Branding Strategies for Customer Recognition
By Vanessa Horwell Founder & Chief Visibility Officer, ThinkInk & TravelInk'd | August 01, 2011
A brand is a powerful thing. For the hotel industry, this is particularly true, as many of its customers make their purchasing decision well in advance of interacting with the product. Potential guests do not typically visit a property, eat in the restaurant, or lay in the bed before making a reservation. In past years, a hotel's brand image was one of the only things under the hotel's control that influenced consumers' decision-making process.
But of course, today this is not quite as true as it used to be. In fact, today's consumers can access a wealth of objective and subjective information about a property before committing to a reservation, thanks (of course) to the internet. Price is also a major consideration for some buyers, as is location, neither of which is truly a function of brand. Many aspects of branding, though, are well within a hotel's control, and can be crucial to driving sales and maintaining a high average daily rate (ADR).
So if branding is so important, why aren't more hotels emulating branding superstars like Apple? First off, branding is indeed a high priority for many hotels, most visibly the major chains. Maintaining the Hilton or Hyatt brand is the responsibility of a small army of high caliber marketing executives, and these chains expend significant resources to keep their brands strong. Many independent hotels don't have the resources or the time to dedicate to that level of brand development but that doesn't mean that branding should be ignored altogether.
Secondly, branding a hotel is substantially different from branding a line of consumer products. Hotels, at their core, offer a naturally undifferentiated product: a room night. It would be difficult for a hotel or hotel chain to simply create a whole new category of products, like Apple did with the iPod. Also, there is far less opportunity for pre-purchase interaction, as mentioned. Hotels cannot create "Hotel Brand" specific stores, as Apple has to great success (the Apple store is considered one of Apple's major branding successes). To compound this, the trend in hotel room sales has been away from brand-specific sales channels like global distribution systems or central reservations, and toward third-party channels like online travel agencies. To be sure, hotels do what they can to steer sales toward those channels that they can control from a branding perspective, including a hotel's proprietary website, but the overwhelming trend is in the opposite direction.
Hotels are by no means restricted in their branding efforts. The prior points notwithstanding, successful hotel branding is entirely attainable, even on the level of individual boutique properties. Research has shown that successful hotel branding - successful defined as resulting in higher occupancy and ADR - is due largely to guest satisfaction. Those hotels with high levels of guest satisfaction enjoy a higher level of occupancy over time. Moreover, a one point increase in guest satisfaction level correlates to a $0.61 increase in ADR over a period of time(1).
Other branding factors influencing occupancy include brand size, measured in total rooms, and percentage of franchised properties. Larger hotel brands experience higher occupancy, as consumers seem to take brand size as an indicator of quality, while those brands with a high percentage of franchised properties see a decrease in occupancy over time(2).