Last month, Hotelintel.co invited brands to talk about just how important branding is (See Here). One of the comments we had in response was that “marketing and branding people care far more about marketing and brands than other people do,” so this month we want to hear from some of those “other people”. We asked some owners the questions to find out whether they actually care as much about branding as brands think they do, whether they only really care about bottom lines, and what influences them to pick one brand over the others.
Joining our conversation are:
James Kibble, Co-Founder of Selongselo Resort & Residences in Lombok
Karan Vaidya, CEO and Founder of The Kaivalya Villas & Retreat in India and Nepal
Tom S’prayoon, CEO of independent hotel development consultancy PCL Hospitality, asset management specialist, and owner of Loligo Hua Hin Resort
What do you take into consideration when choosing a brand for your hotel?
James: A 4-5 star with strong sustainability mindset. Established marketing and distribution strategy; revenue management system; IT Support and strong training processes. Ability to operate numerous assets/concepts within close proximity. Alignment of outcomes.
Karan: As an owner, the first thing we need to understand when choosing a brand for our hotel is what our incentive is for building that hotel. Is it purely for investment purposes or are we trying to establish our own identity with it? As I am trying to establish my own identity with my hotel, it is my priority to choose a brand that aligns with my vision and the identity that I’m trying to establish with my hotel. If the core principles are aligned, then working with the brand will also be significantly easier and the synergy will definitely be greater.
Tom: Suitability of the brand to the location and the capital investment. This includes the brand’s position, its current footprint in the location, its primary customers, and its operational excellence which will impact the GOP.
Why is a ‘brand’ important to you? What does it contribute to your business?
James: It defines and differentiates our assets in Lombok. It gives confidence to the area, and it enhances the underlying value of the asset.
Karan: The evident reason a brand is important is for the recognition it creates that allows people to identify and distinguish it. For example, in Kathmandu, we don’t have many name brand hotels, however, we have a new Marriott that has opened up recently. Even though the hotel itself might not be in the best location, or have the best service or amenities, the brand itself attracts travelers towards it for the recognition it has created. That’s why a brand is important and how it contributes to a business.
However, following up from before, I would not choose Marriott as my hotel’s brand as it doesn’t align with what I am trying to create and achieve. Marriott would be excellent for investment purposes for its strong brand recognition. However, I’m looking a bit deeper for a brand that is aligned with my core values to create a more unique identity for the hotels/resorts I am building.
Tom: We expect the brand to give us a quicker lift-off period due to brand recognition. It should also generate higher ADR and higher occupancy during the low season. We also expect a higher GOP due to lower purchasing costs and operational excellence.
What do you think hotel brands are lacking when it comes to maintaining a brand's promise to you as an owner and/or to your guests?
James: Many do not align their compensation with the underlying performance of the asset. Too short-term focused vs developing a sustainable plan for consistent returns over many years.
Karan: This really depends on what the brand’s promise is, and again, what the owner’s incentive is. If the brand’s promise is aligned with the owner’s incentive, then there should be no lack at either end. For example, if the owner’s incentive is the bottom-line, and the brand with its recognition, consistency, and network, fulfils the expected occupancy and ARR, then there should be no shortfall in the brand’s promise. Therefore, choosing a brand with utmost scrutiny is the wisest decision for an owner. As an owner, I’ve been in talks with several brands for my property. I believe if the brands could understand my incentive better rather than imposing their standards and identity, I would have been more readily persuaded to work with them. Flexibility and understanding on both sides would be the key to establishing a strong synergy between the brand and the owner.
Tom: Some brands are over compromised on the quality of their products, especially on conversion properties. This could jeopardize the integrity of the brands including the trust of customers and owners.
Brands talk about brands, owners talk about the bottom line – where’s the balance when it comes to running a successful branded hotel?
James: Clear objectives need to be set from the beginning on the desired outcomes of each party.
Karan: I don’t agree that all owners talk about the bottom line. As I’ve mentioned throughout this discussion, owners can have different incentives, among which the bottom line is definitely a prominent one, but not necessarily the only one.
I fall into the smaller category of hoteliers that are trying to create a new identity with their properties. The risk-averse and bottom-line-friendly way would probably be to choose a prominent and recognizable brand, that would set their standards and brand the property in accordance with their guidelines. Then again, that would mean that as an owner, I would be choosing to be washed up in a sea of similar properties without any unique identity. If I just cared about the bottom line, that would not really matter to me. However, since I am trying to create a certain distinctiveness with every property, I am digging deeper in my process of selecting a brand and to create that delicate balance between identity and bottom line.
Tom: Owners do care about brands as much as the operator – after all, the right marriage should deliver a stronger bottom line. However, there are occasions when international brands are obliging owners to invest in additional FF&E, OS&E and fixed assets without any consideration for the current business conditions, and the ROI of such investment is not outlined; this circumstance usually causes frustration with owners. Brands should prioritize the implementation, for example, between a brand standard recycling bin versus the new lining for the beds, and give sufficient timeframe for execution.
Let us know what you think of the importance of branding and share with us your experience in choosing and managing a brand for your hotel.