hot tubs and full equipped exercise rooms. Additionally, complimentary continental breakfast have come and go instead of just offering guests coffee and a selection of doughnut out of the box bought locally. Also, in this age of high-tech everything, even the economy lodging segment is now competing by offering such amenities as Internet access, fax machines and copiers. Although many of these are fee-based, their presence at economy lodging facilities is a welcome plus for many business travelers who were quite budget conscious.

Unfortunately, the recent history of accounting lodging operations dictates that owners and managers are typically in a reactionary mode. When the need arises to add customer attractive amenities, then action is usually put into place. There’s rarely any planning for change but there is also a willingness to accept it when it is beating a loud banging at the hotel’s front door.

Leave a Comment

Previous post:

Next post: