TIME TO BOARD?
Investing in hotel accommodation is a strategic move that more airports could be capitalising on to boost revenues and customer satisfaction levels, writes ICF’s Stephen Freibrun.
The buzz around airport hotels has taken off in recent months – from May’s opening of the hotly anticipated TWA Hotel at New York’s John F Kennedy Airport (pictured above) to San Francisco’s new Grand Hyatt, which is set to debut this summer.
And there’s a direct link to another global trend: passenger demand is on the rise. In fact, according to recent data from STR, airport hotel demand growth outpaced supply growth every month in 2018.
Further, airport hotels see higher occupancy rates (74%) compared to the overall hotel market (66%). The bottom line: more people are staying as they go.
For airports and hotel stakeholders, high demand underscores a somewhat untapped business line. A well-located, well-appointed hotel is a strong contributor to the customer experience – serving as a point of differentiation in connecting markets and considerable revenue driver.
Despite being a strategic move, many airports do not offer an on-site hotel at all; let alone one that successfully marries convenience with quality, while holding the passenger experience sacred.
Whether or not a trip goes as planned, hotels play an important role in the passenger journey and experience. Both travellers with long layovers and those facing unexpected delays require a comforting respite that will integrate seamlessly with the rest of their trip.
This, in part, explains why there was so much anticipation and excitement about the opening of the new TWA Hotel. Investing in passenger-centric accommodation also shows a thriving operation and increases the pressure on existing airport hotels to deliver flawless service.
Among those getting it right is The Westin Detroit Airport. Located in-terminal, this hotel offers customers the added convenience of a designated security line. According to the Certification Activity Tracking System (CATS) database, The Westin comprises a notable 15% of the airport’s total non-aeronautical revenue. Other industry players can benefit from studying what Detroit’s airport hotel executes effectively.
Located past security, transit hotels take the element of passenger convenience to a new level entirely. Some international connecting airports are catching on to this concept, including the impressive Aerotel in Abu Dhabi.
However, while convenience is paramount, more must be done by hotels and host airports to enhance traveller experiences and, in turn, maximise revenue for all parties.
Most on-site hotels still miss a chief consideration: price stratification. Airlines see all kinds of travellers. Although some guests may not mind the high price point of luxury airport hotels boasting myriad amenities, this singular model excludes passengers travelling on a tighter budget or those facing unexpected layovers due to flight cancellations.
Simply put, there is a segment of price-conscious customers whose needs could be better met with mid-range rates.
In order to reap the economic benefits of operating a hotel, airports must work with hotel stakeholders to cultivate a positive experience for all passengers – not just those in the front of the plane.
Creating a number of options at various price points ensures that airport hotels are broadly accessible and represent a seamless element of the passenger journey.
Hartsfield–Jackson Atlanta International Airport, for example, addresses this need by offering three separate Marriott properties connected to the airport via SkyTrain. Others, meanwhile, could consider providing a wider array of price points within a single hotel in order to service more travellers.
Airport and hotel executives considering capitalising on this lucrative market must make decisions with the customer in mind to attain global notoriety. Ultimately, having a thoughtfully-designed hotel that prioritises the passenger experience will lead to a significant new revenue stream and enhanced satisfaction ratings.
A successful, multi-dimensional approach will transform the airport into a destination in its own right, rather than simply a means to an end.
About the author
Stephen Freibrun is a principal focusing on commercial and customer experience master planning in ICF’s Aviation practice, one of the world’s largest global aviation and aerospace consulting firms.