The International Network of Hospitality Consulting Professionals

Digital Marketing Timeline for New Hotel Opening

A new hotel opening or changing of flags has so many moving parts. As an owner or manager overseeing this transition, you are likely wearing multiple hats. Here is a hotel digital marketing timeline for opening hotels to ensure you are building your website presence and a healthy channel mix that has reduced OTA dependency later down the road.

1 Year Prior to New Hotel Opening: FOUNDATION

  • Buy your preferred domain. Develop a 1-page site or temporarily redirect to a page on your management company site. This should have contact info about sales and careers.
  • Determine your opening budget. Be sure to include an extensive photo shoot, UNAP (URL, Name, Address, Phone) consistency and heavy paid marketing for the first 3 to 6 months of the new hotel opening. Participate in brand promotional add-ons if applicable for year one.
  • Create a fact sheet. The sales team will need something that has stock photography, amenities, and proximity to local demand generators.
  • Pencil in a photographer. If you are a branded hotel, ensure you meet brand standards in case they require certain companies to shoot, and also specific images. For more photo shoot considerations, visit these hotel photography guidelines.
  • Choose the best systems. For an independent hotel, ensure there is proper alignment between your PMS, Booking Engine, Channel Manager and Website. Make sure respective systems can integrate with a CRM down the road. The website vendor should be on top of latest search engine optimization trends, site speed, responsive design, booking engine integrations, and Google Analytics e-commerce/goal tracking.
  • Develop a voice for your brand. Who is your target audience? How will you fit into the compset? What are your goals, for digital marketing and otherwise? Pull market statistics from your CVB to properly set expectations.

6 Months Prior to New Hotel Opening: WEBSITE

  • Hopefully, your website is live or being built and these points are considered.
  • Define your unique selling propositions. Consider what is unique to your hotel and location against the comp set. Also, what is unique about your sub-brand, in terms of food and beverage, pet policies, in-room amenities. This is also location-based and how far your hotel is from specific demand generators. If your hotel has a free hot breakfast, are there any signature items? If you are close to a university, how far and are you the closest hotel to that place?
  • Find niche keywords for your on-site search engine optimization. Each page should be dedicated to different keywords. Start with niche keywords and expand into more competitive keywords later. Your meta descriptions should include unique selling propositions again. Integrate your keywords into on-page content and header/alt tags.
  • Write extensive content. Ensure your homepage lists all your unique selling propositions. Supporting pages should be dedicated to amenities, rooms, offers and the local area, at a minimum. Include keywords strategically placed throughout.
  • Have a working phone number. You should have your local number, but likely no front desk, so set this up to forward to your corporate office or someone’s cell phone.
  • Create a social media presence. Keep it minimal and just start with Facebook then you can grow into more platforms later. Aggressive posting isn’t needed at this time, but post construction pics, job fairs, and team training events.

3 Months Prior to New Hotel Opening: RATES

  • Ensure rates are live. Rate strategy should be built and rates should be selling on your website. Submit to get your interface set up with the larger OTAs, at least Expedia and Booking.com. Audit your content and imagery on these sites and fill out as much as you can.
  • Build at least 1 local package. It should showcase your unique selling propositions, partnerships or proximity to local demand generators. Leverage these to get exposure on your local CVB and chamber websites. And keep the fall back packages, like AAA, Points and Advanced Purchase.
  • Activate local listings like TripAdvisor and Cvent.
  • Check GDS strategy. Ensure major GDS channels are live and pushing AAA at a minimum.

2 Weeks Prior to New Hotel Opening: EXPOSURE

  • Write your press release. If you are a new hotel that is a flag change, the press release will need to comprehensively show the volume of the renovation. Later, this press release will be easier to submit to TripAdvisor to wipe old reviews than some other documents they accept.
  • Execute online partnerships. Your sales team should be in full force. As they are creating relationships on the ground, they need to think about how to promote the hotel online and get listed on local sites. Not only will it drive referral traffic to your site, but it will also help with off-site search engine optimization.
  • Tweak your paid marketing budget. Does your original budget align with hotel needs and season you are opening? Finalize your UNAP partner to ensure your hotel is visible on all channels with correct URL, Name, Address, and Phone number.

