Hotel CEOs talk Wi-Fi, Millennials and mobile keys

Travelers don't just want to sleep in hotels anymore. They want to work, eat, drink, socialize or just keep to themselves with their electronic devices there.

Hotels are finding new ways to adapt, including experimenting with technology, design and amenities.

USA TODAY assembled five top hotel executives last month at the Americas Lodging Investment Summit in Los Angeles in the L.A. Live JW Marriott hotel to discuss these changes and challenges. Participating in our fourth annual roundtable were: Wyndham Hotel Group CEO Geoff Ballotti; 21c Museum Hotels President Craig Greenberg; Hyatt Hotels and Resorts CEO Mark Hoplamazian; InterContinental Hotels Group CEO Richard Solomons; and Preferred Hotel Group CEO Lindsey Ueberroth.

USA TODAY's Nancy Trejos moderated the discussion. The text has been edited for clarity and length.

Q: We surveyed nearly 1,000 of our Road Warriors and asked them if free Wi-Fi influences their choice of hotels. The result: 70.9 percent said yes. Hyatt is now offering free Wi-Fi to all guests. IHG is offering free Wi-Fi to loyalty program members. Is free Wi-Fi finally going to become the norm at hotels?

IHG's Solomons: The research you've done is what we see, and one of our biggest "dissatisfiers" that we had a few years ago was Wi-Fi availability, price--and actually how well it worked. If you go back a few more years than I've been in the business, the hotel room was a big advance than what we had at home. How many people at home had air conditioning or separate en-suite bathrooms? In some ways, the wider world moved on faster than the hotel industry. You can go and spend 99 cents on a hamburger at McDonald's and get free Fi-Wi or a cup of coffee.

Hyatt's Hoplamazian: It's been a guest essential for a while now, and we felt that making it conditional was demonstrating maybe a tone deafness.

Q: While many more hotels are offering free Wi-Fi, they have added a new fee for premium, or faster, Wi-Fi. Only 18.1 percent of our Road Warriors said that they would pay for faster Wi-Fi. One of them actually said, "Hotels are starting to become like the airlines. Nickel-and-diming their customers for everything." How do you respond to that?

Wyndham's Ballotti: You need to differentiate between Internet access and knock-your-socks-off, high-speed Wi-Fi. Meeting attendees, planners, people are showing up with not one or two, but three devices, and they are looking for a really fast broadband. To the owner who believes that there's a return on investment and is going to invest in that, I think it makes sense to charge. I think business travelers, meeting planners and attendees are willing to pay for it.

Preferred's Ueberroth: I actually stayed at a hotel in Cannes, France, recently. (Not one of ours.) You could register for very high-speed Internet. For four days, it would cost me 2,600 euros. I think that is clearly where we are not trying to go as an industry. I called down. I said, "I think there's a decimal point missing." I had to ask, and they said, no, that was accurate. There is the acceptable price point, but 2,600 euros?

21c Museum's Greenberg: Guests today are expecting not just great hospitality, but also all the comforts of home and more. They are expecting a comfortable bed; they're expecting hot water; and they're expecting free Wi-Fi. We've always provided it since we opened our first hotel in 2006. We will continue to do so. The new frontier is keeping up with the demand. Just as it's important to replace your mattresses and put in high-definition TVs, we view it as important also to keep up with the bandwidth needs of the guests. So our goal is to figure out how to make those investments to keep up with the guests that are clearly moving quicker than the ability to always change the infrastructure supporting a hotel.

Q: It seems that everyone is trying to go after Millennials, those born in the 80s through the early 2000s. Why go after a group of people who don't really have that much purchasing power yet?

Ueberroth: We actually did a study on Millennials. They are definitely a growing powerhouse, but to build a brand around Millennials is an interesting concept. The reality is, they are not spending their own money. They are spending other people's money right now. And they are influencing the Baby Boomers who have the time and the money to spend.

Ballotti: When you look at the four segments, they are the second fastest spending and the fastest growing. The research last year said the Millennials' spend on travel grew 20 percent, which I don't think it did in the Generation Xers or the Boomers. These people are spending our corporate money, and they are out traveling, and we need to market to them, and we need to appeal to them.

Q: Studies have shown that Millennials don't actually have brand loyalties. So why do all this--create brands and social spaces and improve technology--if they are not loyal?

Hoplamazian: First of all, we are talking about an age group of 16 or 17 years in breadth. There is a big difference between how an 18-year-old is behaving and a 34-year-old is behaving. The idea of trying to create a brand around this group is really sort of curious. It doesn't really make sense because, first of all, you need to stay agile and adapt as people evolve. That's becoming clearer to all of us. I actually don't agree necessarily that Millennials are not brand-loyal. They develop and evolve their brand loyalty in very different ways than the Boomers did or Gen Xers.

