In a world of increasingly ‘investor centric’ ownership and ‘franchised’ hotels there is great potential to ensure consistency in client service, offering, customer experience and branding. As well as offering the opportunity to hotel owners to raise more investment to develop the hotel, than they could possible achieve if they remain an independent hotel owner.
UK 2019 TREND FORECAST FOR HOTELS | HOSPITALITY SECTOR
“Our revised forecast for UK hotels in 2019 anticipates slower growth reflecting softer economic and demand trends and the impact of high levels of new hotel room additions, particularly in London but also in other UK cities. While the weak pound continues to support inbound leisure travel, protracted negotiations around Brexit are not helping business travel” (Source: PWC, September 2018)
Whilst not a gloomy forecast with City based hotel occupancy forecasted at an average of 82%, the more concerning factor is the forecast for revenues / room:
What Customers Want Is Not Always “One Size Fits All”
For some customers the assurance of a branded hotel experience is reassuring, particularly for business customers who travel from one city to another. They need to know that after a long trip they will get wifi, great food, clean rooms, a comfortable bed and perhaps a spa or pool to unwind. A renowned, branded hotel, gives this assurance and cross-border loyalty schemes help to underpin this.
In this scenario the choices are likely to be pretty much functional, base requirements that need fulfilling, a means to an end. More likely to be price driven, consistency or at best a brand driven choice, fulfilled on Hotel.com or other 3rd party booking site (with the inherent hit on room rate margins).
However, in this simplistic scenario, it does not reflect the deeper and diverse needs of many business people nor the general public who are looking to book a hotel. Guests needs are far more complex and may for example include requirements for entertaining and impressing guests from overseas, proximity to local attractions or a scenic location to unwind.
A more unique hotel ambience, often seen in the independent hotel sector and personal service can be major draws for discerning customers.
If Nike Opened An Amazing Hotel
Seth Godin has his view on the use of where branded hotels may need to divert from the ‘core messages’ and associated communications. Given as a comparison to Nike the mass marketing sportswear brand (watch video below):
People seeking more of an ‘experience’, not just looking to have purely functional needs being met.
And this is where the power of localised content control kicks in. Providing a more granular and customised level of detail about the specific hotel, hotel events, the restaurant, the local services and amenities. Not a replacement of core branding awareness communications or campaigns, but complimentary TO those campaigns. Delivered in a synergistic way.
WHERE HOTEL COMPETITION IS FIERCEST PRICE IS DRIVEN DOWN – HOW TO STAND OUT?
“High levels of new supply in many cities are likely to dampen performance. Occupancies are at record highs at 76% and we can’t see much more growth in 2018 or 2019. London continues to operate at a globally high level and our lower growth forecast should be viewed against this backdrop.
We are forecasting a marginal occupancy gain in 2018 of 0.1% and a 0.5% fall in 2019 as new supply additions continues to bite and political uncertainty dents corporate demand.” (Source: PWC, September 2018)
In short, customers are often spoiled for choice and as more hotels are planned for development in the Cities across the UK, including London, the saturation point of customers Vs. occupancies is nearing.
Very often, this means that hotel brands are driven to reduce prices and therefore margins, reduce physical room sizes to maximise floor space Vs. returns.
Specifically from the wide range of competition in high density, close proximity geographic locations seen in UK Cities and across the world. There are only ‘so many customers’ and a plethora of choice, so hotels claw to ensure occupancy damaging margins.
Relying on international/national branding and brand communications simply won’t cut through the noise of all the ‘Discounted Offers’ across marketing platforms.
There is a disjoin between TV, Radio Ads and homogenous branded content on social media as the ‘branded content cascaded from Head Office Marketing teams DOES raise awareness, but one website looks like the next, the social media posts on on hotel are the same as next….there’s no differentiation. Which comes back to Seth’s point above.
BLENDED MARKETING APPROACH TO MAXIMISE SUCCESS
In short, a level of hotel personalisation is fundamental. I have seen significant results where we have blended, on brand, highly localised content relevant to the prospective client/s and giving each hotel a ‘unique personality’. Complimentary to to the HQ Marketing comms, not in spite of.
The needs of the end customer are addressed at a truly niche and localised level that engage room booking clients and the local catchment populous.
This opens up additional revenue streams e.g. promoting wider facilities (spas, events, restaurant offers, special occasions) and returns additional bottom line margins. Fundamentally cross and up-sell outside of the core room booking agenda.
However, the challenge is delivering this specialist approach for each hotel with the resources and skills of the in house hotel team who are already stretched to capacity.
Drive to The Top
This blended approach reverses the ‘drive to the bottom’ for pricing, by giving each hotel a level of uniqueness, a reason for a new customer to choose Hotel Hotel A rather than Hotel B.
It generates significantly more revenues by niching marketing efforts and investment. Whilst leveraging the power of the Hotel Groups brand. It is going to be a lot easier for a General Manager to relay amazing results to the hotel owner or investors than a failed turnover target. That is certain.
At Board level it may feel like it makes sense to trim all costs (external or in house) on the P&L. In the short term from a spreadsheet viewpoint the investors or owners will be happy with the leanness demonstrated. And it makes more sense from an efficiency perspective to control and cascade marketing communications centrally down to each of the Branded hotels website, social media channels.
However my experience is that to drive profits to the top of the Hotel/s tree to Board level, that the enriching your investment into Centralised Branding with marginal on costs will be the winning formula. Slightly increasing the P&L but resulting in a synergy, one where
$1+$1 = $3
Supporting sustainable growth and profitability in the short-mid term.
In my view Top Down Is NOT The Wrong Way Up…
…as long as there is a solid platform at the bottom of the pyramid. Giving local teams sufficient budget to control local marketing, either hiring experts in house or outsourcing is essential to beat of competition and maintain overall hotel revenues.