Day Of Opening: TESTING AND LOCAL

  • Ensure a working phone number. It should be ringing to the front desk.
  • Do test reservations. Test inventory selling for day of on multiple channels and do test reservations.
  • Distribute your press release. Consider using a national distribution service but also send to local avenues to distribute like your CVB and chamber.
  • Communicate opening on social media. Post the new hotel opening on Facebook and any other social channels you have.
  • Claim local listings. This includes Google My Business, Yelp, Bing and Apple. There is usually a phone verification involved.

2 Weeks Post Opening: PAID MARKETING, GPS AND PHOTO SHOOT

  • Turn on paid marketing. Considerations are Google Adwords, MetaSearch, Groupon/Flash Sales, Social Media, Waze, Eblasts, Travel Ads, Retargeting, Banner Ads. If you don’t have a database yet for email marketing (as most won’t) check with your CVB to advertise in one of their e-blasts or e-newsletters. Most states also have a tourism website that you can advertise.
  • Submit the new location to maps sources. With new builds, sometimes GPS devices don’t recognize road extensions or that a building physically exists. Check Apple Maps, Tele Atlas, Navteq, OpenStreetMap, and Waze. Google My Business should already be claimed at this point, but do submit turn-by-turn direction changes if needed.
  • Prep for the photo shoot. Your photo shoot should be scheduled within 30 days of opening. Ensure your landscaping looks good and you have extra staff scheduled around breakfast and reception times, if applicable.

90 Days Post Opening: CLEAN UP

  • Distribute new imagery to all channels. Ensure consistent image storytelling on your website, OTAs, local listings and social media.
  • Check with front desk for guest complaints. Cross-reference sites to make sure amenities and directions are not vague or misstated.
  • Check analytics and reporting. Check Google Search Console and Google Analytics for increased organic exposure. You also need to check Google My Business statistics. Look at your channel mix for red flags on really low channels. Tweak strategies as needed.
  • Plan for Grand Opening Party. Time to celebrate and invite your favorite and potential clients for a party. Budget for food and entertainment. Showcase local vendors specific to your area. Design custom invites and play it up on social media.

The goal should be exposure sooner than later and integrate a plan that spends money in the right areas for your new hotel opening until base business is acquired. Also, you want to ensure a consistent story is being told across all channels to avoid guest confusion and higher conversions. For assistance in executing on this timeline, contact Cogwheel Marketing.


About the Author:

Stephanie Smith, founder of Cogwheel Marketing, is an expert in hotel digital marketing and comprehensive digital strategy for both branded and independent hotels. The company has opened over 40 newly built hotels plus handled the flag / name conversions of another dozen hotels.  To ensure a cohesive online presence, the digital strategy must be aligned with the goals of operations, sales and revenue management.  Cogwheel Marketing understands the roadblocks teams face in hospitality and how to work around system issues, restrictions and delays.  Contact them if you are interested in the execution of the above timeline with their opening package.

The Relationship Between LEED Hotel Design and Guest Satisfaction

An approach of environmental design in LEED hotels by comparing visual and verbal experiences.

A study in emotional design and its relationship to LEED certified hotel design and guest experience.

For: Department of Design and Environmental Analysis, Cornell University. 3423 Martha Van Rensselaer Hall, Ithaca, New York

Abstract

The goal of this paper is to highlight those actions that can change the experience of the customer during their stay by the design in the guestroom. The research carried out choice hotels located in the United States and Europe in order to find out and compare strategies of each one.

The research covered ten case studies, which were chosen by obtaining LEED certification. Once we obtained their design actions developed for getting indoor air quality, the research compared which of them were influential on the customer experiences during their stay by reviewing TripAdvisor reviews and pictures of customers.

The results show us how the LEED certified hotels have a relation between the design action of LEED and the customer’s experience in rooms. In addition, the paper reveals a group of emotional codes in terms of comfort, relaxing and visual relations between built and natural environments.

