High-end business and leisure travelers are demanding superluxury, and hotels around the world are responding
Superior hotel amenities once brought to mind elegant spa facilities or a private beach. But over the past five years, the world's most luxurious lodgings are increasingly upping the ante. Helipads, undersea restaurants, and expanses of gold leaf that stretch farther than in any castle are some of the details that exclusive hotels are offering to woo jet-setting business travelers and wealthy tourists.
"The lodging industry is very healthy at the moment," says Scott D. Berman of PriceWaterhouseCoopers' Hospitality & Leisure division. "The luxury hotel portfolios are driving a great deal of that success worldwide." In the U.S. alone, hotel industry profits are expected to rise to $29.7 billion by 2007.
That's up from an estimated $25.2 billion in 2006, according to a Jan. 23, 2006, presentation by PriceWaterhouse Coopers researcher Bjorn Hanson. And new hotel construction is up too, largely to meet increased demand. In 2006, there were approximately 127,708 room starts, up from 77,549 in 2005.
Pushing the Design Envelope
Berman points to emerging economies, such as China (site of the 2008 Beijing Olympics, which will no doubt attract legions of tourists) and India as areas of the biggest surges. "The growth in hotels in these countries reflects the growth of their overall economies," Berman says.
In these Asian locales, many luxury hotel properties are pushing the envelope in terms of sumptuous design details and adventurous architecture to attract high-end tourists and business travelers. Nestled beside the Great Wall of China at Badaling, for example, The Commune, which opened in 2002, is a collection of sophisticated homes designed by 12 leading Asian architects who were each given a budget of $1 million. Collectively, these chic dwellings make up a stunning new concept for a luxury "hotel."
The property includes the Furniture House, featuring the laminated plywood typically used for modular furniture, by Shigeru Ban, the Japanese architect most famous for the paper houses he designed for refugees of the Kobe earthquake.
Location, Location, Location
China's Yung Ho Chang created the Split House, which takes the idea of a boxy dwelling, splits it in two, and spreads it out like a fan. The Commune is currently operated as a boutique hotel by Germany luxury hotel group Kempinski, which is responsible for an upcoming expansion. Scheduled for completion in 2010, the updated Commune will feature a total of 21 homes (including replications of the originals).
One draw that will remain untouched: the Commune's private walking trails, which trace sections of the Great Wall, a breathtaking—and hard to beat—backdrop.
In India, a record number of foreigners entered the nation in 2005, 3.92 million, up 19% from the previous year. India's Tourism Ministry predicts that the number of tourist entries will increase to 5 million by 2007 and rise to 10 million by 2010, creating ample opportunity for international hoteliers to profit.
And Then There's Dubai
Hilton (HLT), Starwood Hotels & Resorts Worldwide (HOT), Intercontinental Hotels Group (IHG), and Marriott (MAR) have all recently announced expansion of their offerings in India.
The Middle East is also quickly becoming a site of spectacular hotel design firsts and broken records, led by the United Arab Emirates. Dubai's ruler, Sheikh Mohammed Bin Rashid Al Makhtoum, also the Vice-President and Prime Minister of the UAE and president of the Dubai Development & Investment Authority (DDIA), hopes to attract 15 million tourists in 2010, up from 5.24 million in 2003.
Why 2010? Sources such as The Economist predict that Dubai's known oil reserves will be tapped by that year. Dubai is racing to pump up new industries, such as tourism.
Gilding the Lily
Currently, well-heeled visitors to Dubai can stay at the luxe Burj Al-Arab, which features a helipad, the world's tallest atrium, and an underwater seafood restaurant. Not far from Dubai, in Abu Dhabi, another of the seven United Arab Emirates, the world's most expensive hotel, the Emirates Palace, opened recently (built at a cost of approximately $3.9 billion). Like the Burj Al-Arab, the Emirates Palace features a helipad, as well as more than a 100 domes and the largest swath of interior, gold-leaf embellishment in the world.
Even as high-end hotels work to out-luxe the competition, they must contend with new, lower-priced options that offer the sophisticated decor or amenities once only found in five-star lodgings. Starwood, for example, plans to launch its aloft brand (see BusinessWeek.com, 8/23/06, "Starwood Hotels Explore Second Life First") in 2008, as a budget-friendly yet stylish, loft-style chain.
The trend toward more stylish design standards across all hotel categories is further evidenced by the December, 2005, reopening of the Newport Beach Marriott. The hotel's $70 million renovation included a new state-of-the-art spa and 17-foot-high glass walls for spectacular ocean views. Before, the 31-year-old property looked like any conventional Marriott, with nondescript-but-pleasant decor in the lobby and rooms—and, of course, no spa.
The Spa Package
After the makeover, the Newport Beach Marriott & Spa ("spa" is now part of the official title) is a one-off luxury resort—exactly Marriott's goal, as the company customized the layout specifically for the ritzy Southern California location rather than reflecting a more generic, hotel chain look.
"The hotel was built in the mid-1970s and expanded in the mid-1980s. It still looked like the mid-1970s definition of 'quality.' But things change," says Bob Shorb, vice-president of development at Host Hotels & Resorts, which owns the Newport Marriott Hotel & Spa (operated under contract by Marriott International). "There's a lot of demand among business and leisure travelers for amenities such as spas today."
It seems unlikely that today's ultra-high-end amenities such as helipads will catch on beyond the luxury hotel category. But hoteliers of all stripes will have to watch what the world's most discerning business and leisure travelers expect, in order to further distinguish their brands and thrive in an increasingly competitive environment.