Top U.S. Hotel Chain Survey: Walt Disney World Wins Burgeoning Upscale Category

By David Eisen

MARCH 06, 2006 -- Eleven brands vied for top billing in the upscale category of Business Travel News' U.S. Hotel Chain Survey, with Walt Disney World Resorts coming out ahead by offering premium meeting facilities and staff service. Strong growth performance within the category also stimulated new development of many hotel brands—both domestically and abroad.

Disney carried every category, receiving high marks for its ability to arrange individual travel, its meeting facilities and the helpfulness of its staff. Falling in behind Disney was Hilton International, which in January was bought by Hilton Hotels Corp. for $5.71 billion, in second place. Marriott, Hyatt and Hilton brand Embassy Suites rounded out the top five.

The upscale segment is cluttered with many brand offerings and has been one of the fastest-growing categories during the past five years in terms of demand. That has resulted in an occupancy rate that is at the top of the tiers—70.7 percent in 2005, which exceeded 2004's rate by 1.6 percentage points, according to Smith Travel Research. The impressive growth in the segment is spurring more property development, even spawning neo-brand offerings, including Starwood's Aloft brand—debuting in 2007—NYLO Hotels and Hyatt's rebranding of AmeriSuites to Hyatt Place Hotels.

These new brands will offer upscale amenities at a price-conscious rate and augment a supply growth that Smith Travel Research estimated at 1.4 percent from 2004 to 2005.

As the upscale category continued to absorb new entrants, hoteliers jockeyed for position to ensure their brands remained relevant. However, Sean Hennessey, CEO of Lodging Investment Advisors, said growing supply will not marginalize hotel profits. "There will be no deterioration in the business on the basis of too many new hotels coming in and dividing up the pie," he said. "The only real concern is if the economy slows."

Optimism has not slowed hoteliers from adding value to their brands. "At Disney, we think that all the meetings and group spaces don't need to be utilitarian," said George Aguel, senior vice president of Walt Disney Parks and Resorts. "Truly, there had to be a way to make it more thematic and continue to tell the story of the resort. Every one of our resorts tells a story and we extend this feeling into our hotel properties and meeting spaces." Disney's Coronado Springs boasts more than 220,000 square feet of meeting space with a Southwestern feel.

Disney offers a meetings service, conceived in 2004, to assuage some of the burdens that meeting professionals encounter and to help exhibitors maximize their trade show investment by abetting the exhibitor in anything from technical services to dinner reservations for clients. "It's an opportunity for the exhibitor to leverage the things that Disney may be able to do to help them do business with their customers that are attending their trade shows," Aguel said.

As demand in the upscale sector continues to surge, hotel companies are becoming less hesitant to populate areas with their brands both domestically and internationally. Hilton Hotels Corp.'s expensive buy of Hilton Group Plc was done to globally grow the brand, similar to what Marriott and Starwood already have done. The purchase added Hilton Group's 400 hotels to Hilton's existing portfolio, but also will enable Hilton to populate Europe and Asia with its domestic brands. Linda Bain, vice president of group communications for Hilton International, said that the Hilton flag's success in the United States will transfer effectively across the Atlantic. "Hilton continues to focus on high-growth markets," she said. "We are accessing opportunities for key brands and taking existing Hilton brands—like Embassy Suites—and applying them internationally. Hilton's attraction for the deal is the international opportunity for its brand range." Hilton International's existing portfolio includes the Conrad, Hilton and Scandic, its respective luxury, upscale and midprice offerings.

Hotels across the spectrum are dedicating more resources to ensuring that their guests—both business and leisure—have memorable experiences. This service guarantee is something at the core of Disney's model and has been taught to its employees and fine-tuned over the years. "Researching and understanding what our guests are telling us is something we exhaustively look at," said Aguel.

While premium service is pivotal to Walt Disney Resorts' success, Disney doesn't neglect keeping pace with technology. It is in the process of refurbishing the Contemporary Resort, one of its 22 operated hotels, with many upgraded features, including flat-panel televisions in the guest rooms, high-speed Internet capability and wireless Internet in meeting spaces. Aguel noted that these revisions, as well as new bedding and workspaces, were aimed to increase business traveler comfort.

Back to Articles