Introduction

The hotel’s rooms represent almost 70% of the total built surface of the hotel (Forster Associate, 1993). This percentage may change depending of the type of hotel (skyscraper, hotel of 4-7 floors or tourist resorts). 10% of customer purchases are driven by guestroom design (Dubé L. & Renaghan L.M., 1999) and 9% were driven by the following attributes: HVCA, aesthetics, overall size, cleanliness, comfort, kitchenette, work equipment and entertainment. In Dubè`s research, the customer gave their opinion during the stay or at the point of purchase decision. That means that the experience was not finished, leaving the possibility to change their opinion during the rest of stay. In any case, some of the attributes defined in 1999 by Dubè continue to be useful for defending the hypothesis that emotional guestroom design is more important than functional guestroom design, such as, size, comfort and entertainment.

During the last decades, architects and interior designers have been studying the guestroom through functional design features (Rutes, W.A., Penner R.H., &, Adams, L., 2001). The relation between optimal dimension, amenities and room types is the goal for architects to design a guestroom. Technical and constructive aspects are important too for designing, interchangeably the type and room’s dimension (Rutes W.A., FAIA, & Penner R., 1985).

On this line of spatial and technical aspects, U.S. Green Building Council organization is promoting sustainable actions to offer professionals a guideline, in order to get a sustainable certification for the building. Leadership in Energy and Environmental Design (LEED) is the title of the certificate and is becoming a kind of marketing brand in the hospitality industry. We still do not know how the LEED certificate may impact on the business benefits (Walsman M., Verma R. & Muthulingam S., 2014). However, LEED certification continues to be the most proper certificate for sustainable designing in the U.S. hospitality industry. Some of the most important chain hotels in the world, such as, Marriott, are promoting the LEED certification in their hotel by creating the first LEED Volume Program. So far, this company has thirty hotels with awards and has introduced the first LEED green Hotel Prototype.

LEED certification is based in point schedule by six categories (sustainable sites, water efficiency, energy & atmosphere, material & resources, indoor environmental quality and innovation. In this research, we will put the focus on the indoor environmental quality aspect because by studying its parameters of design, the researcher can understand that this is the more related category regarding the design and customer’s experience inside the guest room. These parameters are increasing ventilation, thermal comfort-design, and daylight and views, among others.

If LEED certification gives us the benefit and certainty during and after the hotel’s construction for being a sustainable hotel, that benefit is opening new lines of research for knowing the customer’s experience in a LEED certification hotel. Could a LEED hotel increase the customer experience? Or does a green hotel not always mean a successful experience for the customer? Professionals in the hospitality industry are convinced that the most important thing is the customer experience. Three of the head officers of the most important chain hotel in the world defended that idea during the lecture series in the fall semester of 2014 at the School of Hotel Administration at Cornell University. Mr. Ronald T. Harrison said, “the most important for Marritot is people; Mr. Kevin Jacobs said during his lecture, “we are passionate about delivering the best experience to our guest; and Samantha Sugarman showed the goals for facilities and design analysis in Four Seasons hotels, which are “specific style of design, don’t dictate a style, every hotel has their style and want great experience.” All of them considered the customer experience as the principal concern in the hospitality industry.

So far, we know that LEED certification has become a metric for sustainable hotels in the U.S. and the chain hotels are focusing on the customer experience for improving their benefits. The scientific researchers conducted studies about the customer experience and its impact in the hospitality industry; in addition they applied different methodological approaches.

The volume of customer reviews on the TripAdvisor website for the final purchasing decision, represents an important tool for potential customers (Melián González S., Bulchand Gidumal J., & López Valcárcel B., 2014). The electronic word-of-mouth called eWOM (Cantallops A.S., Salvi F., 2014) is more effective than communication marketing in the hotel sector (Litvin S.W., Goldsmith R.E., & Pam B., 2008; Gretzel, U., & Kyung Hyan Y., 2008).

The eWOM can be manipulated for anyone, and the authenticity of the comments can be false (Mayzlin D., Dover Y., & Chevarlier J., 2012). The impact of the TripAdvisor reviews directly affects the reputation of the hotel and changes the booking of hotels (Anderson K., 2012). Due the possibility for false reviews and a decrease in the percentage of real reviews, the researcher applied a methodology for increasing the indicator about the truthfulness of costumer’s reviews. Thus, the study continues using the impact of reviews on TripAdvisor as a source.

