Asset Value of a Hotel Brand Rides on the Solid Foundation
of Balanced Marketing and Operations
|by Dr. Gabor Forgacs
Branding is one of the most dominant trends in the global hotel industry. In the USA, brand penetration in the ratio of branded vs. non-branded properties is over 70% in the commercial lodging industry; in Canada it is just under 40%; and in Europe it is under 25% but growing. Branded hotels tend to outperform comparable nonaffiliated properties in most markets according to performance indicators. To solidify the advantage of an appreciating brand asset, it is fundamental to the success of branded hotels to master the dynamics of marketing management and operations management. A balanced approach is discussed and its model presented with the purpose of helping achieving brand integrity and consistency.
The integrity of any brand rides on doing well what the brand says and saying it right what the brand does every day at every point of guest contact. The most successful hotel brands understand that their value proposition must be relevant to their targeted customers and that they have to successfully differentiate themselves from their competitors. To achieve this, a hotel operator can choose to compete in any category or classification as long as there is brand clarity. What would that mean? It means guests easily identify a brand symbol or logo, are familiar with the brandís concept and knowledgeable enough to expect a certain set of benefits, which matter to them.
A frequent mistake is seen when hotels choose to compete only on rates. On the one hand the guests may flip their brand loyalty to price loyalty, on the other hand the price parity of an intangible product (room night) is a delicate issue. Hotel operators work so hard to earn the market recognition of their brand Ė all this credibility can be thrown out the window the moment a quality brand chooses to ask the customer the rate of lesser product.
A Model of Brand Asset Equilibrium
Branding has implications on each facets of hotel
management. However, the management of marketing and the management of
operations are the most critical in this regard. Different levels of management
have to work together as a team to achieve a balance between these two
categories because the brand asset value is riding on this delicate balance.
The Mistake of Being Operations-Heavy and Marketing-Light
This balance is very delicate and it is not unusual to see a shift to either the marketing side or the operations side in management focus. What happens if a brand puts too much focus on operations and becomes less focused on marketing?
Lodging brands develop a set of standards to ensure
the consistency and integrity of the services they offer. All the standards
regarding property curb-appeal, guest service procedures, the maintenance
of fixtures, furniture, equipment and providing a specific line of supplies
can be strictly followed. However, clean carpets or the finest towels alone
cannot guarantee fair market share. If the marketing of the hotel is not
managed adequately, the hotel may not have a clear understanding of its
strengths, weaknesses, opportunities and threats compared to its set of
competing properties; the market of the hotel may be not be well segmented,
target markets not be properly identified and the hotelís offerings may
not be effectively communicated and promoted. When a hotelís positioning
and promoting are inadequate, as a result the brand asset value may start
to slip. (Fig.2)
Right message, wrong remedy: When one of the leading international upper-midscale brands launched an excellent service promise campaign in 2002, the brand promised a discount to guests for service failures. Why is this initiative not necessarily helping to grow brand asset value?
If marketing and operations were well aligned, it would have been obvious that
The Mistake of Being Marketing Heavy and Operations Light
What are the consequences of being marketing-heavy and light in operations? In this case a "say-do gap" develops: marketing communications tells consumers what to expect from a brand but their experiences with the brand may not live up to those expectations. One never gets a second chance to make a good first impression: if a hotelís reservations department is understaffed and the caller is put on hold for long minutes, the future guest can quickly figure it out how important the call is to the hotel (?!).
Right attention to the wrong guest: a guest who
asked for a late check-out and got it granted by the Front Office, finds
in the morning his invoice discreetly slipped in under the door. Nice touch;
a courtesy for early departures, who are in a rush. Although well intended,
the message is clear: the hotel either did not log the request or forgot
to let the cashier (or night clerk) know about it. Either way: the guest
is under the impression that this hotelís right hand has no clue what its
left one is doing (a late check-out vs. an early departure). The operations
of a hotel must do more than simply produce satisfied customers; they must
reinforce the brandís value proposition at every point of contact. As a
result of an imbalance, the brand asset value may start to slip. (Fig.
Nobody is perfect and mistakes can be costly. A hotel guest of a luxury hotel who requested a room with a view, complained at check-out. The front desk learned that although the room was carefully assigned on a high floor with the best angle towards the sights, the tinted windows were less than perfect. Cracks and air pockets between the thin layers of the protective tinted film on the outside of the window pane caused some distortion as the guest explained. Apologies and rebates were offered and an upgrade on return. But most importantly: the hotel had to do something about those window panes to prevent future complaints.
If a hotel operator chooses to thrive for perfection, every mistake in operations will be costly and the brand asset value may start to slide in the eye of the demanding customer. If an economy hotel advertises vending machines on the premises and guests find it out of stock, more can be lost than the margin on a can of pop: the loyalty of a guest.
The Equilibrium: Key to Brand Asset Value
It is fair to say that the brand can be one of
the most valuable assets a company can own. So far the presented model
concentrated on the corporate side of the cohesion. Successful brands are
perceived to gain a high level of awareness in the mind of the customer,
therefore a brand asset equilibrium model should also include the customer-side
relationships. These items are the strength and the stature of a brand.
Marketing and operations play synergistic roles in driving brand asset value. No brand can be successful without building a base of loyal and satisfied customers who hold the brand in high regard (stature). A hotel brand can be strong in the eye of the customer if it does what it says consistently, it can be clearly differentiated from others and if its value proposition is relevant to its guests (strength).
The relevancy of product attributes is always specific to a given hotel and its clientele. To the guests of a budget category motel a well signaled easy access to the property from a highway and free parking can be just as important as premium cable channel selection and ice machines on the guest floors. To the corporate traveler guest of an upper-midscale property a rolling 24-hours check-out time policy, high-speed wireless internet access with easy connectivity and round-the-clock room service would be more relevant than free local calls.
In conclusion it can be stated that the asset value of a brand rides on the solid foundation of balanced marketing and operations. All this is held together by management and solidified by the perceptions of consumers regarding the strength and the stature of a brand. In organizations fully committed to driving their brand equity, the entire organization becomes united behind the brand.
Marketing and operations must be in equilibrium to avoid a say-do-gap. Successful brands offer consistent products and services with integrity. They do what they say and say what they do day-in and day-out. The balance between the brand components is dynamic: market forces and consumer preferences can shift any time and the beauty of operations means that each day will bring different challenges. Strong brands will meet customer expectations and keep the brand asset value in balance.
It is up to the management of each hotel brand
to identify what product attributes will be perceived as relevant in the
eyes of their guests. If the brand can successfully deliver on their promises,
differentiate their offerings and communicate that to their well chosen
clientele, their brand asset value will ride on solid foundations.
School of Hospitality and Tourism Management
240 Jarvis Street
Toronto, Ontario M5B 2L1
tel: (416) 979-5041
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