For 4 and 5 star branding specialists, the decision whether to start from scratch or spin off an old brand and start with an instant chain is a difficult one.
A hotel brand needs geographic spread to attract owners and a hotel needs a market to attract customers. Now comes the million dollar questions.
- Who pays for the risk of creating a brand?
- Who pays for the risk of building a hotel under a new brand?
- How many hotels make a chain?
The gradual shift that has seen hotel groups gradually dispose of their real-estate in favor of management or franchises means that the development costs of these new branded properties falls on the shoulders of the property owners.
As a former executive with Cirque du Soleil in the heady days when they were planning to enter the hotel market with their own brand, I was intimately familiar with the label that CDS places on their huge skill-set. They referred to themselves as Creative Content Providers leaving those that created the Box, be it a hotel or a theater, to finance the container. This is a reasonable approach where everyone sticks to their knitting!
This leaves me to probe a little further to find out the degree to which hotel groups go to create a new ‘Brand’. Do they go to the extraordinary lengths that Cirque du Soleil went to re-invent hospitality spending many, many millions on research, creators, designers, concepts, ideation and study? The brand owners will probably answer yes and I grant that there is some investment in the development of the standards. I just question whether the level of creativity is high enough.
And what have these Creative Content Providers created that will revolutionize our industry and create huge waves of investors across the globe to start creating new experiences?
Let’s take a look at the menu;
There are a few that have truly been created from scratch and those that come to mind include,
- Edition (Marriott)
- Blu (Carlson)……Actually from SAS
- Indigo (Intercontinental)
In the case of this scenario where we create a brand from zero, I as the hotelier will want to create a brand from which my company provides the Creative Content and then profits from it. My preference would be to insure that my company hypes up the excitement of the ‘brand’ new idea and that owners get caught up in the promises. I would prefer to invest minimally in creativity and not at all in the land, bricks and mortar.
The less preferred but more honorable route would be to invest in the hotels to obtain the spread and then sell off the real estate when the brand is successful and franchise from there, as Marriott did when they started.
BRANDING FROM A SINGLE ASSET
Starting from the value of a name that already has panache, brand value and an image that can be exploited is a brilliant concept that grabs the imagination of the hotel developer although leads to some unfair comparisons as one searches out the Waldorf’s Bull & Bear equivalents (that is a classic Lexington Avenue haunt in New York)………..in Orlando or Shanghai.
And those that come to mind do include,
- Waldorf Astoria
- St Regis
- Four Seasons
In cases where hotel groups take an existing hotel with a huge, well-earned reputation and rolls it out to the far corners of the globe, it comes with a mix of gigantic expectations with a dash of raw disbelief. It is perhaps geared to the owner ‘libido’ more so than the future client. As a natural brand for princes, pop-stars and presidents, a Waldorf Astoria Orlando seems like a stretch, although probably not to the owner.
The exception to this was the Four Seasons. The two first Inn on the Park properties were on great parks in London and Toronto. A great start! That did not work for the next ones which were far from parks so they needed a new name. The decision was made to use the name of their ‘other’ managed property which was the Four Seasons on Jarvis Street. While a perfectly acceptable city-center motor hotel, it was perhaps better known for its’ neighborhood whose reputation in Toronto was anchored in the red-light zone.
NB. I was the opening General Manager of the first purpose built Four Seasons ever, in Calgary.
SPIN OFF BRANDS
I can think of a number of examples of chains that have been created from other chains to create brand differentiation, to separate the wheat from the chaff. Those that come to mind are;
- Holiday Inn Select from Holiday Inn.
- Crowne Plaza from Holiday Inn.
- Pullman from Sofitel.
Splitting a group of hotels from their sisters is a frightening decision. It is sometimes referred to as ‘sub-segmentation’. Do you take the substandard ones out as they did with the Pullman brand or take the good ones upmarket as they did with Holiday Inn Select? Ironically in an earlier phase, the insiders were referring to the two groups as Holiday Inns and Holiday Outs.
The Crowne Plaza branding was, in my opinion, a huge error of judgement starting out as a HOLIDAY INN Crowne Plaza, morphing into CROWNE PLAZA by Holiday Inn, moving on to CROWNE PLAZA where it now remains but still perhaps smeared by the memory of its’ 3 Star roots.
And if none of this makes sense, consider the confusion that is created by the large operators of multiple brands that elected to call the umbrella company by its’ Deluxe brand name and in this category there are two major ones that come to mind,
- InterContinental Hotel Group (7 brands)
- Wyndham Hotel Group (17 brands)
All of this to suggest that the decision on branding is probably best not made by;
- an inexperienced owner who has minimal knowledge of global brand movements.
- a hotel brand…..due to conflicts of interest or tunnel vision.
It should be made by an independent hotel brand consultant who is typically very familiar with where is the brand on the curve and will it contribute more than it charges in fees, costs and other more uncreative content to the success of this business over the next 30 years or more.