Vetting The Value Of Soft Brands
Much of the momentum that soft brands have gained within the industry can be attributed to powerful loyalty programs, distribution systems and the design flexibility to create memorable experiences for guests.
That was the takeaway from a pair of prominent brand executives who participated in a panel discussion entitled “Vetting The Value of Soft Brands” during last week’s BITAC Independent Virtual Connect 2020.
Brad LeBlanc, SVP & chief development officer, Best Western Hotels & Resorts, touted the popularity of soft brands, particularly among owners and developers.
“I’d say one out of three applications that comes in today is for a soft brand,” he said, noting the company has more than 500 soft branded hotels within the BW Signature Collection, the Best Western Premier Collection, SureStay Collections by Best Western and WorldHotels, a luxury portfolio of properties.
Jenna Hackett, global brand head, Curio and Tapestry Collections by Hilton, also addressed the momentum of its soft brands. She noted the company’s upper-upscale Curio Collection–which was launched in 2014–is closing in on 100 hotels, while its Tapestry Collection now includes nearly 40 properties since being launched in 2017. Hilton has a third soft brand in LXR Hotels & Resorts, a luxury collection of properties.
Hackett acknowledged the competition among soft brands has picked up over the past few years with many new entries but pointed to a few major differentiators.
“I’d say that it really does come down to the reservation system, the Honors loyalty [program] and sales, as well as the integrity of that collection. That’s something I think about every day, what is my collection? Because a collection is a collective of all. It’s really making sure that I keep within my market segment and when a guest walks into a hotel they have an enjoyable experience,” she said.
Leblanc agreed and emphasized efficiencies. “At the end of the day, it’s all about the distribution system and leveraging your brand family and those components of that distribution system. So whether it’s sales, rewards or procurement, it’s all about helping them [franchisees] to get to where they need to be and then tapping into what is a massive distribution system, It’s also about tapping into the components and the savings that can be had from those different components. There’s a real advantage to soft branding when it comes to that,” he said.
Hackett did point out there could be some consolidation within the industry if the downturn continues or becomes prolonged. “There is an opportunity for some of the smaller hotel collections to maybe become part of a larger collection,” she noted.
Hackett further elaborated on the importance of loyalty programs in driving traffic for soft brands, particularly in the case of Hilton which she noted now has more than 103 million members in its Hilton Honors program.
“To me that’s what the owner is really looking for is those guests. It’s critical and the number one thing I talk about when I’m speaking with an owner whether we’re talking about converting or a new build,” she said.
LeBlanc agreed that it’s critical. “The rewards program gives them another avenue to access customers outside of traditional OTAs. We’ve got a sizable rewards program that I think helps drive interest in our soft branding. It is a critical component, but I would say ultimately it’s about other options and attracting customers,” he said, later adding, “it’s all about cost at the end of the day.”
Another appealing aspect of soft brands, according to both executives, is the design flexibility that is afforded to owners who are not bound by the same restrictions of a traditional brand.
“The owner knows the market better than we do. These guys are building or owning independent for a reason; they’re very fine-tuned into the local market and what’s driving that demand so we let them go. Be creative, let your architects help you, let your designers help you, we don’t want to interfere. We just want to make sure that the standards are at the level that the collection meets,” said LeBlanc.
Hackett shared a similar sentiment, noting “we still have standards, there is still a threshold.”
However, she added, “we’re not going to tell you what it needs to look like or we’re not going to have a prototypical look. We want that completely to be up to the owner.”
Meanwhile, from a development standpoint LeBlanc acknowledged things have slowed considerably regardless of brand affiliations.
“We’ll have a continued addition to room count for the next year, but after that it’s going to fall like a rock. Unless you were under construction, lenders have retreated…The development landscape has continued to be moderate for us, but it wasn’t what we expected in the beginning of this year,” he said.
LeBlanc added there is opportunity on the conversion side as a lot of owners are “looking for a brand that will help improve this difficult time. You’re going to have lot of that activity.”
Hackett reinforced the point. “Right now we’re seeing a lot of conversions. It’s a great opportunity for both of the collections to really grow and we can be very opportunistic within a market,” she concluded