TripAdvisor gives the customer the possibility to insert their reviews and upload pictures of their travel before or after their stay at the hotel. The pictures taken inside the guestroom become irrevocable proof that the customer stayed at the hotel and give us information of their behaviors and memories (Harper D., 2002). In addition, it is a form of evidence that the reviews were written after the stay. Pictures in the form of postcards have been used in tourism for representing an ideological discourse in modern tourism (Albers P.C., & W.R. James, 1988) representing icons, customs or landscapes of the places to visit. The new technologic trends in smartphones and cameras give the customer the possibility to capture any moment during the stay. Often, customers use photography to spark strong memories, among others reasons (Pullman M., & Robson S., 2007). Thus, the researcher studied the pictures taken inside the room, knowing that the pictures uploaded represent positive or negative memories from the customer’s experience. Regarding what kind of pictures the customer takes during the stay, the research concluded those highlight important design elements. In other research where a photographic approach was applied through websites, researchers discovered the subject of the pictures reflecting the customer’s behavior (Donaire J.A., Camprubí R., & Galí N., 2014; Chalfen R.M., 1979). This research is focused on what they captured and not how they were made.

The current research is carrying out a new approach based on emotive design for the hospitality industry, putting in evidence the customer’s comments and pictures as the new approach for the hospitality design. Often, architects and interior designers are able to design hotels without any background knowledge about the customer’s experience. The hospitality industry, based in the guest experience, must focus more on the emotive design in hotels and public spaces (Lo K.P.Y., 2009, 2011; Masoudi A., Cudney E., and Paryani K., 2013; Pullman M., & Robson S., 2007; Jüttner U., Windler K., Schaffner D., and Maklan S., 2013).

The emotional design in guest rooms means working on designing for emotive status, such as, functional, satisfactory or memorable experience (Lo K.P.Y., 2007). Each status is defined by different emphases on its design (Barsky J., & Nash, L., 2002). It is, therefore, how we can achieve a memorable experience in LEED hotels. LEED certificate represents the top level for sustainable actions for buildings in U.S. That means that the hotel or chain of hotels wants to communicate a clear message to its guests. Having a message or theme is one of the conditions to achieve a memorable experience.

The research analyzed those designs that the customers emphasized through comments and pictures on TripAdvisor’s website. Using this approach we will be able to recognize positive or negative design aspects in LEED hotels.

The emotional design has been studied and put into practice by other disciplines that use object or symbols (Norman D.A., 2002, 2004; kim H., & Lee w., 2014). The hospitality industry is becoming a trend sector for applying new methodologies in interaction with the human behaviors. Recently, researchers are searching new approaches for understanding the customers’ behaviors using eye tracking (Robson S., & Noone B., 2014).

This research highlights the opportunity for using the emotional design in the hospitality industry because it is a sector based in human experiences. The success of guestroom design must be understood as those spaces are able to offer many experiences to the customers. The idea of designing many rooms within a room (Siguaw A.J., & Enz C.A., 1999) is the basis for thinking that a guestroom is not only a functional space or a satisfactory experience. The real loyalty of customers in a guestroom of a hotel is when the expectation of the room design is exceeded and memorable experiences are reached through it (Skogland, I., & Siguaw, J. A. 2004). If that emotional guest room is applied in LEED hotels improving its commitment with the environment and energy, we can break old concepts in the hospitality industry and add value to guestroom experience in hotels.

Material and methods

In order to obtain results that can be used or put into practices by professionals in the hospitality industry, the material and methods applied were collected directly from resources used by professionals or real customers.

The stages used to obtain material and the methodologies applied in this study were mainly based in two phases. In every one of them, the goals were different, which means each phase used different methodologies. The first stage of the study was representative, collecting data from different sources. The second stage focused on creating groups of emotional design codes in LEED hotels.

Discerning visual design codes.

All the photographs in bathrooms and bedrooms were codified according to the parameters of tangible or intangible elements and their spatial relation (visual and physical). The total of elements coded in bathrooms and bedrooms were 32.

According to this study of the customers’ visual impact, we could identify three types of user experiences. Those experiences are based on the tangible element of bed as a “sleeping” experience, the bathtub jet/shower sauna as a “relaxing /spa” experience, and the physical space of living room as a “living / welcoming” experience.

