Marriott imports a new hotel brand for Millennials

• Second aggressive move company has made for Gen X and Y traveler this year
• Already 79 AC Hotels by Marriott in Spain%2C Portugal%2C France%2C Italy
• Industry appeals to the next generation of business travelers

Marriott International today will announce plans to introduce to the U.S. a European-based hotel chain that targets younger, tech- and design-savvy travelers.

Marriott will import the AC Hotels by Marriott, a Madrid-based, midprice brand it partnered with in 2011 to broaden its European presence. The Bethesda, Md.-based hospitality giant is betting on the urban lifestyle hotel chain to capture the lucrative Millennial market and its rapidly growing purchasing power.

"It's the right time to bring it to the U.S.," says Brian King, global brand officer for Marriott Endorsed Brands. "You import wine and you import cars. We're going to import a hotel brand."

It's a first for Marriott. And it's the second aggressive move the company has made on the Generation X and Y traveler this year. Recently, Marriott announced it is partnering with the Swedish IKEA furniture company to launch Moxy, a budget chain for Europe. It will run the AC Hotels by Marriott as a joint venture in the U.S. There are already 79 AC Hotels by Marriott in Spain, Portugal, France and Italy.

Hoteliers and researchers say Millennials, those generally born in the 1980s to the early 2000s, are unique travelers because they want to stay constantly connected through social media, they want coffeehouse-like spaces where they can work and play, and they want unique and local amenities. They also want it all instantly and in a comfortable, modern setting.

The company will describe its plans for AC Hotels by Marriott at the 35th Annual New York University International Hospitality Industry Investment Conference today.

King says the Generation X and Y business traveler has been underserved. He cited Marriott research that indicates that business travelers ages 21 to 49 who make three or more business trips a year spend $34 billion on hotel rooms.

"This generation … they grew up with Gilt, Target, Fab.com, Apple," he says. "These brands are affordable and stylish and they're great-looking and they feel curated. And that's what AC Hotels is."

Chekitan Dev, an associate professor at Cornell University's School of Hotel Administration and author of Hospitality Branding, says other hotel companies have started brands to appeal to the young traveler, most notably Starwood's Aloft and IHG's Hotel Indigo. Commune Hotels & Resorts, parent company of Joie de Vivre Hotels and Thompson Hotels, last week announced it is launching Tommie, a brand for the price-conscious youthful traveler.

"There are multiple brands that are capitalizing on the Millennial demand growth with smart design and advanced technology," Dev says. "This space is expected to grow."

King says AC Hotels will appeal to those travelers who appreciate design, technology, good lighting and quick, efficient service. An AC Lounge will have a menu of small plates, cocktails, wines and craft beers. Visitors will be able to book spaces for meetings from their smartphones using Marriott's Workspace on Demand app. And Wi-Fi will be free throughout the property.

King says Marriott hopes to open 200 AC Hotels by Marriott in the next 10 years. The company is scouting out locations for the first property but could open one as soon as next year.

APPEALING TO MILLENNIALS

Millennials already outnumber the Baby Boomer generation. According to the United Nations Department of Economic Social Affairs, there are about 79 million Millennials vs. 76 million Baby Boomers. By 2030, Millennials are expected to exceed the number of Baby Boomers by 22 million.

Older Millennials are starting to spend more money and travel more, especially for work, experts say.

C. Patrick Scholes, a gaming and lodging analyst for SunTrust Robinson Humphrey, says hotels started to appeal to the younger generation before the recession hit. The recession slowed hotel building, but hotels are now ready to pick up the pace.

"As the economy improves and development slowly starts to return, it is a natural progression that the hotel companies will go after the next generation of business travelers," he says.

A survey last year by Boston Consulting Group of 4,000 Millennials ages 16 to 34 and 1,000 non-Millennials ages 35 to 74 found key differences between consumers in both age groups. Millennials value speed and convenience, are more likely to trust advice from peers than people with professional credentials and use technology to connect with more people in real time, the study found.

Dev says hotels are responding to that by "emphasizing off-beat and accessible locations, modern and comfortable design, smaller and more functional rooms, fewer and targeted amenities, cutting-edge and easy-to-use technology, fun and hospitable service, and fewer and multifunctional public spaces."

Aloft, which has 70 hotels in 10 countries, has drawn younger business travelers with live music in lobbies and high-tech amenities, such as Smart Check-In, which lets members of the loyalty program bypass the front desk and go directly to their rooms with special key cards.

Recently, Aloft also partnered with Design Within Reach, known for its modern design, to furnish the hotels' public spaces.

"We skewed to people who like design, like fashion. They're interested in the next generation of technology," says Brian McGuinness, senior vice president for Starwood's specialty select brands. "They're flipping through Architectural Digest. They like modern design. They also like authenticity."

Design is also important to Hotel Indigo's clientele, says Mary Winslow, director of Americas Brand Management for Hotel Indigo. She says Indigo, which started in 2004, does not target any particular demographic. Instead, the hotels appeal to people who exhibit certain behaviors.

"We look more at the behavior and interests of the guest," she says. "We know that they're curious, that they seek out new experiences, that they appreciate vibrant design. … It's more about who they are."

That approach has worked well enough for the company that it plans to double in size from 51 hotels around the world to about 100 in the next three to five years.

Commune's Tommie, which will launch in New York in 2015, is unabashedly going after Millennials. Public lounges called Reading Rooms will promote socializing. Guests will be able to check themselves in and dine from a gourmet grab-and-go marketplace. Rates will stay in the mid-$200 range because of the limited services.

"We are creating hotels that will appeal to youthful, design-savvy, connected and discerning travelers seeking responsible and immersive experiences," says Jason Pomeranc, co-chair of Commune Hotels & Resorts and founder of Thompson Hotels.

Antonio Catalan, founder of AC Hotels, said that even though the chain is targeting younger business travelers, the properties can appeal to just about anyone. "It's really adaptable to a wider range of customers," he says.