When it comes to soft brands, ‘hip’ and ‘trendy’ are out and localization is in.
It’s not a stretch to say that 2017 was the year of the soft brand, and the soft brand market shows no signs of slowing down in 2018. Across the industry, new soft brand offerings have proliferated, with most of them sitting in the midscale market, making the space as competitive and desirable to invest in as any sector of the hospitality industry.
According to J. Walter Thompson’s The Future 100: Trends and Change to Watch in 2018 report, as millennials age and acquire more disposable income, by 2020 they will spend $1.4 trillion in the United States alone. As travelers, they are experientially-minded, preferring to spend money on the memorable aspects of travel and save on the functional – like hotel rooms. Hospitality brands have the opportunity to get their market share through delivering on a combination of affordability, style and location.
As millennials come into their own as travelers, it will be more important than ever for brands to offer affordable and modern hotels in cultural hubs of cities travelers love. Many brands are taking notice and expanding their midscale offerings, but larger brands fall victim to amenity creep, pushing the nightly rate of a “midscale” offering outside of the category. The opportunity is there for a brand to offer a true midscale experience, providing locations in appealing destinations where travelers won’t have to sacrifice value for quality and comfort. Brands should look to bring the city into their hotels, not just bring their hotels into the city.
At Red Roof, as we explored the initial stages of developing and launching The Red Collection, our brand new city-center soft brand, we knew the competitive landscape of the market and that we’d need to find a way to differentiate ourselves from the pack by truly delivering what travelers desire. With this in mind, we conducted comprehensive consumer research, including detailed surveys of our guests and general consumers, and some of what we found was familiar in many aspects, but not without some key surprises.
The explosion of soft brands and midscale hotel offerings are the two biggest trends to watch in hospitality right now, but hoteliers should be careful to listen to what travelers in the space truly want. Localization and authenticity are the new hip and trendy, and, travelers don’t want to pay more for frivolous amenities that they don’t find to be beneficial to them or enhance their hotel experiences.
As we’ve known at Red Roof for years, we found that value was the single most important hotel attribute to consumers as they make purchasing decisions. We also saw that reliable and free Wi-Fi was more important to travelers than a free breakfast, a consistent finding from previous research we conducted prior to launching our brand extension Red Roof PLUS+ in 2014.
However, as we drilled into the data around urban lifestyle travelers, we were surprised to find that they actually dislike the terms “hip” and “trendy” as hotel descriptors, which they associated with monikers like “expensive” and “fleeting.” Furthermore, the most important hotel attribute aside from price was close proximity to local activities and attractions. People want to be right in the middle of the action and receive an authentic experience of the city they’re visiting.
Based on these findings, we specifically crafted The Red Collection to accommodate these travelers. The Red Collection, which will launch in Chicago this year, will be a portfolio of modern, accessible and affordable hotels with enhanced amenities in the hearts of cities that travelers love. The properties will be hyper-local, drawing inspiration from the unique cultures of the cities that they call home. A stay at a hotel in The Red Collection will be an upscale, unique experience unlike any offering in the market segment, but at an affordable midscale price so our guests don’t have to sacrifice the critical value proposition that Red Roof delivers across all brands.
The first property in The Red Collection will be the St. Clair Hotel, opening later this year in the heart of Downtown Chicago. As with all properties in The Red Collection, it will honor popular Red Roof initiatives like free, verified Wi-Fi, pet-friendly policy at no cost and participation in our loyalty program RediCard, but its design will naturally reflect elements that make the Windy City one of the most popular tourist destinations in the world. We have other hotels in the pipeline that we are excited to share in the coming months as well.
The unique design of each hotel is a key differentiator for The Red Collection. While we will hold each property to consistent quality standards that travelers would expect of a major, city-center hotel, each property will have a unique name, logo and design to authentically reflect the local vibe of its home city. Delivering a genuinely local experience is something that we found travelers valued far more than brand loyalty.
As the popularity of midscale hotels in key cities continues to rise amongst travelers, especially millennials, it is imperative to keep a leaning ear to the ground and listen. Travelers are more vocal than ever in telling brands and companies what they want, how they want it and what they are willing to pay for it. As Red Roof continues to bring new experiences and to cater the needs of the ever-evolving consumer and traveler, we are looking to even further extend our presence in the midscale segment and working to directly connect with consumers, including setting the standard for hotel brands by connecting with travelers at home through Amazon Alexa Skills.