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The Select-Service Model Remains a Top Choice

You get what you pay for and, in the select-service segment, that’s a good thing — for guests, developers and operators. It remains the fastest-growing category for many reasons: its no-fuss, no-frill offerings meet the demands of both business and leisure travellers, affordably; its streamlined design is cost-effective for developers to build and for operators to run; and it offers attractive return on investment. What’s not to like?

“All the major brands have select-service options [because] they’re not only less expensive to build, they require less land,” says Kenny Gibson, president of Toronto-based development company Sunray Group, which owns 42 properties and has partnerships with major master brands, including Marriott, Hilton and Choice. “For operators, the hotels operate much more efficiently. [For guests,] the free breakfast, small, focused meeting space and ease of check-in and check-out are all appealing. Loyalty programs also play a key role.”

Talene Staab, global head for Tru by Hilton, adds this segment, with its fewer amenities and departments, also boasts “a leaner staffing model, a more-efficient property to clean and maintain and minimal land requirement with a scalable prototype.” For owners, or new-to-Hilton owners, Staab says Tru by Hilton has “created an appealing entry point, given the lower cost to build and simple-to-operate design.”

A numbers game

According to Carrie Russell, senior managing partner at hotel-valuation company HVS, of the 53 hotels that opened over the last 12 months in Canada, 39 have been select-
service properties. “There is continued growth in the segment and [the market] seems to be healthy,” she adds. 

So healthy that Tru by Hilton, in particular, opened 100 properties across North America. Earlier this year, the brand unveiled its first hotel outside the U.S., Tru by Hilton Edmonton Windermere. The brand has approximately 10 more properties in the Canadian pipeline — primarily in Ontario — set to open by the end of 2021. “Building on the fastest brand launch in hospitality-industry history, Tru by Hilton has the largest midscale pipeline in the Americas, currently consisting of more than 320 hotels and nearly 32,000 rooms, most of which are expected to open by the end of 2021,” says Staab.

Best Western Hotels & Resorts is also capitalizing on the segment. Its select-service offshoot, Aiden hotels — which launched its first property in October 2018 in Seoul, South Korea — followed that up a month later with another near Paris, France, as well as a German location in October 2019. The brand opened its first U.S. property in June in Austin, Texas, followed by another in Cape Point, Mass., in September. Additionally, the U.S. pipeline currently includes eight more Aiden hotels. Internationally, the brand is set to open in Italy, Spain, Peru and add additional properties in Germany and France.

Hyatt Hotels has stepped into Canada with its Hyatt Place brand, deepening its focused-service footprint with 20 properties planned by the end of 2022 — adding to the brand’s existing port- folio in Edmonton and Calgary. Hyatt cites the boutique-like style of the brand and scalability of the segment as attractive incentives for developers. And, in Canada specifically, there’s been good growth over the past five years.

Outstanding in the field

With virtually every major brand muscling in on the market, rising above the fray can be a challenge. How do you preserve brand recognition while preventing it from becoming too homogenous, cookie-cutter or bland? For Tru by Hilton, it was simple: ask for and listen to feedback from both guests and owners.

Input prompted not only more-efficiently designed rooms with work- friendly mobile desks, but also free breakfast, “reimagined” public spaces and larger lobbies to allow for both guest interaction and quiet work areas. “[We also learned that] travellers like to experience the destination they’re visiting,” says Staab. “So our hotels have a ‘Tru-ly’ local wall with local recommendations on everything from restaurants to activities to insider tips, along with a locally inspired mural in each hotel that pays homage to its respective city.”

Indeed, trends continue to be all about the “experience.” Millennials, in particular, expect a hotel’s design to tell a story or be connected to the community in some way. Operators can achieve this without spending a lot of money by incorporating photography or art exhibits by local artists in the lobby; performances by local musicians; a colour palette that reflects the locale; or framed literature or murals that recount a region’s history. Offering locally sourced self-serve snacks and drinks on-site or encouraging restaurant delivery through services such as Uber Eats and SkipTheDishes, brings the local taste right to the guest’s door, while saving operators the need for a full-service restaurant or room service.

By definition, the category typically offers limited services, but if those services are done well and satisfy the guest, you’re ahead of the pack. “Tru by Hilton caters to both business
and leisure travellers who cross all generations and who value experiences over things,” says Staab. “Our audience is looking for simplicity and value without compromising quality and design, so Tru delivers the basics served up in a fresh, consistent, affordable way.”

Even select-service offerings, such as Best Western’s Aiden hotels, offer more than just basic amenities, featuring fitness centres, meeting facilities and on-site bars and restaurants. The brand also allows developers the flexibility to be creative in their design by blending technology and art, as well as a locally inspired flair that reflects the unique market in which they’re built — meaning no two hotels are alike.

On the horizon

As the major brands continue to focus their finances and attention on this burgeoning segment, there’s a danger of over-supply in some regions. Brian Stanford of commercial real-estate and investment firm CBRE in Toronto says, “There are a number of markets in Canada that are just not large enough to bring in an 80-, 90- or 100-room property — whether it’s in the select-service segment or elsewhere. The [most]significant growth tends to be in the top 10 or 12 major urban centres, where almost every one of these brands is represented and, in some cases, represented with more than one location. Most developers would love to be with a Holiday Inn Express or Hampton or Garden Inn, but if one is sitting a block away from your site, you’re hard-pressed to be the second in the market. If your preference isn’t available, what do you do?”

Look farther afield, perhaps, to more suburban areas, which themselves are growing and often able to accommodate more development — albeit on smaller sites. In fact, it’s often these outlying neighbourhoods that have retained the culture and character often lost in the commercialization of cities, offering an air of authenticity. Think Winnipeg’s St. Boniface, heart of the city’s French history and culture with its 35 designated historic sites, or Halifax’s North End, which features iconic neighbourhoods, such as the Hydrostone, developed after the Halifax Explosion.

Regardless of whether the select-service’s site is urban or suburban, as HVS’s Russell says, the segment is healthy. “I don’t see anything on the horizon that will dramatically change — it’s here to stay.”

By Robin Roberts

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