The Brand of One – a new chance for hotel operators
Updated: Nov 26, 2022
There is no doubt that to drive market share, scale matters. It’s important to have more negotiation power and deep pockets to drive Share of Voice and Brand Recognition. This is even more prevalent in the hotel market where the core travel value contribution - a room - is commoditized and made comparable by aggregator booking sites. This makes any brand building or distinctive positioning very costly.
It is no surprise that larger hotel operators are in need of differentiating their brands to attract new guest profiles. This also allows for more unit growth in the same locations. Differentiation of hotel brands however is largely determined by re-inventing the hotel room product like extended stay products, boutique and design hotels, etc. (Raleigh, Roginsky, 2003, Hotel Investments, Issues & Perspectives, p.22 ff). As the function of the lobby experience is turning into a social center of the guests stay, this also becomes another element of relevance towards differentiation.
The downside of defining a brand experience by too narrow travel profiles and fickle demand variations can easily compromise the overall performance potential. As we know, many travel segments have high seasonal variations.
In a post-pandemic world where regional travel is becoming much more dominant, personalization options for customers are a crucial part of selling. New technology is allowing to revolutionize the way of how room experiences can be sold directly without compromising the access to common distribution channels. The independent hotelier’s ability to beat big brands is much more realistic than ever before.
Why is that? Background:
How come hotel operators sell the same room product to every customer, no matter what their purpose of travel and travel companions? The answer is simple, because room inventory is clustered into simplified standardized categories (Standard Room, Deluxe Room, Suite etc.). This allows hoteliers to easily manage and sell them through all channels, keep operational flexibility to allocate rooms as and when, independent of the customer preference. It commoditizes their rooms and makes them comparable at the point of sales which in return has the opposite effect of building a distinct brand creeping into the profit margins and RevPAR potential of the hotelier over time.
We are about to enter 2022 - The opportunity!
In the age where we can witness space tourism, we should assume that technology is able to break away from this traditional way of managing room inventory! We know it’s possible!
Imagine a world in which hoteliers could repackage, cluster and label their inventory in numerous ways which is much more targeted to specific travel profiles and travel occasions. A world in which hoteliers can celebrate the uniqueness of each individual room highlighting the various functional room components relevant to the traveler profiles, and all this fully automated keeping operational flexibility in mind and without overwhelming the guests!
This can transform the entire pricing, sales and marketing strategy of a hotel and finally gives hoteliers a vehicle to break out of the sea of sameness.
A brand positioning can be finally determined in a broader space and differentiated for individual travel profiles by selling the same physical rooms in different ways through different channels.
Hotel room experiences re-defined
Take the role of new product launches, a core discipline for building a brand and market share. We are all accustomed to watching a product launch of a new phone or TV brand.. Not doing it would result into a loss of market share as the lifetime of electronic goods becomes shorter and shorter through ongoing new innovations.
In the hospitality industry, new product launches are largely defined in the form of new hotel openings. This is something that large hotel companies are able to do but independent hoteliers can’t, unless they completed a major renovation. However, as marketeers know, to build a strong brand and drive more market share, brands must innovate and launch new products on a regular basis!
With a new inventory management technology, breaking away from static, standardized room types, a whole new vehicle for launching new products arises. In addition to allowing guests to choose their own room preferences, room experiences can be marketed and sold like retail clothing lines: i.e., the winter collection, autumn collection, purple & sunset collection etc. Room experiences are being mediated by the story the hoteliers tell and not by the standardized boxes which are being sold on aggregator sites. The same physical rooms can be sold differently for a different name at a different time, highlighting various room features. This can be done without rooms being refurbished, just mediated by good story telling and evoking respective emotions for the target audience or by combining different room features with new or existing services. This would even change the way that customers think about buying a hotel room. Consumers know this type of marketing already from other industries and the hotelier has finally a strong tool as well to build a unique and distinct brand learning from consumer goods.
Winning excess share of voice and why it matters
According to marketing lectures share of voice has a perfect correlation with share of market. If a brand achieves a higher share of voice than its market share, marketeers refer to this as excess Share of Voice (eSOV). Excess SOV, as we know, leads to better market share performance over time. Of course, the opposite can be true as well where a reduced share of voice can lead to market share loss.
So, if hoteliers can now take advantage of the new technology, they will break through the communication clutter with personalized and creative ways to sell room experiences, win excess share of voice, more direct bookings and differentiate from third party channels and the hotel next door impacting on their overall brand performance. Good creative execution becomes a whole lot easier and therefore excess share of voice becomes very realistic for independent properties at a very affordable price.
Evaluate and check the numbers
It is worth playing through the numbers with today’s technology available for every hotel operator. How much is a costly Franchise or Management agreement worth to achieve a better result compared to an independent hotel operation. Especially for locations with high leisure and regional travel demand a global brand might not add the value you would hope for. Of course, we do not want to ignore that there are other considerations like access to qualified staff for example, as well. However, we strongly believe that a brand of one has great tools available to succeed in these times with new technology supported by consumers looking for more personalized experiences.
We love to help the independent hoteliers and now is the time to benefit from new technology!
For additional information and support contact us and get a free GauVendi Positioning House framework.