RSBA & Associates 
Hospitality Consulting Services
400 Spear Street, Suite 106
San Francisco, CA 94105
Email: rickswig@rsbaswig.com
Web site: http://www.rsbaswig.com
 
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 Successful Hotel Brand Differentiation
Means Connecting With Customers
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by Rick Swig, June 2006

Branding has become increasingly important in the hospitality segment. There are, of course, the large hotel brands, which seem to grow larger every day with strategic market segment tiers, and then the well-known, single-entity hotels, which will never be more than “brands of one.” Yet branding must extend beyond sticking a logo on building signage and letterhead. Any brand must tap into the psyche of customers to stimulate the highest level of interactivity.

Super-luxury and economy lodging brands are not at all related based on their guestroom features, service standards and amenities, but each must rely on its ability to stand out within its own tier. If one drives along the highways and byways of the US or into suburban corporate centers, the difference between the sub-segments of full-service, focused-service and limited-service outlets becomes fuzzy at best. This clustering is what some have referred to as the “hotel brand pu-pu platter.”

Clusters of sub-brand offerings by larger hotel flags provide a cafeteria of choices for every economic or service market segment. These sub-brands distinguish themselves with beds, bathroom, amenities and breakfast (free or not), but these things may be ambiguous to the average traveler, especially if the price differential is relatively minimal.

Room rates may vary between $10 and $20 among limited-service and the full-service hotel units, but when looking more closely, the value differentiation may become unclear. The more expensive full-service hotel could offer three-meal service, better bathroom amenities and a slightly more comfortable mattress, but it might also charge $12 for breakfast or $10 for high-speed Internet connectivity. The same mega-brand’s limited-service offering would provide a lower rate for a possibly lesscomparable guest room, but include free breakfast, free Internet connectivity and no service charges of any kind.  Thus, the value proposition is unclear.

This also extends into urban markets, with even greater confusion, where games of brand musical chairs quite often occur. One only needs to look into major markets where Westins become Hyatts, Wyndhams become Hiltons, Hyatts become Meridiens and independent hotels become brands and vice-versa. What is the customer to believe? What will stop hotel brand dilution into a non-descript commodity product?

Individual hotel operators must seek to define their properties within their immediate communities or targeted customer bases. This may be achieved either through creating unique service aspects within the hotel or outreach to the community.

Full-service hotels can do this easily. An operator can become more creative with food and beverage products or add a spa, fitness center or other lifestyle facility.  Lessons for differentiation can be best learned from the boutique hotel segment, which has exploited lifestyle and local stimuli to mirror customer preferences and sensibilities. Even the most rigid of branded operations can extend service aspects to include location connections with which customers may personally identify. This might be implemented through guest services, guest room accessories or other references within the hotel’s product programming.

Even limited-service or focused-service operators can tap into local food and beverage specialties to present these as part of breakfast, manager receptions or evening snack hours. Further local references can be established with employee uniforms or available reference periodicals.

People do buy brands, but most importantly they buy an extension of themselves. As hotels continue to change names, brand clarity deteriorates, and it will become even more important for individual hotel units to develop methods to ensure they can be recognized above the noise and clutter to establish market penetration.  Standing out among the competition or within an individual community should be a continuing priority for all hotel operators and owners.

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The views expressed in this article are those of the author and not Real Estate Media or its publications.

Rick Swig is president of RSBA & Associates, a hospitality industry consulting firm based in San Francisco. He may be contacted at rickswig@rsbaswig.com.

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Contact:
RSBA & Associates
400 Spear Street, Suite 106
San Francisco, CA 94105
E:mail:   rickswig@rsbaswig.com
Website: www.rsbaswig.com
Tel:  (415) 541-7722
Fax: (415) 541-5333

 
Rick Swig Article Index:
Shortage of Sites, Rising Expenses Should Keep Hotel Development in Check / Rick Swig / RSBA Associates / February 2006
In Today’s Hotel Acquisition Market, How Much Do Cap Rates Matter? / Rick Swig / RSBA Associates / January 2006
Lodging Business in Transitional Year, But Challenges Will Remain After ’05; A Hotel with Truly Unique Attributes Is Worth a Premium / Rick Swig / October 2005
Despite Lack of Long-Term Data, Hotel Developers Favor Hybrid Projects; The Fractional and Condominium Component Not a Proven Solution to Development Prosperity / Rick Swig / June 2005
Travelers Prefer Innovation, Creativity Over Predictability, Discount Pricing / Rick Swig / March 2005
Recent Occupancy, ADR Growth Still Do Not Spell Post-9/11 Relief; Total 2% revenue growth over four years has not kept up with national annual average inflation growth of 2.5% / Rick Swig / RSBA Associates / November 2004
Hotel Success Hinges on Relationship Between Owner, Asset Manager, GM / Rick Swig / August 2004
Hotel Operators Can Gain Market Share Through Distinctive Brand Images; A 100-room boutique hotel can develop more identity within a market than its 1,000-room competitor  through customer impact points / Rick Swig / May 2004
Hotel Operators Must Share Blame with the Economy for Stagnant Performance / Rick Swig / RSBA Associates / January 2004
Investors Seeking Opportunistic Hotel Buys Are Likely to Come Up Empty Handed  / November 2003
Hotel Sector Remains in the Game Despite Reaching Strike Three; Occupancies are now beginning to improve compared with last year and a poor first half of 2003 / September 2003
Some Stability Has Returned to the Hotel Sector, But Its Staying Power Is in Question; The Plundering of Lower Market Tiers Has Cost Upscale Hotels / May 2003
New Business Practices Essential to Lodging Companies’ Success / February 2003
Unreliable Market Trends Yield an Uncertain Direction / October 2002
The Bigger They Are, The Harder They Fall / September 2002
News of Boutiques’ Demise Is Greatly Exaggerated  / May 2002
Management by Spreadsheet Erodes Full-Service Hotel Core Values / Feb 2002
Hotel Lenders Face Challenges In Tough Climate / October 2001
Where We Are Now Depends on Starting Point / Summer 2001
Solid Management Practices Can Improve Franchise Value / May 2001
Hotel Market Stagnation To Continue / January 2001
Here Today…but Tomorrow? / November 2000
Ready, Willing, and Unable? / August 2000
Independent Hotels: The New Brand Alternative / June 2000
Ankle Biter Syndrome / January 2000
Redefining a Mature Hotel Sector / November 1999
Focus On Operations Is Not Enough / August 1999
What’s Next?? / May 1999
Growth Through Management  / Feb 1999
Expect a Subdued Market in 1999 / Feb 1999
Hotel Real Estate: Back to Fundamentals / Nov 1998
The Hotel Investment Barometer For Institutional Investors / 1998
The State of Independents / 1998
Success (or Survival) of Boutique Hotels and Resorts / 1998



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