The new “cheap & chic” players

Midscale hotels are doing well. Results for the year 2007 bear witness to this fact. In Europe, the revenue per available room improved by 8.3%, leading to a better than average increase that was essentially the same as that of upscale hotels, which has been a veritable growth engine in recent years. On the other side of the Atlantic, the growth rate of the “midscale” range - in particular around “selectservice” concepts – is higher than that of 4*. Several hotel groups have tried to take a position on a segment that is generally occupied by brands such as Courtyard or Hilton Garden Inn. Aloft by Starwood and Hyatt Place by Global Hyatt are examples. The new offering combines very contemporary design, a strong presence of services and high-tech solutions, as well as services limited to the essentials to achieve more “affordable” prices. Thanks to improvement of the hotel industry’s cycle, the ex “sick child” is regaining its health. At the low point in the cycle for the hotel industry overall, the midscale segment found itself stuck between the dynamic economy hotel segment and upscale hotels seeking guests. The logical result, which was detrimental for hoteliers in the 3* range, was that hotel groups at either end of the spectrum invaded the 3* hunting ground. This is no longer the case today. Average daily rates are up and previously lower occupancy rates are now catching up to the overall level.The hotel The Five reports some of the highest profitability per square meter in Paris with its average daily rate of 160 euros. This price is particularly high for rooms that are 9 sq.m on average… smaller than those at a Formule 1! No magician had a hand in helping Philippe Vaurs, Christophe Sauvage and Pascal Laffon, the three creators of...