No doubt the Great Recession was a business fiasco for many. But in the deepest darkest moments of this depressing time for the lodging business there was one great idea that helped both franchising companies and independent hotels work together to make money: Soft brands.
Soft Brand Satisfaction
Independent hotel operators and the major brands are working together with unique win-win programs.
Thursday, July 12, 2012
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That is, the notion independent hotels could plug into a major company’s reservation system while also retaining their individuality. For a fee of course.
The concept was a total win-win for everyone and now it seems every major hotel company is doing this, and it's making a lot of owners and franchisors very happy in an unexpected way.
The Autograph Collection was launched by Marriott in 2010. “We were working with a hotel that didn’t want to put our name on it in 2009,” says Kip Vreeland, vice president for Autograph Collection, a Marriott brand. “Independent hoteliers were getting ‘slaughtered’ during this time, and a couple of guys came up with the Autograph Collection on the back of a napkin.”
It’s a concept that grows business for successful hotel corporations when they make deals with independent hotels but are advantageous to both parties.
Within a year, Marriott had opened its first hotel in the Autograph Collection, and by the end of the year there were 13 properties in the collection. By the end of 2011, there were 27, with four added so far in 2012, including The Saint Hotel in New Orleans, Louisiana, and the Blue Moon and Winter Haven hotels in Miami Beach. Florida, and four more in the works. It’s most notable property is The Cosmopolitan of Las Vegas, which has been getting stellar reviews since opening in December 2010.
“We always knew what would happen if we put the Marriott name on a property but with Autograph, we were selling a promise initially,” says Vreeland. “We keep Marriott in the background, and even Autograph in the background. It’s all about the hotel. The hotel’s the hero. You will not see Marriott when you walk into the hotel. But you can book on Marriott.com. You can book on an Autograph reservation number of a Marriott reservation number.”
By the end of 2010, there were 13 hotels in the Autograph Collection, and by the end of 2011, there were a total of 27. There are four so far in 2012, and Vreeland expects four more this year with plans to expand in Europe, and to grow to 45 or 50 or more properties. by the end of the year.
Choice Hotels International, Inc. was actually ahead of the downturn in developing its Ascend Collection, which was in the research phase even before the stock market crash in fourth quarter 2008, according to Stacy L. Ragland, CHA, vice president for the Ascend Collection. “We are a franchising company. We are a franchisor.
Ascend Collection hotels are truly independent hotels. They get to keep their local Identity, to operate the way they want.” Vreeland echoes this point. “The hotels are independent, stand-alone properties that are not associated with a brand. They are franchisees. There is a fee to plug into our system. The franchise fee is a percentage of the total room revenue.” For Choice, Ascend is a way to expand its reach into untapped markets. “The Ascend Collection gets us into the primary markets,” says Ragland. “This has enabled us to get into markets that we weren’t in before” such as Chicago and Boston. “We’re targeting the difficult-to-get-into city. There’s not a lot of land to build new and it’s a cost problem, too,” to build in expensive cities. For independent hotels, being associated with a major brand has advantages. A key one is the ability to use the major brand’s reservations system and its loyalty program. Marriott, for example, has 38 million Marriott Rewards customers, and as a member of the Autograph Collection, a hotel can market to any and all of them. Choice Privileges, the Choice loyalty program has 14.8 million members, and gives similar benefits to members of the Ascend Collection.
Using a hotel corporation’s central reservation systems has bolstered independent hotels reservations. For example, on average in 2011, Choice’s central reservation contribution was 43.2 percent to Ascend Collection member hotels, according to Ragland.
For the Autograph Collection, approximately 35 percent are booked by Marriott.com; 25 percent by the voice channel, and 25 percent are booked on the property, with the rest booked through online travel agencies and through the GDS systems such as Sabre and Galileo, says Vreeland.
The Luxury Collection is part of Starwood Hotels & Resorts, and traces its beginnings to Compagnia Italiana Grandi Alberghi (CIGA), founded in 1906. Starwood bought the group, owner of some of Italy’s renowned luxury hotels including Hotel Danieli in Venice, in 1994, and launched The Luxury Collection in January 1995.
Since 2007, the collection has grown from 56 hotels to 80 on every continent, according to Paul James, VP, global brand leader, St. Regis & The Luxury Collection at Starwood Hotels & Resorts. Expansion is in the plan. “There is a lot of opportunity in Africa,” says James. “We are keen to explore Africa, India, and Asia.”
Today, 74 percent of hotels in The Luxury Collection are managed, and 26 percent are franchised. Hotels in the collection have access to Starwood’s Preferred Guest network.
The requirements for joining a particular hotel group vary. Each hotel company wants to establish and maintain its distinctiveness. “We don’t tread lightly on the word luxury,” says James.
The Luxury Collection aims to draw together independent hotels that are indigenous to their city or region. “People are hungry for authentic experiences,” says James. “The clear thread is hotels that are independent and special.”
The Ascend Collection, with its 75 member hotels throughout the United States, Canada, the Caribbean, as well as South American and Europe, seeks hotels that are historic, boutique, or unique.
“The hotels truly get to keep their local identity,” says Ragland. “Our hotels are truly entrepreneurial. They feel like the guests are coming into their home.” The Ascend Collection started in October 2008 with 18 hotels that had been the “best of the best” of Choice’s Clarion Collection. Clarion, says Ragland, was mid-market, and had a limit. On the rate they were able to charge for a room. In contrast, the Ascend Collection is upscale hotels.
Indeed, the market is poised for growth. “The luxury hospitality business in general is at a very positive juncture,” says Starwood’s James. “The number of global travelers is increasing. There’s market share to be won. There are few destinations that wouldn’t have capacity for a luxury hotel.”