NAME-ORAMA Is Cheap the New Chic On the Block?

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Posted: 21 Dec 2009 | 6:44 am

Frankly speaking the entire low cost airline (LCC) and now limited service hotel craze has got me a bit on edge; kind of like having five double espressos and a barista who looks to be reaching for the nearest stun gun.

In the beginning it was economy, then budget and of course limited service. For the uninformed the latter in the wacky hotel biz means 'no restaurant.'

Looking at the alternatives of course we have cheap or even better the omnibus cheapo, for you Spanish speaking hombre's that's el cheapo for you guys. Low, low cost, reduced, sale, slashed, reasonable, bargain, inexpensive and a host of others.

Add in that age old ad tricky of a modifier and of course its super, mega, big, bigger biggest (i.e. all three versions of Elvis that is), colossal, jumbo, whopping, large, extra large XXL, and of course for computer geeks there is giga, or tera.

I had a strange debacle the other day on this with the Thai launch of Tune Hotel.com which is billed as limited service. Now Holiday Inn Express carries the same tag but they have 20-22 square meters and a TV as does an IBIS, Tune has 12 square meters and no TV, as well as paying for everything. Unlike a girlfriend experience it's more like the ultimate ho…(or more seasonally ho ho ho).

Actually I love the model, and fly low cost carriers often, stay in limited service hotels and have nothing but esteem for AirAsia as a brand. In the David vs. Goliath scenario my credo is BA no way and Tune is going to shake things up the staid way of doing things like a barrel of moneys on speed.

But what do we call it? Unfortunately it appears to be the ubiquitous up to us, though for me its budget…which is a nice way of say cheap. But again there are lots of opinions out there and indeed by those vaunted of American hotel standards I am absolutely incorrect. For the consumer though who needs a place holder the shortest and easiest niche always works….

Be it limited service, cheap, budget or low cost, it's going to a weird strange ride from here on in. Buckle up for lift off.

DO YOU LIKE THIS?

For the likes of Tune where it is a one night rental of the bed(room) only perhaps we should be branding these style/level of accommodation properties as "Basics Plus" ; "Basics + Up", or something similar - even - "Bed & ?"; "Bed and Anything else you want we might have" (that you are willing to pay for!).

I can't see this model working too well for long for either customers or more particularly for those separate investors (other than Tune/Air Asia themselves) that Tune are now trying to encourage into franchise and management models and where a location isn't already tertiary or even 'terminal' in a transport link sense - elsewhere the margins are too thin if Tune draw fees as well.

Many may have to be worked over conversions in the re-use of secondary buildings (leading to zoning headaches, perhaps?)- for standalone new builds will be hard to justify the carrying costs of a separate management structure, leading to risk of early deterioration or departure from the scene.

That scenario has emerged as the necessary primary steps for Easy Hotel in older European venues (few in any new builds among them), and Yotel (11 sq.m. compartmental rooms & partly owned by Nakheel) has yet to play seriously in any operation of note anywhere and the previous GuestInvest Group floated in the UK with great fanfare at industry conferences through 2007- 8 as the cheaper individual investor end of condohotels for Europe died a horrible death in liquidation during the early part of the GFC because their start-up and carrying costs exceeded their pre-sales for too long.

To many of us, it seems limited service is just that - the likely limit of what the industry should be.

Have a Nice Stay!

KevinM

KevinM, 04 Jan 2010 | 8:12 pm

WE HAVE NEVER HAD SO MUCH CHOICE IN HOTEL AND TRAVEL OPTIONS. THIS CAN ONLY BE GOOD FOR ALL,ONLY THE BEST WILL SURVIVE THE COMPETITION.

JOHN DEVENPORT, 21 Dec 2009 | 8:26 am