This year´s IHIF in Berlin recently came to a close. The premier hotel investment forum focused especially on New Generation Hotels. hetras CEO Martin Reents took part and noted the top ten reasons to invest in New Generation Hotels.
10. The needs of travellers are changing. Guests will no longer pay a premium for traditional brands, they are not impressed by imposing architecture and they turn down unnecessary service. They do, however, want to walk into a lobby that feels like home, require a perfect night’s sleep in a sparkling clean and quiet room and expect in-room technology to match what they have at home.
9. New generation hotels lead the way in advanced digital technology. Today’s guests want to take control of their destiny. They want to manage their own profile, preferences and bookings, check themselves in and out, and take advantage of hotel services at their own convenience on their own electronic device.
8. Highly successful pioneers have paved the way in Scandinavia, England and The Netherlands. New generations brands continue to open throughout Europe and the world.
7. New generation hotels invest less per room, require less staff than comparable hotels and yet still achieve higher room revenue per available room than traditional hotels.
6. New generation hotels are anything but “cheap hotels.” Quite the contrary: They consistently achieve top values in daily rates and in high occupancy, which exceeds 80% year-round.
5. Lower personnel costs mean better service for guests, not worse. Through automation, the few employees in the hotel can actually focus entirely on the guests. This is reflected in the excellent reviews new generation hotels regularly receive in the review sites.
4. Altogether, new generation hotels achieve a gross margin of up to 54%. The best hotels achieve around 20 to 50% higher profit margin than the average for traditional 3 to 4-star hotels in a comparable market.
3. Real estate is available. Requiring only a fraction of space compared to traditional hotels, new generation brands can build a hotel on a very small space and even convert existing office buildings in prime locations into successful hotels.
2. Savvy investors and funds are already bucking the traditional hotel models and moving to the new generation.
1. Greater returns with lower investment: This simple formula sums up the success story of new generation hotels. The best new generation hotels can pay back the entire investment (including land) within 4.6 to 5.7 years – About twice as fast as traditional 3 to 4-star hotels in a comparable market.