How Hotels Can Profit From Product Placement
April 24, 2019 2:39pm
By Larry Mogelonsky, MBA, P. Eng. (www.hotelmogel.com)
Product placement has been a subtle revenue source for Hollywood for many decades now. For instance, have you ever watched a movie and noticed that all the cops and robbers were driving only one brand of car? Or that every actor on a television show only drinks exclusively Coke or Pepsi but never both? It’s undeniably influential.
More recently, however, hoteliers have started to realize that their properties can offer perfect symmetry with many brands that want trial from their target audience, especially when those brand’s key demographics match that of a property’s guests. Examples abound and now that you are fully aware that this is a going trend, no doubt you’ll spot this everywhere
Notably, in the luxury car category, BMW, Lexus and Mercedes Benz have all established programs where their vehicles are offered to hotels for guest use. Or how about a Land Rover Driving School at an East Coast resort? I’ve seen these partnerships displayed prominently on hotel websites – while I may not know much about the property, a complimentary use of a classy auto has a tremendously positive halo whether I actually take them up on the offer or not.
Outside of the automobile world, partnerships with local retailers can transcend short-term promotions to include ongoing discounts and personal shopping arrangements. For example, Le Printemps department store has a relationship with Raffles Le Royal Monceau in Paris whereby hotel guests receive a 10% discount, personal shopper assistance and same day delivery service for their purchases.
The nuance comes in deciding what truly is product placement versus just a supplier substitution for one brand or another. To help you discern which is which, here is a set of rules on the issue of developing these brand partnerships.
1. Brand substitution should augment your property’s guest offering. Substituting Coke for Pepsi products (I’m neutral on both) is really a price proposition with your local distributor and has nothing to do with your guest. I am fairly confident that you will not lose any guests because of your selection for one or the other.
2. Look for brands that mirror your guests’ needs then take it up a notch. Most everyone drives, so offering better – that is, premium price – vehicles for visitors to enjoy during their stays makes strategic sense. The quality of the brand should therefore deliver a positive ‘halo’ to your property.
3. Differentiate your property. Do your homework. If your comp set has one brand, select another. Creating the relationship is just the start; it must be a win-win for both parties. Remember that you are getting the product for guest use. Hence, expect that you will have to provide all necessary information – such as the data resulting from a specific product’s onsite use – back to the selected partner.
4. Expect a lot of upfront time investment. Any relationship has the usual myriad of paperwork. No one is going to drop off half a million dollars’ worth of steel and rubber under your porte-cochère without a full-fledged contractual agreement. Factor at least a year from idea to on-property execution.
5. Don’t expect immediate measurable results. The overall goal is to value-add your guest relationship through product differentiation, whatever that product may be. Rarely do programs of this nature lead to trackable revenue gains with direct accountability and ROI. As an offset to this rather nebulous aspect of product placement, there may be little to no investment in capital or expense.
6. It’s all about the guest! Sorry, but that Ferrari is not for your personal use on weekends. Treat these goodies with respect.
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Editor’s note: To discuss business challenges or speaking engagements please contact Larry directly.
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One of the world’s most published writers in hospitality, Larry Mogelonsky is the owner of Hotel Mogel Consulting Limited and the founder of LMA Communications Inc., an award-winning marketing agency based in Toronto. His experience encompasses hotel properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Larry also sits on several boards for companies focused on hotel technology. His work includes five books, “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015), “The Llama is Inn” (2017) and “The Hotel Mogel” (2018). You can reach Larry at firstname.lastname@example.org to discuss hotel business challenges, to inquire about his consulting services or to book speaking engagements.
Contact: Larry Mogelonsky
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