Midmarket hotels rule the roost

Hotel analysts believe that the robust outlook through 2007 will be spearheaded by the mid-priced hotel segment (with and without F&B). The perceived shortage in room supply and upbeat projections of demand are especially thought to hold true in the midmarket segment. Midprice with F&B sector has seen a continued supply decrease of 2.8 percent, year over year and this has resulted in an increased occupancy rate over 2004 as well as an 8 percent increase in revenue per available room (Smith Travel Research).

Midmarket hotel guests are on the rise and consumer preferences are changing. The big players, Courtyard Marriott and Hilton have introduced not so mid-market amenities – ergonomic chairs, work stations, top-notch bedding, power breakfasts and more open spaces to give the new breed of price-conscious, hardworking travelers a better experience for their money. As for midmarket without F&B, that segment seems poised for an even more spectacular resurgence according to Lodging econometrics – pipeline project counts increased 36 percent year over year in 2005, the highest of any tier. Occupancy rate is expected to increase two percentage points in 2006, coupled with an average room rate anticipated to increase 5.5 percent to $80, according to Smith Travel Research.

The midmarket resilience owes as much to forward-looking players as it does to consumer preferences – midmarkets hotels are better able to withstand cyclical ups and downs. The business traveler and road warrior will always need a clean, comfortable place to stay at a comfortable price. While boutiques appeal to the edgy, ipod-defined tastes of Gen Y, business travelers hoping to get value (and surprisingly advanced amenities) will look to the good old midmarket brand. Knowing what to expect for the price you pay and being pleasantly surprised by the experience is the hallmark of the midmarket hotel success story. This category is expected to continue to remain the dominant player in the hospitality industry.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.