Q: Speaking of new brands, Hyatt had some news about creating a new lifestyle brand called Hyatt Centric. Tell us about that Mark.

Hoplamazian: The customer group that we call internally the "modern explorers" are people who are really looking for the experience in the neighborhood which they are visiting. So think of the hotel as a platform, a launching pad from which they can go out and explore the local neighborhood. The core element of what we see in this group is people who are savvy, and they tend to have simple tastes but very high standards. The purpose of a visit would be wide-ranging, from a sabbatical after graduate school or maybe it's a change in job or maybe it's a post-retirement trip. But the core element is that they are curious, and they are looking to explore, not that they are 22 years old or 42 years old or 62 years old.

Q: And IHG recently acquired Kimpton Hotels, the largest boutique brand in the USA. Tell us more about your reasoning behind that, Richard.

Solomons: What we're seeing generally is that the boutique segment has been growing. There is a very big mass-market business out there, and I'm very delighted there is. But there are people who want something different. And so all of us have the choice: Do you buy a brand or do you launch a brand? With Kimpton, it's a company I know well, a leadership team I've known sometime, and it's not replicable again today. They've got really great locations, a great reputation. Currently Kimpton is only in the U.S., and clearly one of the benefits we have is we see great opportunity in Europe and in Asia, including China.

Q: Craig, when we asked our Road Warriors if they would stay at a boutique independent hotel or a major chain, 91.3 percent said they would be more likely to stay at a boutique or a lifestyle brand if it is affiliated with a major chain. How can you compete with the Hiltons and IHGs of the world?

Greenberg: It's fine by us that all the big brands are getting into boutique space. I think there certainly is room for a lot more hotels in that space. It will just be more and more important for us to continue to stay true to our original selves--with rotating art exhibitions, with warm and friendly service--and to continue to innovate and surprise as a smaller company.

Q: Lindsey, this applies to you too because the legacy companies are also entering your space with collections of independent hotels. How has the concept of the independent lifestyle hotel changed?

Ueberroth: The fact that all the big brands are launching their own version of independence is validation. This is where the travelers now are evolving to. They really want something that is authentic and unique. And whether you call it boutique or independent, at the end of the day, it's about a personalized, very authentic experience. Before the advent of the Internet and all these channels, chains served a great purpose, especially internationally, because you wanted a security blanket. Regardless of where you go around the world, there is a confidence that it's going to be an experience that's similar. And now I think (guests) want a different experience, especially Millennials.

Q: Can you name a design change you've made that you've received good guest feedback on?

Hoplamazian: I would just pick lights as one. I know this sounds very mundane, but actually this is really one of the most critical things. Things like a passive night light, both at the night stand level and in a bathroom. The new Park Hyatt in New York, for example, has a passive lighting system in the bathroom so that when you are walking into it at night--it's under the vanity, so it's not a bright glaring light--it lights up the floor so you don't trip on anything. It sounds very simple, but absolutely stunning in terms of the feedback from guests.

Greenberg: My favorite one is a little bit more extreme and probably fits into only possibly the smaller hotel world. I had one room in our Louisville hotel that was in the lower level next to the fitness center. It was always the last to sell. We turned that room over to two artists. Out of that came Asleep in the Cyclone, which is this wonderful, immersive art experience with brown shag carpet and this great multicolored fabric ceiling. We turned it from the least desirable room in the hotel to arguably the most desirable room in the hotel, which now commands a very significant rate premium.

Q: A few brands are trying out keyless entry, using your smartphone as your key. Do you think this will be the industry norm at some point, and what are the challenges that you face as an industry in making this happen?

Ballotti: It's all about the lock providers. There's not a new build or ground-break new construction that it doesn't come up in. If the owners are willing to pay for it and it's not much more money, you have a lock provider. They are all out there. They're all providing it. I think it will become down the road, just as free Internet has become, a standard. It will take time to evolve it.

Q: Can you predict the next cool thing that guests will be able to do with their mobile devices?

Hoplamazian: We recently embedded the Uber app, for example, into the Hyatt app so that if you got a reservation and you are showing up, getting off the plane and you are pulling up your Hyatt reservation, you can, within the app itself, request and book an Uber car. It's taking a step out and providing you the opportunity not to have to go and switch among your apps on your phone.

