Orient-Express’ brand-building gamble
28 FEBRUARY 2014 7:20 AM
Executives are ditching a well-known name for one with little to no equity at present.
Another week, another brand announcement of some significance—although this one of a different ilk.
While most major chains are introducing entirely new offerings, on Sunday executives of Orient-Express Hotels Limited announced a new name, Belmond, for their existing collection of 45 hotel, rail and river cruise experiences. The move aims to unify these disparate travel experiences under one brand umbrella—an exercise that was somewhat futile in the past because executives did not have complete control of the Orient-Express name, which was licensed from French transportation company SNCF.
That’s proved challenging for the company in recent years and something President and CEO John Scott has discussed frequently since assuming the post in November 2012. A guest might loyally visit the Hotel Ritz in Madrid each year, Scott would say, but that same guest wouldn’t know about the Reid’s Palace during his frequent trips to Portugal.
Indeed, cross visitation within Orient-Express’ portfolio accounts for only 3% of total demand.
Executives believe their new Belmond brand will bridge the gap. Instead of individual hotels being marketed separately, now they will be marketed within the context of the brand. The Hotel Ritz, for instance, will soon become the Belmond Hotel Ritz. A guest visiting one property will more easily make that connection, prompting active searches within the system and thus driving cross-visitation and revenue.
The rationale is sound, but I’m curious how it will play out in reality. Rolling out a new name to internal stakeholders is one thing. But assuming the traveling public will make the connection is something else entirely.
Orient-Express had cache. It had heft, history, weight. While somewhat vague—a result of the mix of hotel, rail and river cruises—to me it conjured a picture of exotic, luxurious travel in the far-flung reaches of the globe. That’s brand equity you can’t buy.
Belmond, on the other hand, is an enigma that fails to spark any meaningful image in my mind. It’s a blank slate at present, the symbol to the artist formerly known as Prince.
I know executives plan to change that through $15 million in marketing and promotions during the next few years, but there’s no guarantee it will resonate.
A risk worth taking? Scott and his team apparently thought so, judging from their comments during a presentation with investors and analysts. I contacted the company afterward to address the question of brand equity head-on but failed to hear a response by press time.
I, for one, am not qualified to say whether the rebranding was the right or wrong strategy. Unlike Orient-Express’ marketing team, I didn’t invest months of research in this exercise. I didn’t sift through 650 potential names or oversee countless focus groups and linguistic evaluations to assure Belmond was best.
I’m just a careful observer of an industry that’s become increasingly crowded and fragmented. When there are more brands than I can keep straight, I wonder how Joe Q. Traveler is expected to do the same.
Now on to the usual goodies …
What’s making me happy this week
Earnings call madness. It was Shawn A. Turner on our staff who years ago suggested we listen to hotel company earnings calls. We started with the 10 or so largest companies by room count; today we’re covering the top 20.
My sick, twisted brain can’t get enough. While executives’ prepared comments can be a tad rehearsed or commercial, more often than not they provide a peak at the folks pulling the levers behind the curtains.
Even better is the Q-and-A portion with analysts, the unsung canaries in the investment coal mine who chirp and flutter when they sense something’s gone awry. I’ve only seen one executive crack under their barrage of questions. (No names, please.)
Stat of the week
7.6%: Increase in hotel values in Athens, Greece, the highest among any market analyzed in HVS’ “2014 European hotel valuation index.”
The five cities with the highest per-room values in Europe remain unchanged: Paris (€671,000 or $915,982), London (€625,000 or $853,187), Zürich (€501,000 or $683,915), Geneva (€427,000 or $582,897) and Rome (€362,000 or $494,166).
Quote of the week
“We’re certainly very excited to be back in the public markets and to be hosting our first earnings call following our IPO in December.”
—Hilton’s president and CEO, Chris Nassetta, kicking off the company’s first earnings call as Hilton Worldwide Holdings.
And we’re very excited to have you, Chris.
Reader comment of the week
“The decision of Orient-Express to change its name must surely rank as one of the most stupid in the annals of the hotel industry. It’s akin to Coke’s disastrous decision decades ago to mess with its core-product branding that has become a business-school case study demonstrating the axiom ‘If it ain’t broke, don’t fix it’. Orient-Express’s decision will surely replace it!”
—Reader “delanocaras” after reading about the rebranding in “Orient’s rebranding to boost cross visitation.”
While we share similar concerns, delanocaras, I’m more inclined to give executives the benefit of the doubt. Let’s see how it pans out before casting final judgment.
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