I came across an interesting article in The Huffington Post this week about brand equity. Well, perhaps “interesting” isn’t the best word. Maybe “half-baked” or “befuddling” are more appropriate.
In a nutshell, the piece said the best way to create brand equity is to give it away.
“Hold a free micro-webcast and answer your customers’ questions. Host a quick rush-hour cocktail party and tweet it out. Surprise your customers with a 'free' gift or coupon to something they're not expecting. The ideas are endless,” the author wrote.
Clever marketing tactics? Sure. But they only address part of the equation.
Making your brand memorable through free giveaways is one thing; but making it memorable for the right reasons is something else entirely. The latter requires superior quality and service, a strong track record and the ability to delight and surprise guests through unforgettable experiences.
That’s why the strongest brands—those with the highest brand equity—are so few and far between in the hotel industry. Do we have our heavy hitters? Of course. But we’re also seeing an unprecedented proliferation of new entrants who are diluting the waters en masse.
Many investors are hoping to buck the trend by piggy-backing off the equity of existing brands. Thursday I wrote about Ennismore Capital, which purchased the award-winning Hoxton brand in London not as a one-off transaction but rather to expand the brand concept throughout London, Europe and eventually the United States.
It’s an interesting idea, but one not without precedent. The hotel industry was built on similar arrangements, with iconic properties expanding until they became full-fledged global chains.
But Ennismore’s gamble within the current hotel landscape seems like a novel approach. Instead of trying to shove a new brand down guests’ throats, they’ve indentified one that already works. The Hoxton has appeared on numerous “best of” lists since it opened in 2006, and it’s got a strong following and the performance numbers to prove it.
Earlier in the week Qatar Holding LLC announced a similar campaign with plans to open several Harrods-branded hotels in key cities throughout the globe.
For those not familiar, Harrods is a luxury retailer in London—scratch that—the luxury retailer in London, if not the world. Talk about brand equity. Just say the name “Harrods” to a savvy shopaholic, and the name immediately conjures up images of top-tier designers and high-end labels. That’s the type of equity that one of the above giveaways would undermine. In the case of Harrods, the brand’s equity is inextricably tied to its exclusivity.
That said, Qatar Holdings’ move seems like a no-brainer. And yet …
Should the industry brace itself for a sudden flurry of brands-begetting-brands development? We’ve already seen the trend gain traction in the fashion capitals of the world, with famous labels like Armani, Bulgari, Missoni and Versace putting their stamp on hotel development.
I, for one, sure hope not. Expanding a strong brand concept to the hotel industry can work, but only when done very strategically and in a limited context. If every Tom, Dick and Harrods jumps on board, than we’re worse off than when we started—with a crowded sea of hotel brands that were never intended for hotels in the first place.
And there’s nothing memorable about that.
Now on to the usual goodies …
Stat of the week
The “Brooklyn brand” is booming. Occupancy in the New York borough is up 12.8% year to date, while revenue per available room jumped 15.2% during the same period.
These kinds of performance numbers have encouraged a flurry of hotel development activity, as reported this week by HotelNewsNow.com contributor Harvey Chipkin in “Hoteliers hopping on Brooklyn bandwagon.”
Quote of the week
“I would still like to see more chains arriving here because they bring with them an international mentality, especially with regards to yield management, whereas local hotels go more on volume than rate integrity, and that practice ruins the market.”
—Rory Campbell, director of sales and marketing at the Hilton Barcelona, in “Euro crisis eases big brands into Barcelona.”
Comment of the week
“Time for the hotel industry to step up to the plate and invest in their employees.”
—Commenter “DM” responding to the U.S. Supreme Court’s upholding of President Obama’s health-care initiative, as reported in “Health-care reform a reality for US hotels.”
So often this issue gets framed as a hit on the bottom line, so kudos to “DM” for raising another very important aspect. While all the details—the many, many, many details—have yet to be worked out, hoteliers should never lose sight of their employees when weighing their approach to this unprecedented health-care reform.
Email Patrick Mayock or find him on Twitter.
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