The last ten years have been, for once, a period of consolidation for the top 20 global hotel groups. In addition to reshuffling the deck in this ranking, it has also been a period of inflation in the brand portfolios of the groups.
In our world, customers are looking for even more meaning. Brands used to be about reassurance on fundamentals; today, brands need to tell a much deeper story. It’s natural for our industry to think about building strong, engaging brands that customers seek. Today, identifying with values and belonging to a community is vital. It is therefore necessary to move, in an assumed way, from the sign to the brand.
As we have seen, this extra soul that customers are looking for is also reflected in marketing. Over the last 10 to 15 years, we have seen more and more regional brands emerge, with content and consistency in terms of customer experience and message. These emerging brands have ended up having as much awareness as legacy brands with networks of over 200 properties.
Basically, the hotel brand has two customers: the guest who comes into the hotel lobby every day, and the investor or franchise partners. The brand must therefore create value in both environments. The proliferation of brands has sometimes been criticized for responding more to the needs of investors than to those of the guests. They tick all the boxes and all the positions in order to accompany the investment in its expansion. However, the brand must be attractive and desirable to customers on the one hand, and on the other, generate additional economic performance and value for its owner.
Also resulting from the value creation state of mind of the previous decade, the growth of the chain’s portfolio was synonymous with increased revenues for the chains. That’s why the pipeline race has been the other tool of value creation.
Competition is increasingly tough for all these brands and the findings are different depending on the segment and geography. Before COVID-19, EBITDA drove upscale management contracts at the top of the market, which was more profitable for listed companies. From now on, investment and development strategies may change.
In any context, there are real opportunities. In a world where hospitality is going to involve an increasingly wide range of sectors and products, we have a real opportunity to reposition brands, offer value, bring in more content and broaden their horizons, their development opportunities and their service proposals.
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