To Brand or Not to Brand….or Something Inbetween?
Written by Rosemary Rowen
The decision on whether to pursue a brand affiliation or to operate independently is one that hotel owners and developers need to weigh when considering options for new hotel development. There are numerous considerations to be made, based on a variety of factors including the hotel’s target audience, marketing benefits, design and operating guidelines, and costs associated with branding. However, the hard lines between branded versus independent are continuing to blur, as the emergence of quasi-brand options, or “soft brands” continues to become an attractive option on a number of levels.
Maintaining the independence and individuality of an independent hotel is attractive to many hoteliers, however, the convenience and power offered by brands is tempting when it comes down to the numbers. The proliferation of soft brands is evidence that there is a space between these two worlds that can be filled. Soft brand collections, such as Preferred Hotel Group, Leading Hotels of the World, and Small Luxury Hotels of the World offer alliances for hotels to maintain their individuality while at the same time leveraging the services of a brand. Traditional hotel brands, including major hotel chains, have also become players by launching their own soft brands. Examples include Choice’s Ascend Collection, described by the brand as “a network of historic, boutique and unique hotels that offer guests an authentic, local experience”, which began in 2008 and now has 118 properties throughout the United States, Canada, Europe, Central America, Australia and the Caribbean. In November 2013, Marriott’s Autograph Collection, penned as an “ensemble of strikingly independent hotels”, reached a milestone of 50 hotels in 13 countries in less than three years since the brand’s inception. An early player to market properties under a soft brand was Starwood with its Luxury Collection. The grouping of hotels, which dates back to the CIGA brand originating in 1906 as a collection of Europe’s most iconic properties, now consists of more than 85 hotels and resorts in more than 30 countries that offer unique, authentic experiences.
Among the advantages of choosing a soft brand are the obvious benefits of retaining independence in name, and maintaining a property’s individual character or charm. As one example, we have found that this is an attractive option when discussing branding options with colleges and universities that are looking to develop an on-campus hotel. To satisfy the priorities of the institution and create a sense of place, universities often prefer a hotel with a name that incorporates the name of the school so that the hotel is viewed as part of the university. However, in demand periods where school-generated business lulls and the hotel must rely on outside business as a supplement, universities see the advantage of having a brand affiliation that can bring visibility to other customers that it would not otherwise reach.
Joining a loose affiliation often gives the hotelier more flexible contract terms and lower fees than they would find when choosing to affiliate under a traditional brand flag. Having access to a larger scale marketing and reservation systems, purchasing power, and strength of distribution systems are benefits on the operational side for hotel owners, but having an association with a brand or a collection can also give a peace of mind to the traveler who wants the comfort of a certain standard that they know they will get when booking, but who are looking for a unique experience at the same time. Finally, when considering financing options, lender confidence with a brand name attached to the project versus an unknown independent can be a critical factor in the branding choice.
Soft brands are not a magical sweet spot on the branding spectrum for all properties. In each case, the hotel owner needs to do a comprehensive cost-benefit analysis to see where their needs and priorities lie on the scale from independent to traditional brand. But perhaps similar to how boutique hotels entered the market as a new class of hotels, soft brands are gaining in popularity and their definition is continuously evolving.
About the Author
Rosemary Rowen is a consultant based in Pinnacle Advisory Group’s Boston office. Since joining Pinnacle in 2013, she has completed work involving lodging supply and demand analyses, facility recommendations, brand assessments, and appraisals of both branded and independent hotels and resorts. Rosemary holds a Bachelor of Science degree from the School of Hotel Administration at Cornell University and her industry background includes roles in hotel sales and operations as well as analyst experience.