If we think in experiences (sleeping, relaxing/spa and living) and not just in spaces or elements distributed in a functional way, we are actually changing the traditional concept of hotels. A hotel room design geared towards an emotional design would improve the current strategies of many hotels that only use technology (free wifi or tv flat screen) as added value in rooms. (Gilmore J. H., & Pine II B. J., 2002).

The research highlighted the importance of getting a memorable experience while the sleeping, relaxing in the living area and taking a shower.

Verbal codes in memorable experiences.

The next phase was to figure out which customer’s comments made reference to those elements identified as keys to getting a memorable experience in the previous step, and which comments represented a positive emotion.

We studied the comments of 217 TripAdvisor users, obtaining a total of 291 codes between bathrooms and bedrooms. These codes gave us more information about the elements studied previously by the visual impact, and others features which were not photographed. In order to discover how positive the experience was, the study was able to detect those memorable experiences by identifying related adjectives with the elements studied.

If we compare the results between the elements of visual impact method and customers’ comments, we can conclude that the bathtub or soaking tub and the views to outside are the elements to consider in the design of the bathroom that will most likely result in a memorable customer experience.

A visual connection between the bathtub and the bed, an outdoor bathtub, a flat shower separated from the bathtub, or a vanity with two sinks are some of the elements in bathrooms that increase positive emotions (see table 9).

Comparatively, the elements in the bedrooms were beds, views to the outside, furniture and the living room area. The artificial light and natural light were not analyzed due the low percentage of customers’ comments. Nevertheless, the results of the elements studied were high enough to find out how customers achieve memorable experiences in bedrooms.

In the living area of bedrooms, the fireplace element was the most commented by customers with 5.5% of customer’s positive emotions, using adjectives like excellent, fantastic or lovely. 5% of customers appreciated décor or a modern style as a way to make them feel like they were far away or made them feel at home.

Conclusions

The study analyzed LEED hotels in Europe and in the U.S. to figure out if the design of sustainable actions and customer’s satisfaction had a relation between them. The room was the space chosen to study the correspondence between sustainable design and satisfaction. Using a method based on the photographs taken by real customers we coded all the elements with a visual impact in bathrooms and bedrooms. Once we categorized them, we could find out which of them had higher visual impacts. In the bathrooms, the bathtub or jetted tub, the mirror and the vanity, which had 14.6 %, 14.6% and 14% respectively, were the elements highlighted by customers.

In addition, the design of the bathroom with a bathtub beside a window facing the outside with a wonderful landscape, garden, or urban scene was considered by customer as a positive emotion, making it a memorable experience in almost 20% of clients. In bedrooms, high visual impact was mainly concentrated on four elements: the bed, furniture, natural light and views with 13.7%, 20.3%, 20.4% and 15.65% respectively. A comfortable bed and an attractive view to the outside were the most rated by customers.  All these elements were coded in order to identify and categorize them according their own features, such as, tangibility, intangibility, visual relation, physical relation or technology.

Once the results were studied, we discovered that there was a correspondence between sustainable design criteria and customer satisfaction. The data suggested than a customer’s experience may change in the hotel if some of these criteria are not present. The natural light and views are those two essential elements for obtaining a LEED certificate in IEQ category with high visual impact.  The views to the outside in bathrooms represented 9.1% and natural light represented 9.7%. These percentages in bedrooms are higher, in which the view was 15.65% and natural light was 20.4% of customers. The IEQ category in LEED certification establishes two criteria regarding views and natural light, which are EQc8.1 Daylight and views – daylight 75% of spaces and EQc8.2 Daylight and views – views for 90% of spaces. Both criteria provide building occupants with a connection between indoors spaces and the outdoors through the introduction of daylight and views.

If the photographs show what elements have a visual impact to the customers in the guestroom during their stay, the second aim was to find out if a sustainable design has the ability to make customers feel positive emotions in rooms. The research suggested that design in rooms could produce positive emotions in customers. In addition, according the study, the customers could get a memorable experience through the design (Lo, K.P.Y., 2007).

To get information about the positive customer emotion and design, we studied all comments posted on TripAdvisor website. All comments with positive adjectives were classified and put in relation with the design’s elements studied previously. A main outcome of this method was that customers experienced most of the positive emotions and memorable experiences in three different elements of the room (one in bathroom and two in the bedroom). These elements were the bathtub, bed and fireplace.

