Arts & Entertainment, etc. and Tourism & Hospitality and Hotels

Conrad manager says four-diamond award perfect fit for market

January 14, 2008

When developers pitched the idea of building a Conrad hotel in downtown Indianapolis, they painted the picture of high-end luxury lodging like no other in the Circle City.

Former General Manager Jan Chovanec went so far as to pledge pursuit of a coveted Mobil five-star rating--a status symbol Mobil Travel Guide bestowed on just 52 hotels nationwide in 2007.

"Our goal is to be a five-star hotel. I believe we will get it," Chovanec told trade publication Lodging Hospitality in 2005, even as he conceded that it would be difficult to earn the ranking right out of the gate.

Turns out he was half right.

Almost two years after opening, the Conrad hasn't even received a Mobil review, and its four-diamond AAA ranking puts it on par with five other Indianapolis hotels--most of which target conventioneers and business travelers. In fact, current General Manager Greg Tinsley said earning the highest rankings may well be a liability. Many business travelers--especially those working on government contracts where public funding is involved--often aren't allowed to stay in five-star accommodations.

"At this point, we would have limited ourselves on a day-to-day basis with a [top-tier] designation," said Tinsley, who took over the hotel in March 2007.

Stars and diamonds

Mobil Travel Guide's stars and AAA's diamonds are the two highest-profile ratings systems for hotels in the United States.

AAA has 65 full-time inspectors who evaluate hotels for the organization's annual TourBook series and Web site. It gave 84 U.S. hotels the five-diamond mark in 2008; none are in Indianapolis.

AAA inspectors evaluate hundreds of criteria when reviewing a hotel's service and facility. Staff at five-diamond properties must greet guests by name in almost every interaction, for example, and hand check-in and check-out materials directly to guests, rather than placing them on the counter.

The company, formerly known as the American Automobile Association, won't discuss individual property reports, but Tinsley said the Conrad's 2008 score put it in the top range for a four-diamond award. He said there are some five-diamond requirements, such as standard butler service, that aren't worth the extra cost--and the subsequent higher room rate--to provide.

"It does become a cost issue," Tinsley said. "I can provide it when people request, but to have that as a full-time amenity is not a necessity."

No local hotel has ever won the top award from AAA or Mobil.

Mobil's star awards have many of the same criteria, with an even stricter focus on service. And Mobil gives even fewer five-star awards. Seven area hotels received three-star designation in 2007; the 2008 list is scheduled to be released Jan. 28.

The Conrad hasn't been reviewed yet--it is scheduled for its first incognito visit sometime this year, a spokeswoman said--but the other two U.S. Conrad properties in Chicago and Miami got three stars in Mobil's 2007 ratings.

Mobil five-star hotels include the likes of the Four Seasons and Ritz-Carlton hotels in Chicago and New York.

Tinsley said he thinks other accolades the local hotel has won carry more weight. Conrad Indianapolis was No. 71 in Conde Nast Traveler's Top 100 Mainland U.S. Hotels for 2007 and No. 27 on Expedia Insiders' Select list of the Top 100 Hotels worldwide.

"That's huge," Tinsley said. "That sets a very high bar internally."

Part-owner Tom McGowan agreed. He said the important thing is that the Conrad be "known as a renowned provider of service, the finest luxury property in the state."

Ratings matter

But industry observers say the AAA and Mobil rankings are the real deal. They questioned why Tinsley's predecessor set the expectation of a five-star or five-diamond ranking.

"It's virtually impossible to get one your first year out," said Mark Eble, a hotel consultant and regional vice president for Philadelphia-based PKF Consulting Corp.

Although experts sometimes debate the merits of the diamond rating versus the star and how each actually translates into room sales, there's no question about the importance of the rankings, said Rob Hunden, president of Chicago hotel consultancy Hunden Strategic Partners.

"It's a significant marketing plug and huge reputational factor," he said.

Many hospitality insiders will be watching for the Conrad's Mobil Travel Guide review and he said even a fourstar rating there would be important. "To be the only four-star hotel in Indianapolis; that's a big deal," Hunden said.

Though he understands Tinsley's contention that the hotel actually prefers the four-diamond ranking to the top grade, Hunden said it's not a good sign about the strength of the city's luxury market.

It's concerning, he said, to see the Conrad weighing government contractors' business in its strategy when the hotel should be going after higher-spending travelers.

But unlike the convention side of the hotel business where building can drive demand, "it's difficult to create a luxury market from scratch," he said.

Opulence without starch

Tinsley said, regardless of its ranking, the Conrad is providing a level of luxury that's new to the state and meeting the promises made when the hotel was built. He said Chanovec's background was in European hotel management, where a top ranking is more common.

"We would never take for granted the commitment and the obligation we have to the city to provide a luxury level of service," Tinsley said.

And although it has not achieved the top rating, the Conrad is still a cut above other similarly ranked downtown properties in terms of amenities, service and the building, he said.

At least one downtown competitor agrees.

"I think it'd be really rough in our marketplace to have a five-diamond property, the requirements are so strong," said Westin General Manager Dale McCarty.

The Westin is a AAA four-diamond and Mobil three-star property, the highest rankings it can hit with the list of amenities it offers. McCarty said organizations ask about those awards when requesting bids for group business and sometimes even spell out how a hotel can price rooms depending on its ratings.

While the Westin and the Conrad have the same number of diamonds, McCarty thinks the Conrad is a different beast.

"It is a beautiful hotel and built at a higher level than the rest of us," he said.

Tinsley said the reviews are important, but his focus has been on reassuring people that while luxury-oriented, the Conrad isn't intimidating.

"You can have a luxurious experience, but you can do it without a lot of starch in your shirt," he said.

The hotel struggled early on with a lower-than-average occupancy rate. The hotel's director of sales and marketing told IBJ in December 2006 that it was on track to close that year with an average occupancy rate of 50 percent, compared with downtown's average of nearly 65 percent.

Tinsley and McGowan declined to disclose current occupancy rates, but they said the hotel exceeded its internal goals for 2007 and is projecting continued growth in 2008.

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