What's in a name? Everything if you're in the hotel industry. Today's consumers are overwhelmed by a bevy of hotel choices that run the gamut from Ramada Plaza and Courtyard by Marriott to Holiday Inn Express and Country Inns & Suites. The proliferation of concepts has produced a lengthy list of hotel flags.
As a result, the task of making a brand name stand out amid such a crowded field of competitors is both increasingly important - and difficult. "I think major brand affiliation is very, very important. Whether it's a meeting planner or a consumer, people are looking for a brand they can trust," says Jane Mackie, a vice president and brand manager for Four Points Hotels by Sheraton in Atlanta.
Hotel brands have long introduced concepts that were a differentiation of product types such as extended stay or all-suite concepts. "Since the 1980s, 'nichemanship' has clearly been the way of the hotel business," says Donald W. Wise, president and CEO of Wise Hotel Investments Inc. in Corona del Mar, Calif. But as those variations continue, the volume of new concepts makes it difficult for consumers to distinguish between the growing variety of brands. "There's no question that the consumer gets confused," Wise says.
Morris E. Lasky, CEO of Chicago-based Lodging Unlimited Inc. agrees. "Guests are confused, and the confusion comes from the fact that there are so many brands," he says. "If you had a list of 100 brands, a lot of people probably wouldn't know what a lot of them are in terms of the level of service, rates and where they're located." As a result, many hotel companies are looking at innovative and aggressive means of growing brand awareness. People do have a tendency to go to the larger, more well-known brands, and they develop loyalty to those brands. "Good, bad or indifferent, at least they know what it is," he adds.
"It is important to break through the clutter, and to ensure the frequent business traveler at a variety of price points has your brand at the top of their brand awareness," says Sam Winterbottom, president of the franchise division at Starwood Hotels & Resorts Worldwide in Atlanta. Building that brand loyalty is key to long-term success, he adds.
The challenge for hotel companies is making sure customers know who they are, what services and amenities they offer, and what values and prices to expect. The next step is growing that brand awareness, and ultimately boosting loyalty through repeat visits. "Each of the major companies that have the various brands are making a concerted effort to identify themselves to the traveling public to the brands that they have available," says Jordan Richman, senior vice president in the hospitality services group in the Los Angeles office of Northbrook, Ill.-based Grubb & Ellis.
Consistent message Successful branding campaigns are comprised of more than one or two key initiatives. The best branding strategies send the same message from a variety of sources that include advertising, marketing, promotions, frequency programs and, most of all, the product itself. The cornerstone of establishing and growing brand awareness is consistency. "The brand gives an identity to the property that will immediately tell the consumer just what that product is going to be - what product, service and price level they can expect to encounter," says Mark Woodworth, an executive vice president in the Atlanta office of PKF Consulting Inc.
Providing a seamless product to consumers is critical for a hotel regardless of whether it is a franchise or corporate property. Consistency within a brand refers to all aspects of hotel operations from the physical appearance and amenities to pricing and service. "The best way to create value to your customers and to create a niche is to never forget it's a service industry. You need to provide the best service, while still bearing in mind price and perceived value," Wise says.
New brands need to pay particular attention to uniform operations. Properties need to operate with strict standards. If those standards are not adhered to, the company ends up with a "mishmash" of properties where the brand is not fully understood, says Terry Bickhardt, vice president of operations and marketing for the Waterford Hotel Group in Waterford, Conn. Pricing and the value perceived by the customer are two key standards hotel companies should adhere to. "With a new brand, the consumer is trying to size you up by price value," Bickhardt says. "You can't go market-to-market and have one property compete at a low tier, the next compete at a middle tier and the next compete at a luxury tier. That just adds to consumer confusion."
Achieving the physical brand identity is often the easy part. The hard part is the implementation of brand standards. "What in turn happens is that if you roll out a new development, and the first 10 properties vary significantly among each other, you're on a collision course toward not getting that universal awareness that you're looking for," Bickhardt says. "Physically, they might look the same, but they don't operate at the same price point," he says. "It's their own operations that doom their chance of success."
