Wednesday, April 16, 2014

The Day Of The Low-Cost Hotel?

There is a fallacy that low-cost air travel equates to low-rent customers. It is a mistake made without an appreciation as to the way in which air travel has become essential and functional. It provides a function not only for the tourist but also for the business traveller and the second-residence owner. It is essential in that the horizons of mobility have stretched ever further into distances from home, and in having become functional and essential, low-cost air travel has become a commodity.

Air travel is a service which, because of a marketing ethos which has sought to stress differentiation, theoretically should never have undergone a process of commoditization. Nevertheless, for the short-haul traveller in particular, be he or she a regular or irregular flyer or be he or she low or high rent, the commodity of the flight (at as low a price as possible) is all that really matters.

Because of the fallacy of low-rent association, low cost means cheap, and cheap as a pejorative. Again, because of a failure to appreciate how air travel has undergone ifs commoditization process, it doesn't mean this. Low cost equals value for money. This may mean cheap in price terms but not otherwise.

Antagonism expressed towards the proliferation of low-cost flights coming into Palma (and it has been expressed) fails to take account of visitors' total spending behaviour. Sure, there are visitors who spend little, but there are plenty who are not tight. Save on flights and there is more cash for in-resort purchases.

Mallorca, thanks to the desires of government and some hoteliers as well as to legislation, is pushing itself ever more towards a higher-priced holiday. Upgrading hotel stock from the bog-standard three-star to at least four-star is an excuse for putting prices up, irrespective of whether the quality rises accordingly. The perceived wisdom is that, because tourist-consumers are nowadays that much more demanding and discerning, they expect four-star provision along with its accompanying spas and what have you and are also willing to pay for it. Yet curiously there is a trend which runs counter to this stellar augmentation. I say "curiously" but it isn't curious at all. The airline low-cost philosophy is catching on in the hospitality business as well.

The low-cost hotel has always been with us, though it hasn't always been called a hotel. It may also be a hostel. Whatever its name, there has been a marked increase in the provision of low-cost accommodation for urban tourism, i.e. that to major cities. One reason for this increase is the same as the demand for low-cost airlines - price and value for money - but there are others, such as a lack of investment credit over the past few years, which has caused hotel owners to focus on projects that are far more manageable financially. But crucially, the demand side, that of the traveller, is showing itself not to have totally bought in to what much of the Mallorcan hotel industry considers to be a need to up the star rating. 

It isn't the case that this traveller is low rent. While one has to be cautious and not be seduced by the generalisations of marketers and sociologists, the Millennial generation is said to largely eschew the trappings of the luxury or quasi-luxus hotel (typically one which is also now all-inclusive). This is a generation more in tune with the need for experiences as opposed to all-laid-on, all-inclusive exclusivity. In less grandiose terms there is also a whole tourism sector (one which is seemingly conveniently ignored by many in the Mallorcan industry) which craves nothing more than the cheap (value for money, aka low cost) and the cheerful (bright and modernised decor), embellished by added quality through that manageable financing. This is the style of the new low-cost hotel, one that combines being essential and functional in becoming a commodity product but with some important add-ons, namely personal service, facilities such as free wifi and an agility to market itself through social media in ways that large hotels seem less able to.

In Alcúdia an owner of two standard tourist apartment buildings/complexes has secured the SICTED quality certification for both. Investment has been put into both. Social media are used wisely, while there is also a highly effective relationship with the Palma-based Lowcostholidays. Both are booked solid right through the season. The profile of the customer (the word guest should never be used nowadays) will vary, but, and here is the good news, he or she goes out and spends. The onward march towards the hell of hotel hegemony in the form of the all-inclusive may just be encountering a low-cost obstacle in its path.

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