How Does the Proliferation of Brands Impact Guests and Revenue Management?

By Tom Engel Principal, T.R. ENGEL Group | July 23, 2017

Co-authored by Elizabeth Karakachian, Marketing Co-ordinator at LHL Communications

The hospitality industry is abundant with more than 270 hotel brands globally. Nevertheless, this whopping number is not stopping Marriott, Hyatt, IHG, and Hilton from expanding their portfolios with even more new brands. Theoretically, broadening the supply of brands is favorable for generating revenues from various distribution networks, loyalty programs and supply channels. But just how useful, helpful or even good is all this for the customer? Has the hotel industry gone mad by over-saturating the market with brands that are not all that different from each other?

Emergence of Brand Segmentation

Some of todays biggest hotel brands started off as family run businesses with a single location. It took a bit of time, hard work and some luck for these companies to expand into the global enterprises they are today.

Hilton, for example, started with a 40-room hotel in Cisco, Texas and quickly grew through acquisitions. Marriott, started with a Motor Hotel in Virginia in 1957, and then 40 years later purchased its initial interest in The Ritz-Carlton Hotel Company LLC (in 1995). Obtaining established hotel brands allowed companies to instantaneously widen their portfolio without having to embark on new construction or the creation of a new brand. INSTANT GROWTH.

Ultimately, lodging companies focused on growth within every supply and target market. As a matter of fact, the moment a new target market was introduced, companies, without any apprehension, created new concepts to distinguish itself. In 1998, Starwood Hotels & Resorts launched its edgy, high-end boutique hotel W New York. According to JetSetter, many critics believed this was a terrible business decision, stating that customers wanted familiarity and predictability over uniqueness, and a property which had no name recognition would be detrimental. In fact, W Hotels became one of the most successful brands in the industry and now operates 46 hotels in 24 countries. This opened the doors for many hotel chains to introduce their own boutique collections in the following years. Today, creating new lifestyle brands are still a focal point for our industry.

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Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.