Skip to main content

Bigger isn't always better: Investors favor boutique stores and hotels

Bigger is better, right? That’s why there are more hotel mergers and acquisitions in recent years; there are also many hotel chains are building larger loyalty programs to pull in more travelers. Besides hotels, Airbnb and OTAs (online travel agents) also want to get bigger through acquisitions.

When it comes to product development, however, investors seem to favor the small and boutique concept over the big ones. Here are a few examples.

New stores called Sears Home & Life will open on Memorial Day weekend

As Sears is getting through bankruptcy and closed hundreds of stores, the company plans to open three smaller stores --- Sears Home & Life on the Memorial Day weekend, which will only focus on the appliance, mattresses, and home services. The size of these smaller and specialized Sears stores ranges from 10,000 to 15,000 square feet, less than one-tenth of an average Sears store (155,000 square feet).

It is uncertain, however, whether Sears is trying today will help the company turn around its business, with some critiques saying that Sears opening smaller and specialized stores is “a very old strategy” that will amount to “zilch.” At least, Sears is making efforts to fight back with other specialized stores like the Home Depot and Lowe’s.

citizenM, a microhotel brand gets a cash boost

citizenM, a microhotel brand that positions itself as a place for “affordable luxury” received a cash boost last month from a giant Singapore government-run fund for 25% stake of the business. Similar to other popular microhotel brands in the market, such as The Pod Hotel, Yotel, and Arlo, citizenM offers smaller (or “micro”) guestrooms with open space for social activities, including a “living room,” a canteen, and a cocktail/coffee bar.

Arlo SoHo Hotel


The big hotel chains are entering the microhotel market with new brands too

Marriott debuted the Moxy Hotels brand in 2013, where guestrooms are small but with urban and functional designs. The brand is also known for its “flexible” functional space.

Wyndham recently revealed the prototype of its new hotel brand --- Microtel. This award-winning economy hotel brand targets travelers who usually stay in the economy and midscale hotels.

Other examples include the Motto by Hilton and Avid by InterContinental. Both are new but with many in the pipeline. Along the line of promoting social interactions among travelers, JO&JOE by Accor Hotels is another affordable hostel-like brand that tailors to travelers with a budget. 

Why investors want to go big by focusing on small

For the most part, the shifting customer base and their new preference drive the development of new brands and concepts. Gen Zers, for example, are more likely to accept automatic services; they also expect new designs for better use of the space.

Microhotels that are usually built with smaller guestrooms but flexible multi-functional space for social activities can meet the demands from younger travelers. Consumers may also find it easier to build an intimate personal relationship with the mom-and-pop-type small hotels or retails stores than with the big corporate brands, which helps promote customer loyalty.

Meanwhile, building smaller, instead of mega hotels or retail stores can be a better option for developers, including:

  • Lowering the building or startup costs
  • Establishing a clearer brand identity with a more focused product and target customers
  • Easier to adopt the modular construction technique
  • Faster and easier for housekeepers to clean a guestroom due to the smaller space and newly designed furniture; or easier to up-keep the retail space with similar products
  • Easier and cheaper to test new business ideas in a smaller establishment
  • Easier to convert an existing building (e.g., an office or a warehouse) into a microhotel or a micro retail store due to the flexibility of these product types
  • More efficient and possibly more effective in managing the business’ human capitals with a narrow focus on a few specific products/services

Is that all? What other reasons that drive the growth of microhotels and smaller retail stores? Is this another example of how business can win big by acting small?

Note: This post is also available on MultiBriefs.com; the picture was downloaded from Arlohotels.com

Comments

  1. Drake Rubalcava HRT 3020.03April 11, 2019 at 11:26 AM

    Overall I thought this article talked about an important issue that is affecting many different stores today. With Sears downsizing to smaller stores it shows that they are fighting to stay in the retail store market. Many different stores now are offering their customers to order online for better ease. But this can affect the stores like Sears who are know for their stand-alone stores. In regards to the major hotel brands like Marriot branding out with their smaller brands helps consumers who want to experience their brand but at a better cost. After reading the article it helps to see how certain stores are competing with online stores.

    ReplyDelete
  2. This comment has been removed by the author.

    ReplyDelete

Post a Comment

Popular posts from this blog

Yammer: A Social Networking Site Exclusively for the Workplace

Effective internal communications among employees are related to some desirable organizational outcomes, such as robust morale, a clear vision, low turnover, and high employee engagement. The question is what platform can serve the purpose. This ABC News video introduces “ Yammer ,” an exclusive internal communication tool for companies. A user must use a valid company e-mail address to sign up for an account. Once an account is validated, the user will be led to the company page that is pretty much like a Facebook page. The difference is that only the users whose e-mail addresses share the same domain can see the wall and communicate with each other. I have no question about whether Yammer could be a useful internal communication tool for companies, but I just wonder: how many social networking sites do people need for communication? Why people have to “create” so many platforms or channels for “effective communications”? To many people, Facebook is only for “friends,” whe

Can leisure and work-from-home demand stimulate extended-stay hotel growth beyond COVID-19?

The lodging industry is   struggling   to fill the empty rooms in 2020. For months, U.S. hotels are running at an occupancy of 50% or lower.     Not every segment   suffers the same impact from the pandemic, however. Demand for   home-sharing  facilities had already bounced back over the summer. Airbnb reported a higher booking than last year. Marriott’s home-sharing arm is also doing well, seeing a sevenfold increase in booking over last summer.     Similar to what a residential rental or home-sharing facility   offers , guestrooms in extended-stay hotels also feature a full-size kitchen or a kitchenette. Extended-stay hotels are designed for travelers who want to stay at a “home” when away from home. A guestroom at the Residence Inn Miami Sunny Isles Beach   Extended-stay hotels vs. home-sharing facilities     Because COVID-19 is primarily transmitted through direct or indirect human contacts, people are highly encouraged to avoid unnecessary human interactions, leading to more   con

Will restaurants of the future still need a dining room?

It does not seem the coronavirus is leaving us soon, although we have seen good   progress in developing the vaccine . In recent weeks, many places reported   a surge of new infected COVID-19 cases . Some even resumed   lockdowns   and the mask-mandate order, forcing restaurants to   shut down indoor dining   services again.     As a short-term remedy, restaurants immediately shifted their offering to   curbside pickup and delivery  services. Meanwhile, restaurants are testing new concepts to embrace the   contactless self-service  trend for the future. Here are some examples,     Chipotle opened its first digital-only restaurant     The new prototype, known as the   Chipotle Digital Kitchen , debut in Highland Falls, NY, earlier this month. Different from the traditional Chipotle restaurant, the Chipotle Digital Kitchen features:     A lobby designated for pickup services through off-premise orders.   A see-through kitchen, allowing customers to see, smell, and hear what is going on b