Can downgrading save luxury hotels?


The announcements earlier this year of Hilton and InterContinental hotels in Vienna (Austria) that they were looking to downgrade from five to four stars have been met with mixed reactions. The news was like a breath of air for the hotel owners, who would no longer have to submit to the continuous pressure of the hotel chains for renovation and refurbishment investments. Mention should be made that both hotels need extensive renovation investments which have been delayed several times, most recently because of the financial crisis.

Corporate clients were also among those cheering at the news, as even during the crisis they would no longer have to ”avoid” booking the two hotels because of the five star rating, which was no longer accepted in the books of the companies.

Leisure travellers would also welcome the move as the pricing policy of the hotels would translate into lower rates and better priced packages. Tour operators and travel agencies would also benefit from this downgrading, being able to maximize their sales at luxury branded properties, now sold at ”four star prices”.

So who would be the losers of this downgrading? They would be the hotel chains themselves. Hilton, InterContinental, Kempinski, Marriott have all seen a constant decrease in their ”luxury reputation” in the past years, especially due to their continuous lowering of prices as well as the resistance of their owners to invest in renovating the properties, otherwise the only way to maintain their five star status.

Unfortunately, guests are not familiar with the reasons behind the state of many such hotels. More and more travellers are paying attention to the quality of the product which is provided by the property and no longer find it acceptable, even if service might be at the highest level. Hoteliers have to be aware that the current financial crisis has forever changed the way travellers regard hotel ratings, most considering value as the most important criteria in booking a hotel.

International locations of these brands which are already of four star level, while their formal rating remains five star:

INTER CONTINENTAL: New York, Bucharest,  Prague, Vienna

HILTON: Milan, Paris, Prague, Vienna, New York

MARRIOTT: London, New York, Athens, Monaco, Munich

KEMPINSKI: Sofia, Munich, Moscow, Hamburg