When travelers are looking for an Instagrammable, anything-but-vanilla boutique hotel experience, TMC Hospitality hopes they’ll book at its Bode or recently launched Drift brand.
The Irvine hotel developer and operator, part of real estate holding company TMC Group, said the shifting demographics of travelers—namely the growth of the millennial traveler—has carved plenty of room for companies looking to offer a more contemporary take on travel.
“If you use the boomers as the corollary, there are many brands that emerged when the boomers got in the driver seat of the economy. I think the same thing is about to happen right now with millennials,” said TMC Hospitality co-founder and CEO Philip Bates.
The executive oversees a portfolio of $200 million in open or under-development hotels.
The firm, which doesn’t disclose sales figures, said it plans to about double revenue in the next two to three years.
Bates pointed out TMC is not in the business of developing hotels only for millennials. Rather, TMC’s portfolio is for guests that are well-traveled and turn to tech platforms often to help navigate new cities.
“The growth of boutique hotels, the growth of platforms like Airbnb have shown that consumer sentiments are shifting away from the larger, more traditional brands that have a more vanilla experience, and these consumers are looking for a unique experience,” he said.
“They’re looking for an experience that reflects who they, as people, view themselves, the so-called lifestyle experiences. And when you add to that, things like the COVID pandemic where we’re really starting to value relationships more deeply, our friends and our family, I think people want to do more trips together, which is why we cater to social groups.”
Drift, TMC’s latest hotel brand launched earlier this month in San José del Cabo, is a reflection of trends that company executives say are driving the business. Previously an eight-key inn, the property was overhauled and now houses 29 guestrooms and suites running from 215 to 322 square feet. It features what’s been described as “an industrial, restrained design.”
Plans call for Drift to further expand with another hotel slated for Santa Barbara in the spring of next year and Nashville in the summer.
A Different Kind of Stay
TMC’s Bode brand is currently in Nashville and Chattanooga in Tennessee. While a Palm Springs location is on the way, Bates said the company will continue to focus on expansion in the southeast where it has properties coming soon in Greenville, S.C. and Savannah, Ga.
TMC started both its brands with the intent of having its properties serve a mostly leisure customer. However, the properties pre-COVID were seeing anywhere from 30% to 40% of its guests traveling for business.
TMC officials said their sweet spot are properties in the 80- to 150-room range, with an offering of both rooms for solo and couple bookings, all the way over to multiple bedrooms for group travel.
Guests at multi-room units under the Bode brand often share kitchens, living rooms, patios and backyards.
The CEO said there are positives and negatives to doing hotel conversions or new development, and said the portfolio moving forward would likely skew towards more than 50% conversions.
“Currently, we are looking at more conversions than ground-up [developments], and the reason for that is the introduction of the COVID-19 pandemic has caused investor sentiment to be a little more cautious and they view conversions as a little bit less risky. However, when you do ground-up projects, you can customize them more and make them a better overall experience,” the CEO said.
Room rates for Drift average in the high $100s to low $200s per night, with the brand targeting a slightly higher income demographic than Bode. Drift is also more design forward and will be located in trendier cities, Bates added.
Bates said “it’s a wild world we are in these days,” but is generally optimistic about the prospects for the hospitality industry, particularly as more and more travelers choose cars over planes for their leisure activities.
“I think over the next two to four years, we will continue to see the trend of, call it drive-to leisure, of people spending a little bit less time on planes and more time in the car for their vacations. I do think, however, we’re going to start seeing a little more international travel.”
“I think it’ll still take several years to get back up to the pre-COVID levels, and I think business travel is going to probably resume,” he said.
Business for TMC is somewhere between 80% to 95% of what it was in 2019, according to Bates. Most of the business is being driven by leisure customers.
He reported some guests are still somewhat tentative about travel and that many are booking in shorter advance windows. The average booking window was one-and-a-half to two months out prior to the pandemic. Now, it’s about a month, Bates said.
While labor challenges have gripped many companies, TMC’s tech-heavy hotels, beginning with digital marketing efforts all the way to a text message concierge, have helped it skirt that particular pain point (see story, page 18).
“One of the things that we fortuitously did before COVID was we wanted to be very tech forward and labor light. So, as a rule, if you were to come to one of our hotels, you would notice a lot less staff at our hotels,” Bates said.
Each property on average employs a staff of about 15.