Hotel Brands in the Future – What Will Hoteliers Have to Do to Survive

It is safe to say that you will receive the same high-level of service whether you are staying in a Four Seasons Hotel in San Francisco, Paris, Budapest or Hong Kong. The Four Seasons brand is well-established. Both business and leisure travelers, who are looking for luxury accommodations, know what to expect when they check in to any Four Seasons Hotel or Resort anywhere in the world. The reason the Four Seasons has such a loyal following is because they deliver on the promise of their brand.

The hotel industry is comprised of many well-known brands as well as many unbranded properties. It is dangerous to draw any conclusions about whether you will have a more enjoyable stay if you choose a branded hotel or a family-run hotel, without a well-known brand, two blocks away. In Deloitte’s Hospitality 2015 report entitled, Game Changers or Spectators, the role that branding will play on the future success of hotels was discussed in detail. The key points of the study center on the difference between the mass market and luxury market, the emergence of Lifestyle brands, and the use of social media.

Build Brand Loyalty

It takes money and time to create and build a strong brand. Over the years, some of the world’s most successful companies like McDonald’s and Coca Cola have spent millions, if not billions, protecting, promoting and improving their brand’s image. Every customer that orders a Big Mac at McDonald’s knows that they will get the exact same Big Mac in San Diego, Miami or Mountain View. A loyal Coke drinker will not buy a Pepsi or any other type of cola drink. Without their brand, McDonald’s and Coca Cola would be just another hamburger joint or soda company. Brand loyalty is what every non-generic company wants.

In the hotel industry, brand loyalty tends to be a greater choice factor for travelers who stay at luxury hotels and not as important for travelers who stay in economy or more modestly priced hotels (mass market). The person who chooses to stay at high-end hotels is more interested in the experience than the price. The person who chooses to stay in more modest accommodations is more interested in the price than the experience.

Mass market hotels attract hotel guests primarily because of price and location. Other than price, and possibly location, they do not perceive much of a difference between staying in one two-star hotel or another two-star hotel. People who book rooms in two or three-star hotels are looking for a comfortable bed, a clean room and competent service. Brand loyalty is low as this large group of travelers are driven more by the cost to stay overnight than having a special experience.

Major hotel operators recognize that there is opportunity to build brand loyalty in every market segment. Almost every major chain participates in a loyalty program where guests earn points and rewards each time they stay. Hoteliers can also help build their brand and differentiate themselves from their competitors by adding value to a guest’s stay. Common extras that guests enjoy include such things as free in-room WiFi and continental breakfasts.

Turning to the luxury segment, the best way to build brand loyalty is to offer guests something they want that they can not get at your competitor’s hotel. Individuals stay at high-priced hotels because they want a wonderful experience. Almost every top-of-the-line hotel has high thread-count sheets and comfortable beds. They have business centers, exercise equipment, swimming pools, a bar, and a nice restaurant.

It is not always easy to differentiate your hotel from that of your competitor’s hotel, but that is the key to creating brand loyalty in the luxury hotel market. Hotels have to work hard to know their guests and understand what really makes them happy. Instead of putting chocolates on the pillows, surprise your guest with a gift basket of unique local items. Go the extra step and slip your guest’s home town newspaper under the door so he’ll have something familiar to read with breakfast. Use your imagination to create good experiences and positive impressions for your guest.

Another reason why companies pay so much attention to differentiating themselves from other brands is that the luxury hotel market has become very saturated in many of the major cities in the United States.

• 11 branded luxury hotels in New York City
• 9 branded luxury hotels in San Francisco
• 8 branded luxury hotels in Washington D.C.
• 6 branded luxury hotels in Boston

Competition is fierce for the traveler who can afford to stay in the most expensive hotels in these cities. The available pool of guests who stay at luxury hotels is only a small fraction of the pool of guests who stay at more modest hotels.

Consider Building a Lifestyle Brand

Many hotel groups are already pouring money into building lifestyle brands into their family of hotels. This rapidly growing brand has achieved RevPAR that is about 25 percent greater than other hotel brands. Lifestyle hotels are designed to enhance a guest’s stay by offering such things as healthier menus, recreational activities and in-room exercise equipment. Many such hotels are environmentally friendly and the staff is very conscientious of their guest’s needs. Some of the popular Lifestyle hotels are:

• Starwood lifestyle hotels include W Hotels, Aloft Hotels and Element
• IHG has Hotel Indigo
• Marriott has Edition
• Hyatt has Andaz Hotels

Use Social Media Effectively

It is common practice for almost every hotel brand to have an active presence on social media sites. If done properly, a good social media strategy can enhance a hotels name and brand recognition, create loyal customers, and drive profits. Social media can also be a two-edged sword. If your hotel disappoints guests, and does nothing to remedy the situation, that can quickly erode brand loyalty. Today, and in the future, hoteliers must pay close attention to how they use social media.

In the future, hotels will have to step-up their game in order to not fall behind their competition. Hotels that differentiate themselves from their competition by providing better service, better value, and better guest experiences, will prosper. Hotels that do not do such a good job will lose business and struggle to survive.