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Why hotels are broken

Dec 7, 2016 by The Capital

Hotels are over-priced and unaffordable. Try to justify why an apartment costs R12 000pm to rent, yet a similar standard hotel room R2 000 a night. And still the industry is not making great profits, often complaining about small margins and the ever-increasing need for cutbacks.

We are operating in a broken hotel sector that cannot sustain outrageous prices caused by large groups that display a complete misalignment of interests: these groups don’t own the properties or the hotels; they are management companies with conflicting incentives.

Most industry players are branded hotel groups that don’t own the properties where they operate. Their primary incentive is to ensure that they protect their brands and are less concerned about the price the guest is paying and whether the property owner makes money.

Generally fancy hotels are run by management companies that have to raise their rates in order to pay for the fancy buildings. They offer inflated prices with loads of unnecessary frills — for which the guest pays.

In general, marketing and management companies don’t have the same incentive as owner operators. It’s an owner-operator ideology that will win in this climate with a focus on quality management.

We own our own buildings and let them out. And we burn if occupancy is low. We burn badly.

The Capital Hotel Group revolutionized the accommodation sphere for the short, medium and long-term traveller. The concept, now a popular global phenomenon, combines the best of both worlds - a full service hotel with the option of self-catering apartments and a host of facilities geared towards the requirements of both business and leisure travellers.

We remove unnecessary frills, keep aesthetics simple and sophisticated without compromising the guest experience; limit the services but not the quality of service. Everything you need. Nothing you don’t. No expensive extras. And we pass on the savings.

We understand the needs of busy professionals and travellers. We minimise the cost of doing business and maximise the return on investment, both for our guests and our business.

We give corporates everything they need and nothing they don’t. Our hotels offer complimentary laundry and all channel satellite television, but there won’t be three porters at the door to help with luggage because most guests are happy to wheel in their own bags.

We give guests more than double the space, which matters when you’re staying for longer. Our experience is that business people are there to work and they want good quality surroundings, but not the excessive decoration that you see in many hotels.

“So we design our buildings backwards: What is the corporate client prepared to pay per night and therefore what do we invest in this hotel or apartment? The numbers don’t lie: our hotels consistently have the highest-ranking occupancy in Sandton - an average of 83% month on month.

Hopefully we’re going to steadily see more signs of the hospitality industry’s efforts to provide more of what travellers want and stop wasting money on the frills nobody will miss - Marc Wachsberger, MD of The Capital Hotel Group.

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