Flagless Flagships: The Lifestyle Appeal and The Evolving Relevance of Brand identity and Loyalty Programs

By Jackson Thilenius Principal, Retail Design Collaborative | March 18, 2018

It started with a couple of air mattresses and a simple idea. In just 10 years, Airbnb has grown into a $30 billion-dollar company. Why start a discussion about brand flags and loyalty programs with a fact about Airbnb? Because with every hospitality panel discussion, seminar, conference, convention and trade show I attend, inevitably the topic of Airbnb comes up. Similar frequently asked questions include, "Can Airbnb really compete in the hotel market?" "How long will the fad last?" and, "When will Airbnb be regulated?"

Meanwhile, all I can think is: you're not asking the right questions.

The Rise of the "Sharing Economy" and The Lifestyle Appeal

The growth of Airbnb and other shared home and vacation rental sites including VRBO, Wimdu, Roomoramma and HomeAway have directly impacted the traditional hotel model and their brands in a dramatic way. This new shared economy model is evidenced by an explosion in the realm of lifestyle boutique hotels and the seemingly endless release of new brands carrying the flag of their parent company, including Curio, Autograph, Moxy, and Canopy.

In their quest to keep pace, global hotel chains have been vigorously exploring ways to offer a similar lifestyle model that appeals to millennials who are driving much of this demand as well as cost-savvy, spirited travelers seeking unique experiences, authenticity and affordability. Hotels are now doing anything they can to stay ahead of the trend, whether that means downsizing, scaling back, becoming more accessible, more affordable or touting local flavor with every new brand they create - it's now all about the lifestyle appeal. Reducing labor models, combining amenities, streamlining guestroom design and using creative finish choices to bring room costs down are all signs of the uphill battle these brands are facing to recapture market losses. It's not only the empty rooms and reduced rates that are taking a toll on traditional hotels, it's also the ancillary revenue losses associated with food and beverage, spa, and other service and amenity offerings affecting the bottom line as well.

"Poshtels" and Surface Branding

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.