Luxury hotels to relinquish stars to win business

A number of luxury hotel groups could relinquish some of their stars in a bid to save money during challenging economic times.

Luxury hotel operators have reported that they have been finding it difficult to attract new and existing customers as the recession has meant that consumers are being more careful with their pennies and searching for better deals.

Travellers are finding cheaper deals than ever, but this also means the loss of some add-on services, such as welcome gifts and flowers in guestrooms or complimentary newspaper services.

Rather than lose customers, hotels are being driven to reposition their hotels and lose a star. It is thought that in the next few months, very high end hotels may start to reposition to a lower price point.

Hotel groups that have begun to eliminate frills at their luxury hotels include InterContinental Hotels, Starwood and Hilton Hotel Group, according to Bloomberg.

Stephen Bollencach, former chief executive officer of Hilton explained that maintaining stars requires an enormous capital investment, which doesn’t necessarily make a good return.

Meanwhile according to a recent Media Metrix report, this could be a bad move: “Slashing prices as a reaction to the recession is never good for business in the long run, and could also erode brand image.  Instead, hoteliers need to take an aggressive approach to keep paying customers happy.  Market share is more important than ever in a downturn.  That means holding the line on extra fees and complementary services, and maintaining investments in service recovery and loyalty programs.”

This is supported by reports from the Middle East which suggest that luxury travellers will still travel, but expect more value for their money than ever. Aspiring luxury travellers have been opting to visit destinations within Asia, Africa and the Middle East where luxury hotels are more affordable for travellers – which could mean good news for developing destinations.