Ho­tel com­pa­nies and their ex­pand­ing brands

Business Traveller (India) - - CONTENTS - LEFT AND RIGHT: Crowne Plaza Lon­don; and Hy­att Cen­tric Gran Via Madrid

The big news in 2016 in the world of ho­tels was the merger of Mar­riott and Star­wood to cre­ate a com­pany with 30-plus ho­tel brands. Al­though there were many rea­sons for the merger, stream­lin­ing the num­ber of ho­tel brands wasn’t one of them. Sher­a­ton and Mar­riott, Four Points by Sher­a­ton and Court­yard by Mar­riott, Lux­ury Col­lec­tion with Au­to­graph Col­lec­tion all con­tinue as be­fore, with no amal­ga­ma­tion.

Roll on to 2018, and the num­ber of brands in­creases weekly. It’s fair to say that no busi­ness traveller wakes up in the morn­ing and says to them­selves, “I re­ally wish some­one would in­vent a new ho­tel brand.” How­ever, the ho­tel chains keep on cre­at­ing them. At a re­cent Global CEO panel where the bosses of Wyn­d­ham Ho­tels Group, In­ter Con­ti­nen­tal Ho­tels Group (IHG), Ac­corho­tels, Hil­ton and Choice Ho­tels were rep­re­sented, they alone had more than 90 ho­tel brands between them, and no one dis­agreed with the as­ser­tion that there would prob­a­bly be 100 between them within the next year.

Sébastien Bazin, the forth­right chair­man and CEO of Ac­corho­tels, said that he had been “dead wrong” in be­liev­ing brands would grad­u­ally be­come less im­por­tant. In fact, he thought they were “more im­por­tant than ever.” e rea­son? “Brands are like a group of friends. For ev­ery oc­ca­sion you can count on them for a di er­ent pur­pose, and that’s what peo­ple want. It’s a short­cut in a very crowded world. Brands mat­ter.” Bazin added, “You talk to the Online Travel Agents (OTAs) and they will tell you that the con­ver­sion fac­tor is twice as much for a branded ho­tel than a non-branded ho­tel, be­cause it mat­ters to cus­tomers. ey recog­nise it, they feel more com­fort­able, they know what to ex­pect. Whether you have too many brands isn’t the point, you just have to make sure you di er­en­ti­ate the ex­pe­ri­ence, the prom­ise between each of the brands, be­cause they have to be di er­ent.”

is ap­proach seems to be spread­ing. For many years, In­ter Con­ti­nen­tal Ho­tels Group (IHG) had com­par­a­tively few brands – Hol­i­day Inn and Hol­i­day Inn Ex­press, Crowne Plaza and In­terC on­ti­nen­tal be­ing the best known. But IHG cur­rently has 15 brands, hav­ing launched Avid last year in the US (75 newly built ho­tels have signed up to join), buy­ing the Re­gent Ho­tels lux­ury brand in March 2018 and an­nounc­ing plans for what hote­liers call a "con­ver­sion brand".


A con­ver­sion brand is typ­i­cally a brand that can be used to “re ag” an ex­ist­ing ho­tel – Dou­ble­tree by Hil­ton would be an ex­am­ple. IHG has yet to an­nounce the name of this new brand, but it is com­ing, and great things are pre­dicted for it along with a “de­vel­op­ment pipe­line” of lesser­known brands, such as Hualuxe (seven ho­tels opened so far, with 21 in that pipe­line) and Even ho­tels (eight so far, 12 in

de­vel­op­ment). Ken­neth Macpher­son, IHG’s chief ex­ec­u­tive of­fi­cer of Europe, Mid­dle East, Africa and Asia has nearly 1,000 ho­tels open in his re­gion alone. He told me the ex­pan­sion wasn’t just about new brands. It was also about “strength­en­ing core brands” we know well, such as Crowne Plaza.

“We’ve been work­ing very hard with lead­ing de­sign­ers such as Con­ran [De­sign Group] to cre­ate a Crowne Plaza to meet the needs of mod­ern busi­ness and leisure trav­ellers. When peo­ple travel, their down time is so im­por­tant. They don’t want a stuffy ho­tel, they want it to be en­gag­ing, to al­low them to live when trav­el­ling and to have a flex­i­bil­ity for when they want to work,” Macpher­son says. As far as the new brands are con­cerned, like the “old” ones, “They are all tar­get­ing dif­fer­ent guests on dif­fer­ent oc­ca­sions. It’s not just about hav­ing lots of brands, it’s about hav­ing dis­tinc­tively po­si­tioned brands that meet a set of needs for guests.” Of course, this begs the ques­tion, “How many brands are too many?” The an­swer from the ho­tels is that the limit is less about what the cus­tomer can un­der­stand and more about the in­ter­nal re­sources of the ho­tel chains.

