I have written several articles and blogs about this subject in the past, but am always surprised by what the brands get up to in their ever increasing hunt to control the hospitality market in all segments. Almost like the pharmaceutical corporations, they have unlimited power that they bring to bear to capture as much of the guest pie that they can.
If a new independent chain opens up with a creative and unique identity, the brands come up with a brand to compete and outdo the newcomers, or just plain buy the brand. Just as taxi drivers and associations lobbied against the Uber upstart that bit into their monopoly, so the hotel brands tried organizing against Airbnb who also took large chunks of business away from them. Their sense of entitlement is almost palpable, as is the huge amount of funding that they can bring to fight anything they deem as competition.
Take a look at the huge brands out there. Each of the leading hotel brands comprise of tens of sub-brands that cover all segments and standards of the industry, from luxury to mid-range and economy. To witness what has happened over the past couple of decades you only have to drive along a highway and take a look at the amount of generic hotels that line either side. If one brand does not operate to the satisfaction of the owner, just change the sign at the top and it becomes another brand. Same hotel, just another name. They all profess to offer the best service, have the best culture, the best food, the most comfortable beds, basically the best of everything for you the guest.
Take a room, enter it and draw the blackout curtains and you could be in any hotel of that class anywhere in the world. It is like McDonalds, the only difference being that McDonalds prides itself on that consistency, while the brands try to convince you that they are actually unique and different from the others.
In efforts to lure more guests they offer more points, free stays after a few nights, more amenities, the list goes on and on. Each brand copied the others and soon they were all offering more and more to try and put some daylight between them and the competitive sets in communities all across North America and the world.
Today I read of new ‘bait’ being dangled before the loyalty club members in an article in the Toronto Star: https://www.thestar.com/business/2017/10/13/hotels-offer-one-of-a-kind-experiences-in-attempt-to-one-up-airbnb.html
It states that loyalty clubs are now branching out and offering cooking lessons with Michelin Chefs, basketball sessions with Dwayne Wade, golf clinics with celebrity athletes and even excursions to faraway places, or local tours from hotels all over the world.
Of course these options do not come cheap, but the intent and inclusion of these point options says it all. They want ALL of the market and will not let up until they have it. They spend billions on advertising, and one brand even states in a TV advertisement that ‘’whatever your weekend, we have a hotel for you.” In other words, look no further, we have all the bases covered, all hotel styles and standards to fit your choice and pocket.
Now, despite loud brand cries to the opposite, we all know that the generic hotels are rather bland, offer run of the mill service, serve the same bland food, and their rooms are almost identical. I realise that I am generalising but doing so to make my point. So what better than accumulating points to keep trying to get you going through their doors?
Of course there is nothing unlawful about competition and the way they are setting about capturing all the market, but when is enough? Every day you read and witness cheap cookie-cutter structures going up that will become generic hotels. Just as with cookies, they seem to be buildings that will soak up the rain and crumble, and that is what I often think they might do in my mind. But saturation of a different kind will happen first; too many cheap hotels. In many markets today there are too many hotels and the guest ‘pie’ is spread thinly among them, denying them a high occupancy. And I dread to think about what will happen when the next economic crisis or downturn comes along.
This saturation leads to the fierce competition for the guest loyalty. In many cases it is not loyalty that keeps the guests coming but the points. It is not the great experience or the fantastic food, the impeccable maintenance or the perfect cleanliness; we know that these are not that prevalent in the majority of the generics.
Yet Airbnb has the brands running scared (rightly so) and searching for opportunities to gain the upper hand in the fight for customers. Why are they running scared?
One reason is that the proliferation of different choices, unique locations in cities and standards of lodging allow customers a larger freedom of choice. Millennials, the largest consumer group in the world today, like that option as they seek more involvement and values in the destination lodging of their vacations.
But I see here a huge opportunity for the independent hotels, due in no small part to the huge expansion and increase in the generics. With Millennials seeking a meaningful stay and looking for values in the establishment of their choice, it is easier for the independents to adapt and deliver. Owners and operators can adopt ‘green’ measures and reduce their environmental footprint, and they can implement these changes quickly. Community involvement is another area that independents can get into, given that they are from the community and therefore better known than the cookie-cutter establishments who are largely ‘outsiders’.
Independents can also differentiate their properties from the generics in a number of creative ways that will set them apart in their competitive sets. Many are in older buildings with character and history in their communities. Adopting a worthy cause in the town will also assist in differentiation, as can hiring local, sourcing local suppliers and creating a great culture within the hotels for the staff. Independents can do this given much more freedom of ‘movement’ they have. Of course no hotel or brand has a monopoly on in house culture, but it is somewhat easier for the independent to create and engender a great employee culture based on respect and fair treatment.
The difference between the giant generics and the independents is that the generics cannot help but create more generics. When boutique hotels started appearing, the generics created their own version of boutique hotels. The only problem is that within a short time there were hundreds of generic boutique hotels out there, thus defeating their own purpose.
The independent owners and operators out there must seize the chance to differentiate before it is too late. Playing catch up to the big guns is not an option nor a strategy. You cannot possibly win by competing on their playing field; they will win every time. They can beat down the prices until you go out of business. They can install the latest gimmicks no matter how expensive they are, and can ‘outhire’ every time.
The only way forward to a prosperous independent future is to carve out your place in the community by being something else, creating an identity that customers will look for. Creating a meaningful identity that places importance on the values and expectations that the new customers are looking for, and that is something so radically different from the generations that came before.