Best Global Brands 2010 / 55
HOTELs & HOSPITALITY Memorable Moments The hospitality and hotel sector has been increasingly impacted by customers’ quests for and exposure to rich experiences. Today’s customers are more sophisticated and therefore more adept at identifying the sweet spots in the emotional equation. To meet their desires, hospitality and hotels brands will need to move away from superficial gestures like nicer pillows, and focus on creating truly memorable moments of delight in order to connect with customers.
Polarization along the emotional-value equation Brands will need to match the level of emotional benefit with the right price, leaving customers feeling savvy about their thrifty choices or seduced by indulgent escapism. As a result, expect to see the hotel market continue to polarize. Similar to the airline industry – with the huge gap between budget airlines like JetBlue or EasyJet, and Singapore and Etihad – mid-market hotel brands that don’t have the simplicity of a no-frills brand like Ibis or the service occasions of a boutique collection like Six Senses are likely to encounter challenges. This is especially true given that middle market hotel brands like Hilton and Crowne
Plaza have been investing heavily to achieve physical consistency standards across their vast networks at a time when consumers increasingly value emotional benefits and local color. Unfortunately, these consistencies deliver on functional rather than emotional benefits at an elevated price, which means their costs – and therefore prices – are higher than the value guests put on their benefits.
Power shift from hotels toward the guest It is likely that there is even more pain to come for the middle market as the wider consumer trend towards bricolage or “mix-and-match” buying continues. Gone is the old dogma whereby guests were loyal to a single type of hotel. The transparency of social networking and review sites like TripAdvisor, Mr. and Mrs. Smith and Facebook, have increased guest confidence and shifted the power back to the consumer. Guests are now self-assured enough to stay in a budget hotel for that overnight stop on the drive to the South of France before rounding out their week’s villa stay with a couple of nights at a highend spa resort. Hotels need to recognize the door-to-door customer journey and plan and deliver it to their guests. Otherwise, they will be relegated to a component in the holiday, rather than deemed the heart of the experience. To avoid this, hotels need
to give their partners, guests and employees the currency with which to talk about and advocate their total hotel experience.
The smart money is investing in BraZil Despite the current torrid financial times of the hotel industry, Brazil is the choice destination for investors given the lead times on hotel building. With the FIFA World Cup taking place there in 2014 and the 2016 Olympics being held in Rio de Janeiro, the smart global money is focused on planning and securing hotel development investments in Brazil. The average investment costs range from US $150,000 per key (room) for a budget hotel up to a chilling US $700,000 per key in a luxury development. This highlights the central challenge in making money in the hotel industry: The investment timing occurs counter-cycle, so you need to invest when the market is down in order to gain rewards as it strengthens. Investing in this sector is for the brave, but it rewards bold moves with substantive gains – as long as you can hold your nerve when the immediate future looks bleak. – Iain Ellwood, Executive Director of Consulting, Interbrand London