For hotels in today’s competitive climate, understanding the power of branding has never been more important. At a time when hotel companies are buying each other up and engaging in massive global branding efforts, Canadian hotels, all of which are competing for guests, are ramping up their efforts to demonstrate the business case for joining a branded-hotel family.
“From the standpoint of a franchisee, first and foremost, [brand affiliation] gives them the access to technology and things that will drive their business,” says Brian Leon, managing director, Choice Hotels Canada, citing reservations delivery as the number-1 consideration for franchisees. “Companies like ours have pretty robust central reservation systems that will drive a large proportion of our business to our franchisees. This year, more than 40 per cent of our franchisee’s revenue will come through our central reservations system.”
Beyond that, he says, having a brand on a hotel provides a level of assurance to guests that they know what they can expect. “[Guests] become loyal to certain brands,” he says. “Good brands can help make a hotel appealing and attract as many guests as possible.” According to Sandra Cordova Micek, global senior vice-president of Brands for Hyatt, “A hotel that’s part of the Hyatt portfolio benefits from the trust and reassurance that our Hyatt name provides. Each Hyatt brand is designed to meet the needs of a specific high-end traveller.”
Aligning themselves with a brand gives franchisees a leg-up from independent properties, says Ron Pohl, senior vice-president of Brand Management at Best Western Hotels & Resorts, while providing the opportunity to get the customer in the door. “You want your product to motivate the guest to try your property; but it’s just the first step — if you get them in the door, you have to communicate the brand promise and experience — that’s really were the brand has to step in and establish service standards and overall experience so customers leave with a positive impression.”
Then, says Pohl, operators can begin to build a relationship with guests and move to potential loyalty where they become an advocate of the brand. “That’s what brand does today — gives [franchisees] the opportunity to convince the customer to try the product.”
BENEFITS OF BRANDING
Leon says he’s seen an increase in the importance of loyalty programs, which he says is another reason for franchisees to choose a branded hotel. “People booking travel are very focused on being part of a loyalty program that gives points and benefits they wouldn’t get if they were patronizing a non-brand property,” he explains. For example, says Cordova Micek, Hyatt’s loyalty program, Hyatt Gold Passport (to be World of Hyatt as of March 2017) offers hotel owners marketing, distribution network, technology, and backend infrastructure support, thereby driving brand preference and increasing revenue and profitability.
Technology is touching all aspects of the hotel industry, posing a challenge for independent properties that may not have the budget and support to keep up. “The business has become so complex that we find it’s next to impossible for an independent operator to be able to navigate through all of the technological issues and opportunities that they’ve got facing them when operating a hotel,” says Leon.
Products such as mobile booking, which Leon cites as one of the largest areas of growth in the way people book hotel rooms. “It used to be everyone talked about booking on the Internet, but that’s almost old news now,” he says. “You can get an independent hotel that might be able to create a decent website, but then you look at ‘is there really good functionality for that website from a mobile or tablet standpoint? Is it user-friendly?’ To make it user-friendly is not a simple or inexpensive thing to do and for an independent hotel it can be very challenging.”
Access to industry-leading technology is one of the most important things that hotels will get from brand affiliation, he says, especially as the millennial demographic continues to drive innovation.
“This is the first time in my time in hotels that we’ve seen a shift from baby boomers to millennials,” says Pohl. “It is a huge demographic shift, so we have to be cognizant of that; their expectations are different.”
Probably more concerning, he says, is the pace of this change. “As a brand, you have to be able to react quickly. Before, you could look at an initiative and say ‘you know what, let’s create focus groups, let’s review this initiative and we’ll roll it out in 12 months.’ Now it’s ‘let’s roll it out in 12 weeks’ because the pace of change is so dramatic. The competition is significantly different and everything is happening electronically/digitally — you don’ have the pleasure of time to work through different initiatives, you have to get it done now and move on.”
According to Pohl, brand is all about building consumer confidence — guests need to know that they’re going to get what they expect when they use that product. Best Western has spent 70 years building a strong reputation of being a friendly brand that offers great value. But, he cautions, brand has to be fluid. “It has to evolve. You have to keep some of your core brand promise behind all of it — good value, good service — but what dictates what makes good service and brand standards is all driven by the consumer.”
With 60 per cent of its business being conversion properties, Leon says Choice Hotels has to deal with different structures, different room sizes and other components. “The challenge as a brand is how you weave that together into something that provides brand consistency but also reflects the fact that we are dealing with different types of assets.”
He says brands need to identify what the really important — from a guest standpoint — non-negotiable brand standards are so “when a guest walks into your hotel, how do you make sure you’ve got that consistency while also recognizing that all the assets aren’t going to be identical based on the nature of the business.”
Increasingly, Leon says he is finding, people have a preference to the local experience. “They don’t want to see cookie-cutter hotels with local components. That’s something a lot of the brands are dealing with both by incorporating their standards and providing opportunities for the hotels to do things that will incorporate the local community/demand, and by creating programs such as the Ascend Hotel Collection that is all about the local experience.” The Ascend Collection, he says, was designed to all be different but still have access to the same loyalty programs, revenue management and central reservation.
With this increased emphasis on local experiences, Pohl says owners can still have their independence — and offer unique experiences — and be tied to a brand. “Most of the brands do it through soft branding but we do it through our core brands,” he explains. “You won’t have the same product experience at every Best Western or every Best Western Plus or Premier hotel. There’s a great way to provide a unique experience for each of our properties based on that location and we want hotels to use that as a differentiator.” That said, Pohl is adamant that hotels have to choose, as a brand, what they’re going to be known for, or good at, and then try to consistently communicate that to the guests.
With all the brands available, how do hotels keep from getting lost in the shuffle? “One of the things we see happening in the industry is there are so many brands that there’s potential for it to become confusing to guests because they can’t keep track of them all,” says Leon. “You can get to the point where lines blur between the brands.” As a result, in a market like Canada, where global hotel systems are introducing, over the span of a few years, a number of brands that all seem similar, it can become challenging to find opportunities to grow them and to get hotel developers on side with the idea of investing in new brands they aren’t familiar with.
“The flipside is that it’s so important in our business to continually evolve and develop things that will be appealing to the consumer base we’re looking forward to being our patrons in the future (i.e. millennials),” says Leon. “The brands and the hotel systems are looking for ways to be able to make sure we adapt our offerings to appeal to the changing demographics.”
Pohl says Canada likes new brands. “It’s a bit challenging right now economically, so we’re seeing a bit of a slowdown in some markets but again, in key markets such as Vancouver, Toronto, Montreal and even around Calgary, we’re seeing some very strong development. Most product is new although we are seeing some repurposing.”
For Hyatt, the push is on to become an even stronger brand-led organization. “We will continue to further differentiate our brands to better meet the needs of our guests and customers around the world,” says Cordova Micek. “This allows us to remain committed to purposeful and meaningful growth and each brand provides the company with a new and exciting way to grow our offerings in desirable destinations we know our guests love, beyond traditional hotel stays and in high-barrier to entry markets. Each brand gives us a new way to meet the needs of the market, a new wayto grow, and a new way to deliver on the high-quality service for which we are known.”