Luxury hotels dropping one star to help their bottom line

September 17, 5:43 PMConstruction Industry ExaminerKarl Tehrani

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In the past year or two, I have noticed that most new hotels being built were and are less than the five-star level of service. Most are what are called “Inn & Suites” which are the smaller hotels with 70 to 120 rooms and with limited service. These hotels have more affordable pricing and are less capital extensive to build and to operate.

• First, it reduces the hotel’s ongoing operating cost
• It allows the hotel to charge less and still maintain a decent return on investment (ROI)
• The lower pricing makes the hotel affordable to a larger number of potential guests
• It makes the hotel more competitive in the internet marketing channels where many look for the best value for their travel costs
• Also, many organizations and government entities frown on five-star hotel fees on expense reports. And some just do not accept them. This takes the hotel back into the game with these clients.
• I am sure the hotels’ management  teams have many of their other reasons for this move also.

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