Reinvention Through Rebranding
Sometimes an older hotel needs a new point of view to be successful. Here’s why.
Thursday, August 28, 2014
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Hawaiian sands aren’t the only things that can shift, every now and again, on the island of Kauai: A sea change recently washed over the former Kauai Sands Hotel when the property formally emerged this summer, reborn as Kauai Shores.
“It was a transformation,” said Ben Rafter, president and CEO of Aqua Hospitality, the Hawaii-based company that manages Kauai Shores among its 29 properties. “We took an older property in Kauai and transformed it into something new and exciting and vibrant near Kapaa, a city gaining its own in terms of interest. So to me it goes hand in hand with the renewed interest in that historic place, combined with a full renovation of this property.”
The $10-million overhaul also elevated the property from Lite, Aqua's budget-minded properties, into its mid-priced line, Aqua Hotels and Resorts. The rebranding also helped Aqua Hospitality itself continue to underscore, among travelers and travel professionals, the distinctive characteristics of the parent company's three divisions – Lite, Aqua and its elite line, Monogram.
“It was more of an education process,” said Rafter. “A brand is only as good as what it means to the people who are using it and staying at the hotel. We wanted to get back to strongly emphasizing to people that this is what an Aqua hotel or resort is, to use it as a tool to activate and emphasize that you are making this choice to come all the way to this leisure destination, so you should know what you are buying and where you are staying.”
Indeed, rebranding a hotel or even a hotel company goes a long way toward underscoring its unique characteristics for everyone’s benefit. And it’s an investment a lot of companies see as increasingly worthwhile, according to Prof. Chekitan Dev, teacher and researcher at Cornell University's School of Hotel Administration, and author of "Hospitality Branding" (Cornell University press 2012).
It’s an undertaking to be well choreographed, not done piecemeal. “To realize maximum returns from rebranding, a property needs to go ‘all in’ with the new brand to realize the full benefits from rebranding, including a carefully orchestrated renovation plan, training in the systems and procedures of the new brand, and connecting the hotel to all the brand’s channels of distribution,” said Dev.
In Aqua’s case, said Rafter, part of the overall raised profile for all the hotels required a re-engineering the company’s existing travel agent website to transform agents into what he called “Aqua Hospitality Specialists.” He said the website has become a point of access to an educational process that allows more tailored match-ups between vacation experiences and properties, using keyword searches - whether it be "photography" or "hiking" - and other tools. “This is where they can take the feedback they are getting from their customers and say which one of these properties is the best one for them,” he said.
These are elements Dev associates with rebranding success, which he said includes taking into account the target guest profile, competitive landscape and property profile. “It is in matching these three elements to the ideal brand where the benefits can most be realized,” he wrote. Dev, who was employed at the Hotel George V in Paris from 1984 to 1985, considers that property's ultimate rebranding, more than 10 years later, from an independent into a Four Seasons Hotel exactly that kind of success. “Well-heeled Parisian guests were looking for a luxury brand to guarantee a consistently high level of service delivery, competitors were mostly independent hotels creating an opportunity for a well-positioned luxury brand and the property had the ‘bones’ to become a world-class luxury branded hotel.”
Such successful retoolings, he said, bring economic benefits: Dev said his research shows, on average, that rebranding boosts occupancy by 6.31 percent two years after completion.
When the Midwest-based AmericInn embarked on its own rebranding, the move was a dramatic departure from its committed operations as an almost 100 percent new build brand, as the largest mid-scale brand in the Upper Midwest, said Nasir Raja, AmericInn's executive vice president of franchise development and operations.
But the recession hit hard, he said, so "it was an executive decision...When we realized our growth would get impacted by no development, we had to come up with a way of supplementing our growth." Conversions and rebrandings also gave AmericInn a foothold in some of of the larger markets it had been eyeing. "Our aspiration is to be a national brand and to do so, we need to get into those larger markets. Conversion was a ready-made way to do that."
The first AmericInn conversion came in 2010 he said, and while welcoming conversions, AmericInn remains strongly rooted in its corporate identity and its portfolio of new builds. "On the brand level, I think we have not really changed our business model," he said. "The thing that is very focused for our leadership team is not to make the same mistakes. You and I know there have been brands who went to conversions and became inconsistent brands. And some were on the verge of getting out of the business. For us, it is very important to stay focused on who we are, a quality mid-scale brand." The 201 properties now comprise 80 percent new builds and 20 percent conversions, he said - with many more new builds to come.
Still, the rebrandings have brought the company tremendous flexibility and value.
"We have been happy so far with the progress we have made," he said. "Since pursuing conversions we are now in locations like Madison [Wisconsin] and Minneapolis, we have a couple of metro locations, Omaha, Schaumberg [Illinois], Oklahome City airport, Albuquerque airport. These large market opportunities would not have come to us, especially in a down cycle, if we were not open to conversions."
He said the first Hampton conversion is a particular source of pride. "It took a while but it is coming back to its revenue ... It takes a lot of thought and effort ...and so we give conversions extra sales and marketing support and we provide them with know-how in what to do to ramp up."
Whatever the impetus to rebrand, Dev advises it is a strategy but not necessarily a remedy. "Rebranding is not always the right answer to revitalize a hotel," he said. "My research shows that the effect of rebranding depends on what kind of rebranding is happening. Brand to Brand rebranding increases occupancy the most, followed by Independent to Brand rebranding. Brand to Independent rebranding lowers occupancy."
He does foresee more and more hotels and hotel companies continuing to commit to the shift, largely for three reasons: "The growth in the number of brands, the decoupling of branding from hotel ownership and operations (sometimes referred to as an 'asset light' strategy) and the limited number of new builds. In fact, most economy brands identify rebranding as their chief source of growth in the number of properties."
For hotels, then, as with other industries in which companies have reinvented themselves in whole or in part, the lessons remain, he said: "Listen to the customer, consider the competition in the calculus and be prepared to use rebranding as an opportunity to transform the business for the better."