“The brands are a prom­ise to guests,” says Macpher­son. “So you’ve got to have the re­sources to in­vest in those brands so they pro­vide a re­turn to in­vestors – those peo­ple who put their cap­i­tal into them – and to meet the needs of guests.”

If brands are a prom­ise, why do we so of­ten feel let down by that prom­ise? Ac­cord­ing to the hote­liers, that’s more of a legacy is­sue, and one which brands are deal­ing with, firstly by ex­pelling prop­er­ties

whose own­ers will not pay to keep up stan­dards, and se­condly by im­prov­ing brand­ing. The CEO of IHG, Keith Barr, says that the ho­tel in­dus­try has be­come bet­ter at brand­ing than it was ten years ago, and that part of the rea­son is tech­nol­ogy and the ben­e­fits it has brought consumers.

“We have had to get bet­ter not only be­cause of the trans­parency brought on by so­cial me­dia, but also be­cause if we in­tro­duce a new brand, we work with own­ers and de­vel­op­ers to make sure we are of­fer­ing some­thing of in­ter­est to them. With Avid we had an ad­vi­sory com­mit­tee [help­ing es­tab­lish] what are the core is­sues we are try­ing to solve [such as] how is the room go­ing to be cleaned, how is it go­ing to be main­tained?” Barr says. IHG ex­ited a num­ber of con­tracts, with Barr say­ing the com­pany had re­moved more ho­tels from its port­fo­lio than some chains cur­rently have in their en­tire port­fo­lio.


For Carl­son Rezi­dor, the im­por­tance of brand­ing was demon­strated by re­nam­ing it­self Radis­son Ho­tels, and also adding con­sis­tency across its brands. Its lux­ury “Col­lec­tion” brand, Quorvus, has now been re­named the Radis­son Col­lec­tion (with prop­er­ties such as the Strand Stock­holm in Swe­den, the Royal Copen­hagen in Den­mark and the Royal Mile Ed­in­burgh in Scot­land). It also an­nounced an in­ten­tion to “re­brand or re­po­si­tion” some 500 prop­er­ties in the 1,400-strong group. Fed­erico J González, pres­i­dent and CEO, told me that “over the next five years [we will in­crease] from 80,000 to 1,00,000 ho­tel rooms; a net gain of 20,000; but ac­tu­ally we will see more than 10,000 exit if they are not in good shape, or the owner has no plans [to in­vest].”

Radis­son is the 11th largest ho­tel group in the world and has eight ho­tel brands, with more than 1,400 ho­tels in op­er­a­tion or un­der de­vel­op­ment. In the next five years, the group says it will ex­pand “only or­gan­i­cally”, mean­ing not by ac­quir­ing other ho­tel com­pa­nies; but that then cre­ates a sus­pi­cion that it will in turn be ac­quired. The prospect doesn’t seem to worry Gon­za­les.

If brands are a prom­ise, why do we so of­ten feel let down by that prom­ise?

“It’s very good in life to be a mov­ing tar­get. We need to play with cer­tain­ties. We have a huge busi­ness po­ten­tial, we can grow sig­nif­i­cantly, and, in par­al­lel, we will have time to see if some­one wants to buy us, but I can’t worry about it. With the five-year plan we have got at the mo­ment there is so much to get on with. I think the share­hold­ers will say ‘Show us what you can do’,” Gon­za­les says.

For all the talk of hav­ing brands for dif­fer­ent “guest oc­ca­sions”, they also help power the growth of the ho­tel com­pa­nies them­selves. That’s im­por­tant, ac­cord­ing to Ge­off Bal­lotti, CEO of Wyn­d­ham, the ho­tel com­pany with 8,400 ho­tels across 20 brands, in­clud­ing Ra­mada and Days Inn.

