Without Contradiction, There Would Be No Change
December 27, 2016 7:54am
By Georges Panayotis
Life would get pretty boring if there were no controversy. Our last editorial drew a bit of interest and sparked a number of reactions proving how urgent it is to dispassionately examine the concerns of many professionals in the sector without prejudice. For some time now –certainly since online agencies captured a good share of hospitality distribution, the question of branding keeps raising its head to dominate conversations.
What is the added value for a property that chooses branding? What does it bring in terms of awareness, image, recognition and differentiation? These questions come up regularly and deserve pause. A marketing man like me can hardly deny the essential contribution of brands to commercial strategies.
And yet, in a difficult economic context it is normal to wonder if a brand has delivered all its promises. Not known enough, not recognized enough, not chosen enough, hotel brands are still having trouble getting beyond the brand stage. It's not for any lack of effort, but they still have a ways to go. It is difficult to break through global communications squashed by the power of online agencies that, alone, are able to line up the billions needed for global referencing.
It is undoubtedly necessary to redirect the strategy and begin to strengthen the contents of each brand through an original product that is truly contemporary with services that correspond to the customer promise, thanks to a unique experience that reverses the power relationship. The day OTAs knock on the door to negotiate the possibility of distributing a differentiating product, the brand will have proven the effectiveness of its added value.
To be honest, we're not there yet, despite work undertaken for the new concepts. The arrival of new financiers, such as Chinese groups, which encourage an industrial strategy, is good news for chains that lack the means of financing organic growth. They will be able to align themselves with the strategy of a group such as Marriott International which has always made use of both motors: equity and franchise. Others will follow the leaders.
While they wait for new brands are unfurled that give new meaning to innovation in hospitality, franchisees are wondering if they are getting their money's worth. They would undoubtedly be amenable to a pragmatic approach fitting today's realities. A table of royalties with options could be drawn up that is more closely adapted to the commercial needs of each property, as those at a hotel across from a TGV station are not the same as at a seasonal resort. The need for international recognition of a luxury hotel in the center of Sydney is not the same as that of an economy property near a business zone. While some are directly connected to natural constituency flux, which just needs to be intelligently managed using local marketing tools, others are battling with competition from prestigious brands within an environment of abundance of supply. In this case differentiation weighs heavily.
Cost sharing for the distribution of chains is to the detriment of mature countries that developed their clientele base over a long period of time. Proportionally it weighs more in the operating account of economy hotels that have difficulty bearing all the sales costs. They are faced with a cruel dilemma: risk losing the market or destroy their profitability. Sometimes they have the feeling of supporting a system that is more beneficial to upscale brands.
Perhaps it is time to calm tension by reworking the fees table with measurable impact. Reminding chains of their duties does not mean reviving a settled conflict with investor-operators; on the contrary: it is about working on the solidity of ties within a recomposed family. If each item on the menu offers the right dose, then no one can fear à la carte service. In fact it is a formidable opportunity to appreciate the difference between brands that produce the expected effects and those that merely mask ambiguity.
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Georges Panayotis is President of MKG Consulting. Born in a family of hoteliers for three generations, Georges Panayotis, left Greece at the age of 18 to pursue his studies in Political Sciences and to obtain his Master in Management at the French University of Paris Dauphine. He then joined the Novotel chain, which will become the Accor Group, to manage the International Marketing Division. After developing specific marketing tools for the hotel industry, he left the group in 1986 to start his own company, MKG Conseil, now MKG Group. In twenty years, the group has become the European leader in studies and consulting for the Hospitality industry. The company employs over 70 people in four departments: marketing studies, database, quality control and trade press, with two publications HTR Magazine and Hotel Restaurant Weekly.
The company helped the development of over 2,000 hotels in France and in Europe, with offices in Paris, Cyprus and London. Georges Panyotis is the founder of the Worldwide Hospitality Awards and the Hotel Makers Forum, and the author of several publications on Marketing and Operations in the hotel business, He is a regular consultant for several television channels, among which Bloomberg Television, and radio networks.
Contact: Georges Panayotis
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