Frequent stay incentives Guest frequency programs are one of the primary tools used to grow brand awareness. Most major lodging firms have some type of frequency program. Frequent stay programs have become a popular franchise-driven feature that first became prevalent when Holiday Inn adopted the Priority Club back in the mid-1980s. Holiday Inn was literally overwhelmed by the customer response, Woodworth says. "It proved that people will play the hotel point game the way they play the airline game," he says.
Last February, Los Angeles-based Starwood Hotels & Resorts Worldwide Inc. debuted its revamped frequency program, Starwood Preferred Guest. With more than 550 participating hotels in 60 countries, Starwood Preferred Guest is one of the largest loyalty programs in the lodging industry and is quickly becoming one of the most successful.
Starwood Preferred Guest - the company's first cross-branded program - allows travelers to earn points and redeem awards at Westin Hotels & Resorts, Sheraton Hotels & Resorts, St. Regis/Luxury Collection, Four Points Hotels by Sheraton, Caesars World and W Hotels. Starpoints can be used for free stays, free flights, merchandise, vacation packages and hotel dining.
The Starwood Pre-ferred Guest program was developed from combining two existing programs - the Sheraton Club Inter-national and Westin Premier. "We were able to take the best of both and relaunch it as one program," says Mackie of Four Points. Four months after its debut, Starwood Preferred Guest signed up one million new members. USA TODAY also has recognized the Star-wood Preferred Guest program as the top hotel frequency program in the country.
The biggest complaint guests have with frequency programs is that they never get a chance to use the points they have accrued, Mackie says. One of the reasons the Starwood program is so successful is that it is easy and flexible. It features no blackout dates and no point expiration dates for active members, plus instant rewards and on-line award redemption. Members also can choose how they would like to redeem those points. Preferred Guests can use their points to earn free stays at a Starwood hotel, or even swap points for airline miles in frequent-flyer programs. The "Star-points" also can purchase gift certificates at one of Starwood's merchandising partners, including names such as AT&T, Saks Fifth Avenue and Lands' End. "It empowers customers to use points for something that is meaningful to them," Mackie says.
In addition, frequent travelers participating in the program enjoy increased personal recognition while on the road. Tapping into state-of-the-art Internet technology, the program provides hotels and members with up-to-the-minute account and personal profile information. As a result, Starwood Preferred Guests enjoy personal service, including the ability to claim same-day hotel rewards.
Another advantage of the frequency program is that it increases communication activity, which provides Starwood with the opportunity to grow awareness of all of its brands. That is a significant perk for fledgling brands such as Four Points. With Four Points linked to the more established brands, its image is enhanced, Mackie says. "I think it strengthens Starwood and strengthens all of the brands," says Mackie.
Such frequent-stay programs are not confined solely to the large hotel chains. Many smaller hotel companies have been successful in using frequency programs to boost brand awareness. "You don't necessarily have to offer Marriott rewards; you can do it on a smaller chain basis. That's a great way to build up awareness by taking advantage of your current client base," says Bickhardt.
The Waterford Hotel Group manages 21 hotels, primarily in New England. One brand Waterford manages, Swiss Chalet, offers a guest-reward program where the front desk staff at-tempts to sign up frequent stay members, which increases brand loyalty, Bickhardt says. For example, among Swiss Chalet's Connecticut hotels, approximately 20% of the hotel rooms sold represent repeat customers. "We're really quite pleased with the results," says Bickhardt.
Building new brands Growing a new brand is even more challenging than strengthening an existing brand. Since Atlanta-based U.S. Franchise Systems Inc. was founded in 1995, the company has acquired three different brands, and has initiated aggressive expansion plans for each hotel chain. The company's first brand acquisition was Microtel Inn & Suites. Currently, more than 160 Microtels are open with more than 390 in development. The aggressive roll-out has made Microtel the fastest-growing new brand in the industry. U.S. Franchise also bought Hawthorn Suites a year and a half ago, and has more than 70 units open with another 230 in development. Last year, U.S. Franchise also purchased Best Inns & Suites, a small Midwestern chain. Approxi-mately 90 Best hotels are open and another 203 are in development.