However, the study also discovered that without comfort and views to outside, the customers did not achieve a memorable experience. 19.6% of customers described their experiences in the bathtub with views to outside as an amazing moment. More than 45% of customers thought that the size and comfort of the bed was very important to get a memorable experience. This percentage increased when the room offered views to the landscape, representing 38.6% of positive emotion in bedrooms and 19.6% in bathrooms .

The strong correspondence between the customer rating in rooms of LEED hotels on TripAdvisor website reinforces the hypothesis that sustainable actions are related to customer satisfaction. This result and the outcomes previously shown highlight the possibility of considering a new indicator of sustainable design that is able to measure positive emotion in hotels.

Moreover, this study shows a code series that compares elements of design and the emotional charge of customers in hotels. The challenge of this research is discovering all emotional codes through the design in hotels, in order to build an indicator and emotional guidelines of design able to predict the customer’s experience. In this study, we focused on visual impact and comments codes of design and customer experience. Nevertheless, we realized during the process that a code series related with human well-being, physical perception of spaces and use of technology also existed., It would be interesting to study these elements as well, in order to be able to predict memorable experiences in hotels by using an emotional design.

To view the paper in its entirety, including illustrations, tables and references, please click below .

 

This paper originally appeared in ARA Journal of Tourism Research 6-1, (2016).


About the Author:

Ivan Alvarez Leon is a former member of Cayuga Hospitality Consultants

Iran as a Major Opportunity for US Hotel Brands and Developers

By: Shirin Heidary and Albert Pucciarelli of McElroy, Deutsch, Mulvaney & Carpenter, LLP

Hyatt, InterContinental, Hilton, Sheraton – these United States hotel brands were once associated with Iran. During the Shah era, Hilton had a hotel in Tehran called the Royal Tehran Hilton; InterContinental had one called the Tehran InterContinental; Sheraton had the Arya-Sheraton Hotel; and Hyatt had the Hyatt Crown Tehran.

Following the 1979 revolution, hotel management contracts associated with these US brands, among other foreign brands, were severed as the hotels became state-run and nationalized. Additionally, foreign investors were later limited from investing in Iran due to international economic and political sanctions against business dealings.

On April 2, 2015, the permanent members of the UN security council and Iran broke through years of mutual exclusion by inking a provisional agreement on a framework that, once finalized and implemented, would be exchanged for limits to Iran’s nuclear programs. As a result of this agreement, UN sanctions were lifted on January 16, 2016. Since then, most of the European Union sanctions have also been eased.

US sanctions, though, remain largely in place awaiting the outcome of this agreement. The recent Presidential election also casts uncertainty on the nation’s commitment to the nuclear agreement, and the uncertainty itself will discourage US investment activity in Iran.

While the United States mulls over its position with Iran, European hotel developers have been acquiring some of the choicest tourist spots in Iran to construct new hotels. Meliá Hotels International is planning to open a 319-room hotel in 2017 on the Caspian Sea. In stride with the Middle Eastern nation’s efforts to modernize, private ownership by non-Iranians is now permitted for commercial or industrial property as well as for personal residence.

Next, in 2014, Accor Hotels, the French multinational hotel group, the sixth largest in the world, became the first international hotel group to enter the Iranian market since the 1979 revolution. Accor Hotels will open an Ibis property and a Novotel branch near Tehran’s international airport. The move comes just two months after the historic nuclear accord which the West says is aimed at preventing Iran from building a nuclear bomb. Combined, these two hotels have a total of nearly 500 rooms.

Other hotel operators have also seen the potential and have already entered the market. Abu Dhabi-based Rotana Hotel Management Corp. has signed management agreements for four hotels in Iran – two in Tehran (opening in 2018) and two in Mashad (opening in 2017). The Dubai-based Jumeirah Group is also looking to capitalize on the tourism potential in Iran.

Forecasts and Effects

Iran is estimated to have almost 900 hotels within five years, compared to 768 now according to a forecast by Euromonitor International. The firm predicts that lodging revenue is set to increase about 25% during this time as the number of visitors is forecasted to grow by a similar percentage to 6.3 million.

