The Future of Hotel Brands

David Collins, columnist and Co-Founder and Group Marketing Director at Great National Hotels and Resorts discusses the future of hotel brands.

In a previous article on hotel branding (31 December 2013), I outlined an alternative approach to developing hotel brands. How you must stand for something and give your customers something to believe in. And how you must have a brand that matters to your guests, one that’s head and shoulders above your competitive set and one that let’s your marketing work a good deal harder for you.

There is another very good reason for branding and that is to enable distribution and it’s this that is largely informing the debate on ‘hard’ versus ‘soft’ brands and which in turn is shaping a further discussion as to what exactly the future is for hotels brands.

Just to clarify firstly the difference between ‘hard’ and ‘soft’ brands.

A hard brand as the term suggests entails for example minimum standards in fit-out (as in a bricks and mortar, signage, décor, footprint, etc.) and service (as in staffing levels, client touch-points, etc.); the terms are typically for up to 20 years, are quite onerous and commercially challenging.

Soft brands on the other hand afford owners greater flexibility, are typically for shorter terms, tend to be performance based and allow the property to retain its own brand identity.

Hard brands also typically have a very defined customer base and pricing strategy whereas soft brands tend to appeal to a wider base of customers rate-wise. According to data collected by STR for example, hard branded hotels report a higher occupancy while soft branded hotels report a higher ADR and RevPar.

From the staying customer’s viewpoint, there’s predictability about a hard brand whereas with a soft brand, there’s more of an element of surprise, and with the travelling public travelling more and with greater confidence, it’s the latter option that’s becoming more popular. This for example is borne out by the introduction of Marriott’s ‘Autograph Collection’ or Choice Hotels’ ‘Ascend Collection’ which are what’s called ‘quasi-brands’. Marriott and Choice would both be synonymous with hard brand strategies.

So soft brands offer greater flexibility for hotels and are more popular with customers. They’re commercially more sustainable offering all the benefits of a hard brand without the over-bearance of long-term contracts and costly franchise fees while guests in turn can look forward to a choice in price plus an independently unique hospitality experience.

The question which typically arises at this point is ‘that’s all fine but what about the distribution challenge and how can any hotel brand – hard or soft – compete effectively against those “dastardly” OTAs? Surely the hotel brands of the future will be the likes of Booking.com and Expedia given their sheer weight in marketing spend and on-line presence?’

Agreed, OTAs currently have an overly dominant control of the hotel distribution landscape and I’ve written about this previously. Indeed, put a group of hotel marketers into a room and within 5 minutes the conversation will turn to this very issue.

There is however good news for the future of hotel brands and it’s simply that there is a future. And a very healthy one at that.

Why? Because it is entirely possible to co-exist with your OTA channel partners and still develop your own direct business.

Remember, ultimately you dictate your hotel’s rate strategy and decide which 3rd party channels including GDS suit your business mix. After all, OTAs are effectively resellers and bear in mind clients are proven by a factor of 10 to 1 to prefer to use a 3rd party site for research and then a hotel’s own site to book.

And assuming your own site is for example content rich and mobile enabled and you have an equally robust rate strategy in place with rate parity as a minimum, there’s every reason why you should have your own fair share of this available demand.

The ‘secret sauce’ however is aligning yourself to the right brand partner that can bring additional revenue management expertise, market presence and distribution muscle to your business; in other words, a brand that can fast-track your own efforts in developing a sophisticated, engaging and competitive representation on-line.

Do this with the help of a soft-brand and you will copper-fasten your own future without giving away the keys to the kingdom.

About David Collins: David has over 20 years’ experience in results-driven marketing in the hotel and tourism industry. He has been instrumental in building some of the largest hotel names in the UK and Ireland and is now Co-Founder and Group Marketing Director for Great National Hotels and Resorts, one of Ireland’s largest soft brands and one of the UK’s fastest growing.
DISCUSS
  • 2 Comments
  • dorianskoosh

    “Remember, ultimately you dictate your hotel’s rate strategy”.

    That hasn’t been true for years.

  • David Glynn

    Great article by David . Its true the OTA’s do seem to dominate at present but as you said if used correctly they can offer great opportunities to give presence in the crowded market place.

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