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A Trend: Independents Joining Major Chains

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March 01, 2010
Digital Strategy
George Roukas - george.roukas@hudsoncrossing.com

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Recently Marriott announced the Autograph brand, which represents a program whereby independent hotels that meet certain criteria could effectively share many of the benefits of being in the Marriott family without actually carrying the Marriott name.  In doing so, Marriott joins Choice (which itself recently announced the addition of the Outrigger chain to its comparable Ascend Collection,) the Starwood Luxury Collection, and Hilton’s Waldorf=Astoria hotels. 

What does this mean for independent hotels?  Does Marriott’s offering signal something different from its competitors?  If you’re not a member of what we’ll refer here to as ‘transparent’ brands, is it time to take a look?  Let’s examine the Autograph brand, and a few others, in a little more detail to see the pros and cons.

Not all hotels are eligible for membership in these specialty programs.  For example, Marriott’s announcement stated that hotels must fall into one of the following categories to be considered: Urban edge(forward-leaning major-market lifestyle properties), boutique arts (hotels with a core competency surround art), exotic retreats (high-end hunting lodges), resorts, gaming, iconic/historic.

While the hotels within the group will be independent in feel, Marriott says they will be required to go through the same hotel and operator approval processes as other Marriott full-service hotels, and will need to “demonstrate continued high guest satisfaction and quality assurance scores to remain part of The Autograph Collection.”

Why the Interest in a Transparent Brand? 
In a few words: distribution and marketing and, to an extent, profitability.  According to a Marriott spokesperson, there are lots of good independent hotels that have flourished since 9/11 but that are being hurt in the current environment.  The Autograph brand lets them maintain their existing style and soul but brings the Marriott distribution and marketing engines to their door.

This is a particularly drastic point of departure for Marriott, a company that has gone to great lengths to enforce brand consistency among its hotels.  The notion of creating a somewhat transparent brand for the Autograph Collection might have seemed heresy just a few short years ago.  But the lack of new construction on Marriott hotels, coupled with the preponderance of independent hotels in Europe, makes the Autograph brand a smart idea.

Given that Marriott serves a broad set of customers with its other brands as well, the chances of potential cannibalization has come up, especially in more heavily populated city centers.  The chains downplay the risk stating that if the overlap is too high, they will ask the indepdendents to simply join one of the existing brands.

Clearly there are some good reasons for hotels to join one of these programs, and some reasons for the chain to want them to join.  Even consumers benefit from the arrangement.  The table below summarizes some of the key benefits for each constituency.

Let’s delve into a little more detail about some of the benefits of these programs.  From a hotel perspective, it all boils down to distribution and marketing.  An independent without electronic distribution is at the mercy of its local markets. That may be enough in some cases, but even with a strong local market, hotels are the beneficiaries/victims of local business cycles.  Without guests from outside the neighborhood, a down cycle in the economy can be devastating. 

Electronic distribution allows a hotel to present its products on a global scale, but with competition from other hotels vying for the same pool of guests, distribution without marketing is fruitless.  Consider that your chances of getting a booking if you show up on the third screen of a GDS display or the third page of an OTA hotel listing are about the same as getting struck by lightning.  If you want to be booked, you’ll have to employ marketing programs that bring you to the first page or, at least, the first two pages of the display.  It’s the combination of global electronic distribution (getting your products in the pipeline so they can be seen) and marketing (getting them priority in the display so they will be seen) that gets you the additional bookings.

An additional wrinkle for hotels that are looking for corporate bookings is the issues of negotiated hotel programs.  Company policy often restricts corporate guests to staying at a few hotel chains with which they have agreements.  If your hotel is a member of one of the approved chains, your property is available to those corporate guests.  If not, you’re out of luck.  Being a part of the Autograph brand, for example, means that all of those corporate guests who are restricted to Marriott hotels are now able to stay at your hotel.  

One final note about the benefits of a transparent brand is the opportunity to leverage the chain’s revenue management systems.  It’s part of the offering in at least some of the programs listed above, but since smaller independents usually prefer to do their revenue management locally and manually, we’ll just mention it for the sake of completeness and move on.

Can You Get into the Club?
For hotels considering becoming a member of a transparent brand, there are several issues to weigh.  The first step is to determine the programs for which you might be eligible.   Each of the programs has its own entry requirements, depending on what the chain is trying to achieve.  Each program will have its brand standards in terms of operations, but given that the target properties for most of these programs is high end, luxury and distinctive properties it’s unlikely that any property that is accepted for membership will have problems with those standards. 

So the benefits of joining a transparent brand are there, but what is the cost?  Prices vary and, like everything else, are probably negotiable.  But the cost of belonging to the Autograph collection, for example, is about half of what it would cost to belong to one of the other Marriott brands.  The cost is obviously a final, critical factor in determining whether or not you should join.

And what about the relative benefits of joining a transparent brand vs. joining one of the more prestigious representation companies like Leading Hotels of the World or Small Luxury Hotels?   Rep companies offer many of the same services as the chains and can exceed them in areas beyond distribution and marketing.  Cost is a factor: rep companies may cost more, and they offer services beyond marketing and distribution that you may or may not need.  Finally, consider that two of the big benefits of the transparent brands are membership in a big loyalty program such as Marriott Guest Rewards and access to all those corporate customers.  If you’re considering a rep company, consider whether you’ll get those benefits as well.

Transparent brands aren’t for everyone.  They cost money and there is operational overhead to belonging to a chain at whatever level you participate.  But if the marketing and distribution power of a big chain is what you need to supercharge your sales, they’re certainly worthwhile to consider.

George Roukas is a partner with The Hudson Crossing Group. He can be reached at george.roukas@hudsoncrossing.com.
 

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Among the key inducements for independent hotels considering the Autograph Collection are:

  • Hotels maintain their unique personality.  While they are part of the Marriott family, they retain their name and current style.
  • Access to Marriott CRS, distribution capabilities, CRM, e-commerce, and sales and marketing programs.  Marriott has world-class distribution and marketing systems that the independent can leverage to be in all the same channels as any other Marriott property.
  • Participation in Marriott rewards. Given the leverage that a good loyalty program can have on the purchase decision, especially for business travelers, this can be a substantial advantage.
  • Representation in voice channels, GDS and onward distribution as a Marriott property.  For corporate bookings especially, being shown in the GDS and corporate booking tools as a Marriott property means they can get past policy restrictions for companies that have corporate deals with Marriott.


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