Soft brands of international hotel companies are taking over
Independent hotel brands have two major disadvantages, which of the most common is lack of capital to invest in marketing and business development, and the other is not being able to attract or retain top talents which makes marketing management a lot more inefficient compared to what international brands can do.
Unfortunately, during the past decade, an even bigger problem started to loom over independent hotel management teams, which is international hotel chains establishing soft brands to cover niches better than small hotel companies can. Traditionally, international chains were known to do normal things better, while non-chain hotels were able to improvise but the recent expansion of localized and specialized brands puts this to a risk.
InterContinental (IHG Plc.) operates over 10 soft brands worldwide, covering a wide range of guest personas with a variety of lifestyle, design and travel style options. Backed by technology, data as well as talent and financial resources it seems independent hotels brands competing in the same niche will not stand a chance.
Unless tied by loyalty, travelers choose products instead of brands
When people decide between hotel brands to stay in, the product comes first. According to a recent survey, 84% of people would not hesitate to choose an independent brand over a chain hotel, if it offers more of what they like.
It is important to highlight “more of what they like”. This is especially true in case of resorts, where guests look for unique features and experiences they will be enjoying during their stay. The same can be also applied for city hotels – offering more of what people like will make the product more relevant and attractive.
Adjusting the product and experience to travel trends is critical, and will remain increasingly important as Generation Z youngsters will have a bigger share in global travel.
Differentiation, continuous product optimization and precise marketing communication is what hotel management teams need to do in order to maintain a competitive advantage.
Among over 3,000 participants, less than 16% answered that they would choose an international brand over an independent one regardless of the product – mostly because of loyalty and points that they can use for future stays. This indicates that if the product and product presentation are right, then there is little to no disadvantage to calculate with.
Independent brands can adjust a lot faster than chain hotels
One particular advantage of independent hotels over chains is that they are able to change things a lot faster. Without being controlled by a corporate office and without needing to go through long approval procedures, independent brands can change their websites, marketing communication advertising strategies and KPIs almost immediately.
This is a massive advantage over competitors, and most of our top performing clients take advantage of it – adjusting marketing communications and product presentations swiftly as the situation requires.
In many locations, including the Maldives, Switzerland and Vietnam we have independent hotel clients that outperform big-brand competitors by far.
So what is the future of independent hotels, in our view?
Here at Daniel Diosi & Partners we speculate that international soft brands will continue to gain more market share – eating into the business of higher-category 4 and 5 star hotels that failed to build their own brand.
This will be especially dangerous for those hotel companies who kept in the price – location competition, focusing only on revenue targets without putting efforts into establishing a positive brand reputation. These types of businesses will be the first to fail, unless they consider to change, at least in our opinion.
Independent hotels with a strong brand and reputation will go on uninterrupted, or continue growing further. We think that that there is space for independent brands in the tourism market, but those that fail to evolve will fail eventually.