The global travel industry is enjoying continued growth. However these are not easy times to be in the hotel sector. Strategist Jo Kassis spent 10 years working at Four Seasons Hotels and explains how refocusing on the basics of brand strategy can help hotels struggling with the changes they are facing.
Hotel brands are facing mounting pressure from new platforms that are threatening their bottom lines. Online travel agents continue to divert 64% of the online bookings market, costing hotels up to 30% in commission. In addition to this, accommodation rental platforms like Airbnb, Mint House, and Sonder are expanding their offer to become serious competition across all hotel segments.
Airbnb has made a play for a slice of the luxury market, launching ‘Airbnb Luxe’ in 2019, listing high-end villas outfitted with private chefs, butlers and housekeepers. The company has also invested in over 30,000 experience add-ons, crafted by local experts, adding depth to their offer. The downward influence Airbnb’s offering is having on hotels’ revenue per available room (RevPAR) illustrates the real impact on the industry.
In response, some hotel brands are offering enhanced amenities, special benefits or discounted rates. Others are launching reward programs in the hope of increasing guests’ loyalty. While some of these tactics have proven effective, they centre around monetary value, which risks eroding their reputation and customer perception in the long term.
Hotel businesses should consider brand as a powerful tool to guide them through these challenges. Some hoteliers have lost sight of how having a solid brand strategy is essential to direct decision-making across the business, from crafting marketing campaigns to designing memorable experiences.
Saffron’s 4 steps for an effective hospitality brand aligns brand strategy with business vision and ensures that teams, from management to marketing, are making brand work hard for the business.
Step 1: Define the target customer
With globalisation and rapid cultural change, hotel customer needs are becoming increasingly diverse, meaning established segmentation techniques are no longer enough. In luxury travel, for example, distinctive experiences, personalisation and belonging are becoming more important than room size, a limousine service and a reassuringly high price point. Knowing who exactly target customers are, their motivations and cultural background, is crucial to creating environments, experiences and communications that balance relevance to their needs with maintaining a harmonious brand image.
Step 2: (Re)discover the brand idea
In today’s crowded hotel landscape, it is increasingly difficult to stand out by simply relying on the quality of products and services. Appealing to customers requires brand ideas that evoke emotions and have the power to inspire. Sector-leading brands like Aman Resorts or Four Seasons hotels have developed brand ideas around their own philosophies – “the Aman way of life” or Four Seasons’ “The Golden Rule” – which inspire customers to proudly proclaim themselves “Four Seasons Fans” and “Aman Junkies”, despite neither having loyalty programs. However, it is not only high-end hotels that have successfully developed inspirational brand ideas. Middle market hotel chain Citizen M has developed its brand around the idea of “Mobile citizens”, Mama Shelter group around “Urban kibbutz” and Axel hotels around “Universal equality”. These ideas focus on the target guest, and are expressive of the brand’s promise.
Step 3: Optimise your brand portfolio
Growing businesses might benefit from re-structuring their portfolio of brands, or as refer to it, their Brand Architecture. There could be an opportunity to reach a new market segment by creating a sub brand that attracts new customers without alienating existing ones. Whereas a brand investing in the construction of new properties might want to avoid starting a new collection to ensure they leverage existing brand equity to market their new properties. There are infinite brand architecture possibilities, and the solution will depend on each brand’s business model and current situation, requiring a thorough investigation to find the optimal model.
Step 4: Deliver the experience
The brand idea is the promise made to guests, and should be expressed through the experiences delivered. Developing a customer and employee journey across all guest and staff touchpoints is essential to identify pain and potential gain points and evaluate the gaps between reality and promise. Successful delivery drives guest satisfaction which in turn drives guest loyalty. Satisfaction and loyalty both have an important economic value. Consumer research suggests that the acquisition of a new customer can cost up to five times more than retaining an existing one, whilst an increase in customer retention rates of 5% can increase profits by 25%. Additionally, in the age of social media, satisfied guests add further value by amplifying brands organically through their online networks.
These 4 steps for effective hotel-brand-building are needed to profit from the changes in the hotel industry. Hoteliers considering their next steps need to look beyond short-term fixes and will find real value in examining the foundations of their brand strategy.
By Jo Kassis, Strategist
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