One component of the U.S. Franchise strategy is to boost brand awareness through physical expansion. Some industry observers believe that a strong physical presence is essential to growing a brand's identity. "The basics are if you don't have a critical mass, you don't have a brand," says Lasky. National brands need to have 200 to 300 hotels. Those bigger brands also have more resources to delegate to brand building through advertising, marketing and promotions. "So what I see happening is more consolidation. Where smaller brands don't have critical mass, they will end up being absorbed into the larger companies," he adds.
In conjunction with expanding the size of its franchise systems, U.S. Franchise also is deploying a variety of brand-building strategies. "The biggest challenge we had in launching new brands is that when you're a small brand, you're like David trying to take on Goliath. And if you're not careful, Goliath will step on you and you will be crushed in the growth of these larger brands," says William Q. Dowling, an independent consultant for U.S. Franchise Systems. "So our challenge was turning David into Goliath," he says.
In the case of Microtel Inn & Suites, the brand had a clear positioning statement. Microtel was purchased under the philosophy that the brand would become a dominant player in the budget lodging sector. The message was that Microtels are the "same great hotel wherever you go." But the bigger dilemma was delivering that message using a limited budget. "We decided to target corporate executives and corporate business travelers by concentrating all of our advertising on 'CNN Business Day,'" says Dow-ling. "In doing so, we reached a very concentrated number of frequent business travelers," he says.
CNN goes into hotel rooms and many business travelers tune in to the early-morning show when they are on the road. "If you can't run a $50 million ad campaign, it's important to take a rifle shot and be heard in one location every day," Dow-ling says. The Microtel ads air on "CNN Business Day" every day, which helps increase the frequency of the message and ultimately enhances brand awareness.
In addition, U.S. Franchise is working to form strategic alliances, including a nationwide promotion with MasterCard where the Microtels offer special discounts at all hotels if the guest pays with a Master-Card. "We're working on other strategic alliances," Dowling says. "Because we are an emerging brand, we need to associate our brand with other brands that are already well established."
Franchise support An important ingredient to growing brand awareness is providing support at the franchisee level. A lot of brands sell franchisees a name and then do nothing else for them. "The larger, more organized brands have a lot of programs to teach franchisees and get the best results out of their franchisees," says Lasky.
U.S. Franchise has initiated a "Smart Start" program that goes into effect every time someone buys a franchise. The Smart Start package is customized for each property. The corporate office assists in steps such as making telemarketing calls into the franchisee's market to identify business leads and conducting employee training. "We want to help these franchise companies," says Dowling. "We also have a very thorough site-inspection program where we monitor the standards."
U.S. Franchise also is in the process of establishing a distance learning program for franchise owners via the company's computer extranet. "Because of high turnover at hotels, often you can go in and conduct a training class and three months later those people are gone," says Dowling. The company's new distance learning program is expected to be up and running by the end of the year.
New technologies Hotel companies are pursuing new mediums to boost brand awareness. A growing number of consumers are using the Internet to make travel arrangements. According to a July study conducted by San Francisco Cognitiative Inc., travel comprises the majority of online purchases with 75% of e-shoppers making travel arrangements over the Internet. "There is considerable amount of focus today on how the Internet is impacting consumer buying channels," Woodworth says. Hotel companies are hoping to tap into that emerging cyberbusiness by using the Internet to reinforce the brand message.
Starwood has designed its Website - www.preferredguest.com - to offer members a personalized Web page, accurate and current account information, online reward redemption, as well as easy access to program information and special offers. Starwood uses technology to track customers, which allows individual properties to readily identify Preferred Guests. New technology provides an added convenience for customers to instantly redeem points at hotels.
Whether it it is starting a brand from scratch or merely maintaining a reputation, branding is clearly a necessity in day-to-day hotel operations. Those hotel companies that choose to remain reactive in their efforts could see themselves become just another brand, while those that choose a more active route will stand out in the crowd.