“The cost of keep­ing up with tech­nol­ogy, or cy­ber se­cu­rity – the money you have to spend to make sure you have the best sys­tem, that’s why plat­form mat­ters and size mat­ters,” Bal­lotti says. “Size and scale helps in terms of how much lever­age you have when you are ne­go­ti­at­ing con­tracts, and your loy­alty pro­gramme helps drive sav­ings for ev­ery­one. The ul­ti­mate mea­sure is your share of oc­cu­pancy that is com­ing through the loy­alty plat­form. It low­ers the cost of ac­quir­ing the guest for own­ers be­cause it’s not com­ing with a 10 or 20 per cent com­mis­sion, and so you want the best tech­nol­ogy plat­form avail­able.”


How­ever, not ev­ery­one be­lieves a pro­lif­er­a­tion of brands is best. Scan­dic Ho­tels has only two brands – Scan­dic and Down­town Camper by Scan­dic – yet it is the largest op­er­a­tor of ho­tels in the Scan­di­na­vian and Nordic re­gion with 280 ho­tels (55,000 rooms) in six coun­tries. CEO and pres­i­dent Even Fry­den­berg, who pre­vi­ously worked at Star­wood Ho­tels and Re­sorts, knows all about the power of brands; yet while toy­ing with the idea of a fur­ther brand, he cer­tainly doesn’t plan to head for double fig­ures. Why should he? “We are very big in one re­gion, but that re­gion is made up of sev­eral coun­tries with dif­fer­ent eco­nomic driv­ers. It gives us a bet­ter base to stand on. Our suc­cess is be­ing con­cen­trated on cer­tain mar­kets, so we can quickly get the ben­e­fits of scale.” Scan­dic is con­tin­u­ing suc­cess­ful ex­pan­sion in Ger­many and Poland us­ing the Scan­dic brand, though even here Fry­den­berg doesn’t rule out in­tro­duc­ing a new brand.

It’s also true for other global brands that big­gest isn’t al­ways best. Peter Nor­man, Hy­att’s se­nior vice pres­i­dent of ac­qui­si­tions and de­vel­op­ment, ad­mits that Hy­att “is never go­ing to be the size of the oth­ers, and that’s not our strat­egy.” In­stead, Hy­att con­cen­trates on “grow­ing re­spon­si­bly and sus­tain­ably,” an ap­proach that has seen it reach 700 prop­er­ties in more than 50 coun­tries across six con­ti­nents, yet it is still only one-tenth the size of Mar­riott.

“We can show that our ho­tels out­per­form the com­pe­ti­tion in many of the mar­kets, and that’s be­cause guests love the ho­tels,” says Nor­man. Hy­att’s growth is com­ing through ex­ist­ing and new-ish brands such as the Hy­att Re­gency in Dus­sel­dorf, the Hy­att Cen­tric Gran Via in Madrid, the Hy­att Place at Frankfurt Air­port and An­daz (a Mu­nich prop­erty will open at the end of 2018). It also has the in­evitable

col­lec­tion brand (called the Un­bound Col­lec­tion) with fa­mous prop­er­ties such as the Martinez in Cannes join­ing it (see Up­front, page 16) and, at the end of 2018, a new cen­tral Lon­don prop­erty in the for­mer home of the Metropoli­tan police called (in full) The Un­bound Col­lec­tion by Hy­att, Great Scot­land Yard Ho­tel, Lon­don.

It’s not just large ho­tel com­pa­nies cre­at­ing (or ac­quir­ing) new brands. There are smaller com­pa­nies cre­at­ing in­no­va­tive chains, with Cit­i­zen M be­ing one that many ad­mire. Nev­er­the­less, Sébastien Bazin makes a point about these smaller brands: “These in­ter­est­ing funky trendy brands, they are sexy from year one to year five, and they maybe grow to 25 prop­er­ties, and then they aren’t as trendy as they once were. They don’t have the loy­alty from cus­tomers, they don’t have the book­ings, so they pay big per­cent­ages to the OTAs [online travel agents], and they are not happy about it, and then they start to look for an um­brella and they come to talk to the big op­er­a­tors.”


The other big push by ho­tels is in tech­nol­ogy, though un­like the con­sen­sus on brands, here opin­ions dif­fer. Ho­tels have be­come far more so­phis­ti­cated at cap­tur­ing our cus­tom di­rectly rather than through third par­ties (such as the OTAs) by us­ing ho­tel loy­alty programmes to of­fer ben­e­fits such as points and free wifi. Once they have our per­sonal data through the pro­gramme, it al­lows them to mar­ket di­rectly to us and also to “per­son­alise” our ex­pe­ri­ence, some­thing of a buzz­word in re­cent years.

