To most well-travelled guests there used to be two kinds of hotels: the reliable, standard chain, and the offbeat, quirky independent hotel. However, as the industry grows and changes, the line is blurring between boutique hotels and large, worldwide conglomerates. A new kind of brand extension is gaining popularity in the industry — the soft brand.
ADVANTAGES OF SOFT BRANDS
In addition to the obvious opportunity of portfolio expansion, one would wonder why not just envelop the new property into the fold and brand it as suited? It turns out, there are many advantages for large companies to create and develop soft brands.
Brian Stanford, senior managing director for CBRE Hotels, explains. “From a brand perspective, it’s the ability to continue to expand shelf space. In other words, soft branding is one more channel to bring more rooms into the system.” He points out that from the owner, operator or developer’s perspective, soft branding allows the uniqueness of the individual hotel to prevail through its own name and branding, letting the hotel owner or operator benefit from the marketing power of the major hotel company.
In essence, soft branding is a win-win for both parties. The chain can continue to expand and the hotel benefits from the chain’s systems through reservations, marketing and business practices.
Ron Pohl, SVP and COO of Best Western Hotels & Resorts, describes the value in sharing in these systems. “Independent hotels want to tap into alternate sources of business other than online travel agencies (OTAs), and are looking for access to a powerful reservation system and loyalty program — and they benefit from the brand’s lower OTA-commission structure. Brands, on the other hand are looking to broaden their portfolios with additional price points, locations and hotel types.”
Brian Leon, managing director of Choice Hotels Canada, echoes the benefits for the independents. “Hotels affiliated to Ascend Hotel Collection benefit from our strong reservation distribution, which increases RevPAR; development and design flexibility, which reduces development cost; and operational flexibility and efficiencies, which increases profit margins.”
There’s also another major benefit and that’s loyalty programs, which can be expensive to implement and costly to maintain as an independent. Leon notes that hotels under the Ascend brand benefit from access to its loyalty program, Choice Privileges, and especially from the investment of heavy marketing dollars into the program each year. “A loyalty program is extremely important as the hotel space becomes increasingly competitive”, he explains.
THE CONSUMER PERSPECTIVE
In addition to the benefits for independent hotels and big brands, there are benefits for travellers as well. Pohl states, “Many consumers are looking for unique experiences when they travel — hotels that feel special and are unlike other properties.”
Leon agrees, “From a consumer perspective, guests want a curated, unique and local experience. As a traveller, every time I go to a new destination, I want my hotel to be part of the travelling journey and represent its local culture and community. We encourage hotels in our Ascend portfolio to create unique local experiences to engage with their audience. We recommend hotels get involved with their communities, for example, [by] having a creative food-and-beverage experience that targets hotel guests and locals alike.”
These original experiences are enhanced by the peace of mind that comes with knowing there is a level of service the guest can expect from a well-known brand. “[Soft brands] open up additional booking channels and access to unique assets, while at the same time ensuring some level of product and service standards will be met,” says Stanford.
With regard to saturation in Canada compared to the U.S., soft brand expansion in the North is on the rise, though Stanford says it remains a niche segment. He indicates a number of internationals are already in the space with Tribute and Autograph (by Marriott), Curio and Tapestry (by Hilton), Unbound Collection (by Hyatt) and Ascend (by Choice) among the market leaders. “Combined, these brands were still under 500 hotels globally, with more than 60 per cent of those in the United States (still less than one per cent of the national hotel inventory). It’s still very much an emerging product offering.”
Choice Hotels’ Ascend Hotel Collection is a membership of more than 230 upscale independent hotels worldwide, including hotels under development. There are 14 Ascend properties operating in Canada with three under development and expected to join the affiliation after completing renovations in 2018. Choice continues to grow as a hotel company, currently boasting 325 hotels across Canada, and is expanding its loyalty program. Leon notes there are submarkets where there is limited hotel supply, but strong demand within their reservation system. Ascend Hotel Collection is a membership designed for upscale hotels to capture the pent-up reservation demand and increase financial performance.
Best Western Hotels & Resorts currently has three soft brands that provide hoteliers the opportunity to participate across multiple market segments. BW Premier Collection (luxury and upscale boutique properties) launched in 2015, and BW Signature Collection by Best Western launched in November 2017. And, its SureStay brand introduced the industry’s first mid-scale soft brand, the SureStay Collection.
Pohl says there has been tremendous growth across the board. He notes that Best Western is pleased with the success it is experiencing. “BW Premier Collection reached 75 hotels earlier this year, with upscale, high-quality, independent hotels spanning the United Kingdom, mainland Europe and North America.” The BW Signature Collection by Best Western launched in November with three properties already open and several more in the application phase. He says additional properties are expected to open in Mexico, France, Canada, Illinois, South Carolina and Hawaii. “Our SureStay brand is growing quickly; we will have more than 100 hotels operating under the SureStay brand in 2018; many will be SureStay Collection properties.”
For Pohl, “Success is generated from how we’ve structured our soft brands to fill unique needs in the market at varying chain-scale levels, each with well-defined standards and regulations. We have conducted extensive research and invested smartly in developing new brands that will resonate with today’s travellers and developers/owners seeking to achieve the highest RevPAR in their market.”
Leon is optimistic about the growth of soft brands in Canada, “We opened two Ascend hotels in 2017 and currently have three under development. We are excited about the growth of our Canadian portfolio.”
Stanford agrees the prospects for soft brands look strong. “Historically, much of the brand growth in Canada was focused on conversions; however, the new Autograph Hotel in Vancouver opened earlier this year and, over the last 12 months, we’ve seen an extremely high level of interest in soft brands being considered for smaller new-build hotels as part of mixed-use developments in the downtown cores of Toronto, Montreal and Vancouver.”
Written by Andrea Victory