Greenberg: The hotel industry, like many other industries, has a history of incremental innovation on the technology side. And one risk is if you move too quickly, but do it wrong. We saw the effect of this at 21c in Louisville. We opened in 2006, and we wanted flat-screen TVs in all the bedrooms. So we paid over $1,000 per TV, for flat-screen TVs, in our 90 rooms, none of which were high definition, because that would have been $4,000, 5,000 a room. All of a sudden you've got this very cool-looking TV, but the picture quality stinks because everyone is now broadcasting in high def. We way too soon had to replace all 90 of our $1,000 flat-screen non-HDTVs with HDTVs. You have to be careful that whatever you do adopt, that it works really well and as well as anything that we use in our daily life outside of the hotels.

Q: So many of you make your properties available on the HotelTonight mobile app that lets you book rooms at the last minute. What are you doing to try to capture last-minute bookers through your own channels?

Ballotti: We are all trying to replicate that type of ease with all of our mobile apps. That's where it's headed. 75 percent of those last-minute bookings, 24 hours to check in, it's made on a mobile device, so it's absolutely critical.

Solomons: That is a bigger issue around OTAs (online travel agents). There's always been intermediaries in the business. There are a lot of guests who trust what we do, and they want to stay with us, and they are going to book direct, they are going to book through the rewards club site, whatever it might be. There is another group, much smaller, who just care about price, and they just want last-minute pricing. Those intermediaries who are doing that, that's fine. Let's make sure it's not too expensive, and let's make sure we get a lot of customers. But you can already book last-minute on all of our sites. You just have to be clear with customers, and be very controlled over what inventory is released to these sites and in what way.

Q: Wellness and fitness is something many hotels are focusing on. IHG even created an entire wellness brand called EVEN. Given that fast food chains are still packed, I have to wonder, how big is the segment of travelers who want to stay healthy on the road?

Solomons: When we did our research, the total in the U.S. who say they fall off the wagon when they are on the road is about 17 million people. That was the original insight behind it. It doesn't mean you're not going to have a hotel gym in other hotels. This comes back to the point about targeting. Whether it's boutiques or anything else, there are more and more customers who want the product targeted to them. We opened two hotels. Both of them went number 1 on the TripAdvisor site within months, which I think said to us that there really is that group of people who really want this.

Q: Hotels have been dealing with social media in interesting ways. Are some of these gimmicky or do you think there is a way to leverage social media into making customers more loyal to you?

Ballotti: We think back five years ago. There was no Twitter. There was no Vine. There was no Snapchat. There was no Pinterest. You look today at the quarter of the world's population out there Tweeting and Vining, 2 million people Snapchatting. What our best practices were in terms of marketing have completely evolved. When you think that in any given minute there are 2.5 million posts on Facebook. We would all be naive to not think that we'd better be playing in that space and that it is a gimmick, which it's not.

Ueberroth: Can you build loyalty through a campaign? Campaigning probably isn't going to build loyalty. It's how do you join the conversation? How do you address real-time demands or questions? We are in the business of being hospitable and addressing those needs. I think it's how do you do it authentically and in a way that engages that customer.

Q: We asked our Road Warriors to submit questions this year. From one Road Warrior: "It feels as if loyalty programs continue to lose value by raising the amount needed to get a room. Don't frequent travelers drive more of your business, and shouldn't the trend actually be going in the other direction if you are looking to increase occupancy in the long run?"

Ueberroth: We just launched our points program about a year and a half ago, and because we are all independent hotels, we had to take a different approach. So we did what's called currency based. It's not how many points for a free night, it's a cash value (points are rewarded as cash certificates that can redeemed at hotels.) We're all trying to build loyalty, and how we go about doing it is something we're continuing to evolve. And how do you add more benefits to it? We are all trying to reward the loyalty, but do it in the best manner possible. We are becoming much more nimble, because let's face it, your dry cleaner gives you points, and your Starbucks gives you points. Everybody is expecting some sort of reward now for being loyal.

Q: The USA is now easing relations with Cuba, which will make it easier for Americans to travel there. It's early to tell, but will we some day see an IHG Havana?

Solomons: There are still quite a lot of restrictions on what you can do. But clearly, it's a market that is very close to the U.S. There's going to be a lot more development. I had several phone calls from people who would like us to do things tomorrow that we are not able to do. I think there is a lot of opportunity. A lot of people want to go there before the next round of development comes.

Greenberg: It is an amazing place. So that is definitely on our list as soon as laws permit that. Steve Wilson and Laura Lee Brown, the founders of our company, they've been avid Cuban art collectors for many, many years. We've done a lot of different Cuban art shows in our hotels and work with other institutions. So it's something that's really important to them.