The Marriotts of the world aren’t calling emerging hotels competition just yet
Emerging hospitality companies are expanding their footprint in South Florida. Some are grabbing the attention of large brands.
But none are worth calling competition just yet, said Matt Wehling, Hilton’s senior vice president of U.S. & Canada development. He spoke alongside other panelists at a panel on Thursday at the Driftwood 4th Annual Investor Conference.
“We don’t treat them as true competitors,” Wehling said. “In certain leisure markets, they may [be competition] depending on the assets that we have but if they are coming with a product that’s in direct line with us then we get such size and scale our properties are able to perform and weather the storm in most cases.”
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Lenders see hotel operators and large brands think critically about growth. Operators ask themselves what gaps in the market they can fill, said New York-based Goldman Sachs Managing Director and Global Head of Lodging & Leisure Investment Banking Kellan Florio.
“A lot of these growth-oriented brands that are catering to the lifestyle segment of the millennial traveler,” Florio said, “are definitely areas of interest for the bigger corporate brands that are finding those other areas of growth.”
The expansion of other chains with a larger footprint is causing a discussion among the hospitality industry. Oyo Rooms, in particular, is expected to have more hotels than Marriott International Inc. by 2020, according to Bloomberg. The Indian hotel chain may only have one South Florida location — in Pompano Beach — thus far. But since launching in 2013, the chain’s global footprint is worth $10 billion. Functioning like a franchise, Oyo Rooms acquires independent hotels with 150 rooms or less and converts them under the company brand.
Industry leaders ask themselves, said Florio, what the success of Oyo Rooms means for transaction activity and new supply in certain markets.
“I’d say, we are in an environment now where technology can enable and disrupt any industry,” Florio said. “There are no sacred cows in this world. Hospitality is no different.”
The quality of service and loyalty to customers will determine the long-term success of emerging brands, especially Oyo Rooms, said Florio: “Will Oyo really disrupt the industry and be a longtime player? It’s a new and disruptive model but there’s a lot to be proven over time for that model to resonate over decades.”
A handful of growing brands shared their plans to grow in South Florida, including citizenM, Virgin Hotels, and hostel company Generator. Some, like San Francisco-based Sonder, are prioritizing outpacing hospitality giants Marriott International, Hyatt and other big players.
This story was originally published December 9, 2019 at 4:30 AM.
