How to compete in the budget hotel business

Over the last six months, I’ve had the opportunity to stay in a number of hotels that span the business-oriented traveler (like Marriott) to the budget-conscious vacation traveler (like Days Inn). I imagine the hotel business is a lot like the restaurant business - it sounds kind of fun and cool until you talk to someone in the business who tells you to stay away because it’s a fickle, low-margin business. But when I run across industries where I think there is room for improvement,  I always like to romanticize how I would totally kick ass if I worked in that business running a company.

Here’s my thoughts about what I’ll term as the “budget traveler” hotels - the Hampton Inns, Days Inns, Comfort Inns, Holiday Inn Expresses of the world. The hotels you expect to find along the highway or freeway in most cities, mostly for an overnight stay on the way to somewhere else. Or seen another way, hotels where almost every traveling sports team tries to stay because they are more affordable.

First, who would I say is winning in that segment? My money is on Hampton Inn. I’ve been in five over the last six months in different parts of the country, in several different capacities and all have been clean, organized and comfortable. Service was efficient and polite, WiFi was strong in every corner of the hotel and in all but one situation the price was very reasonable ($85). In once case we did pay $114 but it was one of the last few rooms (King bed, all the amenities) and we were tired and hungry. If there was one word I could use to describe them, it would be consistency. Consistent across service, amenities, breakfast, cleanliness, etc. Holiday Inn Express is a close second, but their prices seemed to have increased a lot lately, and they just don’t seem as consistent as Hampton Inn. We stayed in one recently that was pretty run down.

Who really needs to improve?  For me it’s a toss-up between Days Inn and Comfort Inn. Granted, they are MUCH better than just a few years ago, but they still have a long ways to go. Pricing was inconsistent by market (Comfort Inn in Minot - shame on you for charging TWICE what you charge in other parts of the country!), the facilities were hit and miss in terms of cleanliness and repair, and the food was, well, not very good. Why even stay at these, you ask? Because these are better than other budget hotels we’ve tried. So when we can’t find a Hampton Inn or a Holiday Inn Express with a room at the rate we want, we will stay at a Days Inn or Comfort Inn. Saving $40 on a hotel room for one night is worth making a few trade-offs, although you do have the occasional bad experience.

So were I to become the CEO of Days Inn or Comfort Inn, what would I do to make them the envy of their category?

  1. The first thing I would do is identify every sketchy facility and make it priority number one to improve their look and smell as quickly as possible. Fresh paint, clean carpets, QUALITY repair work (not just shoving caulk in holes and calling it good) and landscaping. I can’t emphasize this enough. If a customer walks into a room and it smells of mildew, there are stains on the walls and the shower looks like someone used a caulk gun as a paint sprayer, no low price or pleasant staff are going to leave that guest with a positive impression. It does seem that these chains are building new facilities, but fixing and maintaining the older ones is important too (and would seem to be less costly). 
  2. Reward managers for paying attention to the little details. Are the public restrooms spotless? Is the tile grout clean and free of cracks (even in the corners)? Is the front desk clean and all the clutter hidden away? Is the parking lot swept and free of debris? Is the ice and vending machine located away from guest rooms so it doesn’t wake up others?
  3. Train your people. Again, the Hampton Inn seems to do a better job of this than all the others. There was a more consistent way of interacting, being polite and completing the transaction than with the others. This kind of fits with rewarding managers for the little details. Making sure your people are trained on how to greet, interact and then guide guests can go a long way.
If Comfort Inn or Days Inn would focus on these three things, I’d certainly stay there more frequently, and even pay a little more. But only if I had to. These things just bring them to parity with Hampton Inn, not make prefer them OVER Hampton Inn.  What would make them stand out?  Breakfast.

Breakfast is the killer feature for these hotels that could help them be preferred of Hampton Inn or Holiday Inn Express. While the food was OK at my favorites, it wasn’t great. If these budget hotels fixed their facilities and trained their staff AND served a killer breakfast, guess where I’d stay? I know hotels are trying to keep costs low, but you could probably charge a little more per night to upgrade the breakfast and people would actually be happy.

The key, in my opinion, is freshness. My biggest complaint with their food was it all tasted stale or watered down. The eggs were rubbery, the starches dry and stale and the beverages weak. Find a way to improve flavor and freshness and you develop a legion of loyal guests.  I’d be one of them, especially if it continued to be relatively affordable when compared to other hotels.

Pipe dream? Maybe. I’m sure it’s a dog-eat-dog world in the budget hotel business. But that is the single thing that would make them stand out compared to all others. Some smart person could figure out how to get it done for them.