You will also see bet­ter tech­nol­ogy in the rooms, though it's cer­tainly taken them long enough. Most busi­ness trav­ellers of a cer­tain age will re­mem­ber how ho­tel rooms only of­fered a cou­ple of wall sock­ets for power, just above the skirt­ing board, and of­ten with a lamp al­ready plugged into one of them. This even ap­plied to lux­ury ho­tels. On one oc­ca­sion in New York I was met by liv­er­ied door­man, had my bags whisked up to the room and was of­fered a wel­come drink, yet a few mo­ments later, want­ing to work, I was un­der the desk on my hands and knees try­ing to plug in my lap­top. The good news is that fi­nally the new de­signs have caught up with our need for power. The Hol­i­day Inn Ex­press I stayed in dur­ing the re­cent trip to Ber­lin for these two con­fer­ences had

“It’s a chal­lenge to com­bine tech­nol­ogy with hospi­tal­ity to make guests’ ex­pe­ri­ences bet­ter”

eight power sock­ets in that one small room, and a USB charger in­cor­po­rated into the power socket by the bed. It al­most made up for the fact that the room flooded for two out of the four days.

At least there was free wifi. Ho­tels are still try­ing to charge for this, of course, and many have in­tro­duced com­pli­cated (and largely ig­nored by cus­tomers) twotier pric­ing, where ba­sic speed in­ter­net is com­pli­men­tary, and high speed (which few use) is charge­able.

So what should ho­tels be do­ing on the tech­nol­ogy front to sat­isfy not only the busi­ness trav­ellers of today but those of to­mor­row, “future-proof­ing” the rooms so they do not quickly be­come ob­so­lete? Al­though a lot of in­no­va­tion has come from trendy smaller brands such as Cit­i­zen M, the larger brands such as Ac­corho­tels, Mar­riott and Hil­ton have all set up their own in­no­va­tion labs to test new tech­nol­ogy. We have writ­ten pre­vi­ously about shower cu­bi­cles which al­low you to sketch out your morn­ing ideas on the steamy glass as you wake from sleep, and mem­ory mat­tresses, but there’s much more com­ing.


To of­fer a glimpse of one ver­sion of the future tech­nol­ogy we might en­counter in ho­tels, Hil­ton brought over demon­stra­tion ver­sions to the Wal­dorf-As­to­ria in Ber­lin. Jonathan Wil­son, Hil­ton's VP, prod­uct in­no­va­tion and brand ser­vices, was on hand to ex­plain them.

They in­cluded NuCalm, which prom­ises to give users the equiv­a­lent of two hours’ sleep in just 20 min­utes; and Nightin­gale, a plug-in socket de­vice which emits white noise and com­bats com­mon dis­rup­tions heard in ho­tels such as traf­fic, voices or con­struc­tion work. Al­though these are be­ing tri­alled, some in­no­va­tions are fur­ther pro­gressed. Hil­ton cur­rently has rooms com­pletely kit­ted out with fit­ness equip­ment in more than 30 ho­tels, and is ex­pand­ing this scheme. The rea­son for do­ing so, ac­cord­ing to John Rogers, se­nior VP of brands and fran­chise op­er­a­tions EMEA, is partly “to make guests’ ex­pe­ri­ences bet­ter”, partly to pro­vide a “real dif­fer­en­tia­tor” between the Hil­ton Ho­tels and Re­sorts brand and that of its com­peti­tors, and also be­cause all of this fits with Hil­ton’s his­tory. “Hil­ton has a his­tory of in­no­va­tion,” Rogers claims. “A lot of things you see in ho­tels that are com­mon­place were tri­alled by Hil­ton – TVs, air con­di­tion­ing, and ho­tels at air­ports.”

The amount of data that many com­pa­nies have on their cus­tomers, and ho­tels have on their guests, will al­low a new level of per­son­al­i­sa­tion. “When you walk into the room it will be the tem­per­a­ture you like be­cause we know it, and we could even have a pic­ture of your fam­ily by the bed.” But Rogers is clear that “there is a line to draw. You have to be care­ful that it doesn’t be­come creepy.”

LEFT AND RIGHT: cit­i­zenM Paris Gare de Lyon Ho­tel; and Wal­dorf As­to­ria Ber­lin

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