One of the largest countries in the Middle East, Iran has a strategic position connecting Russia and Turkey to the Arab world as well as being a key hub for transportation between Asia and Europe. Iran has one of the top 20 largest economies in the world and the lifting of sanctions will now open up a new phase for foreign investment. In anticipation of increased foreign investment, the Iranian government is already implementing strategies to accelerate the development of key sectors, especially oil and gas, technology, and tourism. According to the International Monetary Fund, GDP in Iran will grow by almost 4% as an immediate result of the foreign investment the country will receive after the lifting of sanctions.

Tourism is undoubtedly one of the industries with the most promising growth prospects. Iran expects to attract more than 20 million passengers per year by 2025, compared to the current 5 million. This will require the development of additional transport infrastructure and hotel capacity, estimated to be at least 150 hotels catering to this increased demand. The government has recently revealed its intention to acquire up to 160 Airbus jets to add to the Iran Air fleet as well as build more than 500 kilometers of new railway lines every year and new highways.

The implications of this upswing in development are vast and quite lucrative. Hotels have been one of the most effective tools at the outset to attract new investment into a region. Businesspeople, investors and tourists are more likely to visit an area that has name brand recognition in the form of an established hotel chain. And an adequate supply of hotel rooms surely helps to promote other businesses in the region.

Comparison to the U.S. Embargo against Cuba

The reluctance of the United States to conduct business with Iran is reminiscent of the country’s economic embargo against Cuba. Although an embargo on the sale of arms was imposed earlier, since 1960, the US has imposed strict commercial, economic and financial bans against Cuba. In 2009, the Obama Administration began easing the embargo by allowing Cuban-Americans to travel freely to Cuba. In February 2016, the US Government allowed two American men from Alabama to build a factory that will assemble as many as a thousand small tractors per year for sale to private farmers in Cuba. The $5 million to $10 million plant was the first significant US business investment on Cuban soil since 1959.

In 2016, Starwood Hotels and Resorts (now part of Marriott International) broke an almost 60-year drought of US hotel activity in Cuba with its announcement of the signing of three hotel deals in Cuba. Marriott International itself has separately indicated an interest in doing business in Cuba. Other U.S. hotel companies will surely follow.

European hotel companies, though, have been operating in Cuba throughout the embargo years. Cuba is the second most popular tourist destination in the Caribbean, behind only the Dominican Republic, with 3.5 million tourist arrivals in 2015. Hence, the US brands will not have the advantage as the first among the international brands on the scene. Even so, the power of the major US brands can be expected to attract occupancy at high daily rates as only these recognized hotel names can do.

Conclusion

The embargo against Cuba has cost the US economy approximately $1.2 billion per year in lost sales and exports as well as $3.6 billion per year in economic output according to the US Chamber of Commerce and the Cuba Policy Foundation respectively. For US hotel developers and brands, the door to Iran is now open and it is not clear how long this will be the case. Now is a good time for hotel developers to team up with one of the major US brands and investigate the opportunities in Iran.


About the Authors 

Albert Pucciarelli is a former member of Cayuga Hospitality Consultants.

 

Further Resources:

  1. “Hotel Groups Eye Iran Tourism Potential as Sanction Deal Nears,” Financial Times, June 21, 2015.
  2. Official Website of the Contemporary Architecture of Iran
  3. Significant Changes to U.S. and E.U. Sanctions Against Iran,” Ropes & Gray Alert, January 26, 2016.
  4. High Costs for New Construction in Iran,” Global Property Guide, February 25, 2015.
  5. “Meliá Hotels International announces its first Gran Meliá hotel in Iran alongside a leading Iranian industrial & developer group,” published on Meliá Hotels International website, March 2, 2016.
  6. “Iran to Get Luxury Hotel Along Caspian Sea as Tourism Thaws,” Bloomberg News, March 2, 2016.
  7. Accor to Sign Iran Hotel Deal,” Wall Street Journal, Business Section, September 15, 2015.
  8. Meliá Hotels International announces its first Gran Meliá hotel in Iran alongside a leading Iranian industrial & developer group,” published on Meliá Hotels International website, March 2, 2016.
  9. “United States embargo against Cuba,” Wikipedia, December 20, 2016.
  10. “Starwood: 1stS. Company to run Cuba Hotels in Decades, U.S.A. Today, March 21, 2016.