To brand or not to brand, that is the question!
March 8, 2019 | Community, News, Openings, Our Team, Signings
Nicholas Northam, Executive Vice President – International for Interstate Hotels & Resorts, was recently invited to be on a panel about Managing Brand Standards as part of the International Hotel Investment Forum (IHIF). The prestigious event, held in Berlin, saw over 2,000 senior figures from over 80 countries worldwide come together for one of the most influential hotel investment events on the calendar and here, in our latest blog, Nicholas gives us an insight into his involvement in the event.
I was delighted to be involved in the annual IHIF event again. It is a standout industry occasion providing a great opportunity for the global hospitality market to come together to share their expertise, meet new partners and, where possible, make those all-important deals.
As part of the event I was involved in a lively panel debate entitled ‘Brand and Deliver: Managing Brand Standards’ which looked at the main advantages and challenges that a hotel owner needs to consider when deciding whether or not to have a recognised brand over the door.
On the panel I was joined by other key representatives from across the industry including Franck Gervais, CEO Europe at AccorHotels development, Thomas Magnuson, Chief Executive Officer at Magnuson Hotels and Michelle Woodley, President at Preferred Hotels & Resorts. From my perspective, I was able to give a broad view about operating both branded and non-branded hotels and how they compare.
I strongly believe that there is absolutely a place for branded hotels. They have a proven track record when it comes to delivering higher returns which obviously appeals to owners and lenders alike. And for customers there are also clear benefits such as loyalty schemes, reservation systems and, importantly, brand recognition which, in the eye of the consumer, brings with it a certain level of safety and security. Guests invariably like to know what they are going to get before they buy and a brand can give that reassurance and comfort.
But being part of a brand can also bring its challenges and there are occasions when it is the wrong thing to do.
Firstly, an owner has to consider whether the revenues delivered by the brand will deliver greater incremental profitability when considering the franchise fees that come with this commitment. Secondly, for some very well-known independent hotels being part of a brand has real potential to turn people off, particularly those looking for something quirky or different. Thirdly, location is critical. If you have a stand-out boutique hotel in central London for example where you know demand is high, but it is already saturated with branded hotels, a key question to consider is do you really want to become just another branded hotel or can you stand on your own two feet without the brand behind you.
On the panel I gave the example of one of our hotels which is due to open at Bodmin Jail, Cornwall in 2020. It’s such a well-known landmark in its own right, and to attribute an international brand to that location would, in our mind, have been damaging to the property so it is opening as an independent hotel.
Overall, the panel was an interesting and enjoyable discussion with a range of opinions expressed for and against the branding of hotels. For me, what was clear is that as a leading third-party management company with vast knowledge, experience and understanding of these intricate issues, Interstate Hotels & Resorts is in a unique position to advise owners who have this key decision to make.