In an increasingly crowded hotel landscape, competition is fierce for portfolio growth and global expansion. And in the intense jockeying to attract new business, deliver on customer expectations and draw legions of loyal guests, several hotel companies are investing heavily in repositioning their core brands. As the market enjoys a swift recovery, hotel owners have a choice: Spend big to uphold brand standards or find a new flag.
"Most hotel franchise companies relaxed their standards during the 2008-2010 industry recession in an effort to acknowledge the financial stress being experienced by their franchisees," says Mark Woodworth, president of Atlanta-based Colliers PKF Hospitality Research. "That was yesterday. As the economy continues to improve, the customer is becoming more discerning as well as demanding." According to PKF's preliminary estimates, profit growth for the hotel industry in 2010 was up 6.3 percent over 2009. Profit is projected to reach almost 11 percent this year and soar to 19 percent for 2012.
"There is a philosophy that suggests the quality of a brand is equal to the weakest link in the chain," says Woodworth. "To the degree that this is true, hotel companies recognize that the integrity of a brand is critical to delivering financial returns, which makes maintenance of brand standards absolutely paramount."
For the details and philosophy behind the branding and repositioning of well-established global chains, M&C spoke with senior executives at five major hotel companies: Best Western International, Crowne Plaza Hotels & Resorts, DoubleTree by Hilton, Holiday Inn Hotels and Resorts, and Radisson Hotels & Resorts.
BEST WESTERN> Parent company: Best Western International
> Portfolio: 4,000 hotels in 80 countries
> New in 2011: Galveston, Texas; Nashville; Winterhaven, Fla.; Bangladesh; Berlin
> In the pipeline: Several hundred
In February of this year, 65-year-old Phoenix-based Best Western International officially launched a three-tiered branding system in North America. The goal: to bring consistency to the company's unwieldy and often confusing portfolio of 2,200 hotels, which range from roadside motels to upscale, full-service conference properties.
Under the new branding system, hotels will be defined one of three ways: Best Western, Best Western Plus, or Best Western Premier. "We expect to do more group business, because now planners know which hotels to book based on their individual needs," says Wendy Ferrill, managing director of worldwide sales for the chain.
Here's what the new "descriptor" system means. Best Western hotels, at the economy end of the scale, typically carry a two-diamond rating by AAA and generally offer complimentary high-speed Internet access, parking and breakfast. A notch above is Best Western Plus, usually three-diamond properties that provide a more premium experience, with higher-quality bedding, upgraded in-room amenities and contemporary furnishings.
In the rebranding effort, 1,047 economy hotels were offered the chance to invest in their product and upgrade to the ‘Plus' level. Approximately 815 of them took the challenge and are expected to achieve their new designation by the end of this year.
Best Western Premier properties are the crème de la crème of the chain. Launched in 2003, the line is 100 strong in Asia and Europe. To date, however, the North American portfolio consists of just six hotels (in Cincinnati; Denton, Texas; Harrisburg and Lancaster, Pa.; Miami; and Napa, Calif.). This select group sports four-diamond ratings and is comprised mostly of new-builds and historic properties.
Premier hotels must feature 33 services and amenities beyond what Best Western offers. Among them: larger guest rooms with luxury bed linens, 42-inch flat-screen televisions, bathrobes and room service. The 115-room Best Western Premier Ivy Napa Hotel, which opened in Napa, Calif., this past January, is the quintessential example, featuring airy, loft-style guest rooms, a 24-hour business center, an outdoor heated pool, a full-service restaurant and 7,000 square feet of meeting space. More than a dozen Premier properties will be added to the brand's North American portfolio by year's end.
Hotels won't be able to rest on their new Plus and Premier status for too long, though. The initial rating is good for only three years. After that, properties will be reassessed yearly.
Customer service is a key part of the core strategy for all tiers in the chain. "Best Western has an ongoing customer care program known as ‘I Care.' It is one of the most intensive training programs in the hospitality business," says Ferrill. "All Best Western hotels, regardless of their descriptor, must meet those strict standards of customer care."