Soft branding: the answer to everything? by Laurence R Bernstein

white paper Soft Branding: The Answer to Everything?

...to some extent the proliferation of hotel brands and types of hotel brands highlighted the need for unbranded,

independent hotels.

oft Branding is the new “it thing” in hotel marketing. Much has been written about how it works for developers, owners and operators, but the more important question is whether and how they work for travelers. In this article we look at the fundamental structure of successful brands in this space, and view this in terms of consumers’ functional and emotional needs. The new big thing in our industry is “soft branding” – a term that was invented, and is pretty much used exclusively by hotel companies. Facetiously we could say it was inevitable that after every possible brand idea had been executed (brands, sub brands, line extensions, full service brands, limited service brands, extended stay, resorts, clubs, timeshares, suites, lifestyle, boutique, lifestyle-boutique, boutiquelifestyle, and on and on), what could hotel marketers do next? The obvious answer: no brand brands. As we said, this is facetious, but it does serve to make a point: to some extent the proliferation of hotels brands and types of hotel brands highlighted the need for unbranded, independent hotels. The better at branding the hotel companies became, the more “sophisticated” travelers started rejecting these brands: when there were only few Marriotts outside the US, Marriott was a status brand; same for Holiday Inn, Hilton and Westin. But as they became more ubiquitous they lost the pres-

tige (but not the reputation for quality and consistency, which is fundamental to brands for many travelers) and sophisticated brand rejecters from around the world became more and more interested in independent, unique hotels that reflected the destination. There have always been affiliation groups such as Leading hotels, Preferred Hotels and others that provided services to independent (and small chain) owners that franchisees of major brands might have enjoyed: reservation systems, quality endorsement; positioning (…like the other hotels) and over time a certain (limited) amount of marketing help, online presence, etc. The critical point here is to understand that the genesis of these organizations was as a service to the hotel owners…not as a consumer focused branding business. There were also always “Groups of Hotels”, where a single owner centralized some management functions for a portfolio of unique hotels, and presented these hotels as (for

Excerpted from the article by Protean Managing Partner Laurence Bernstein first published in Hotelexecutive.com (http://hotelexecutive.com)

Looking across the traveler landscape, it was clear that none of the

big brands’ brands catered to a more selfaware, sophisticated, adventurous traveler (in the US) and a large number of non -US travelers who were generally not

comfortable with big brands,

instance) The Langham Edward Group of Hotels, or the Dorchester Collection. This is probably the prevalent model in Europe where smaller hotels have been banding together as a survival mechanism – to compete in an increasingly chain dominated environment. But the idea of building non-chain chains based on a consumer centric proposition is fairly recent. An argument could be made that Starwood showed the way with the Luxury Collection. Certainly, the Luxury Collection demonstrated that it could be done – that great hotels could be marketed under a “soft” banner – but it is not a consumer driven brand as are the more recent entrants such as Autograph (by Marriott), Curio (by Hilton), BW Premier and a few others. The key difference is The Luxury Collection is a rather jumbled collection of hotels around the world with nothing in common other than they are expensive and (in most cases) seem like hotels that are unlikely to have joined a Starwood brand! Later entries to the market have taken the concept of consumer centric branding and developed relevant, differentiated brands that serve the public well.

IDENTIFYING A DISTINCT MARKET NICHE

As opposed to a segment of travelers who are willing to pay a lot for great hotels (a “behavior” rather than a niche), the major brands, led by Marriott) identified a gap in their portfolios. Looking across the traveler landscape, it was clear that none of their brands catered to a more self -aware, sophisticated, adventurous traveler (in the US) and a large number of non-US travelers who were generally not comfortable with big brands, but needed some of the functional and emotional advantages that big brands offer. With that clear target, sophisticated brands have been developed.

We know they meet the needs of developers and operators (much has been written on that), but do they actually meet the needs of the travelling public?

WHAT ARE BRANDS SUPPOSED TO DO FOR CONSUMERS?

This may be a bit technical, but it’s important to understand the role of brands and how they fulfill these requirements. Until recently major hotel brands fit cleanly into one of two brand categories that define the relationship between the master brand (e.g. Starwood or Marriott) and the subbrands (e.g. Westin or Courtyard by Marriott): Starwood, IHG, Accor, etc., were what brand guru David Aaker referred to as House of Brands: essentially the company markets a variety of brands, with the focus being on each individual brand, with the primary brand (Starwood) getting very little attention. While the master brand brings considerable value to the organization at the owner/ management/developer/employee level (internal markets), they’re not adding much to the consumer understanding of the brand except in a peripheral way; and this is the way these marketers want it to stay.

In this model consumers look to the individual brands for the navigation guidance, expectations, trust, etc. that brands provide. A traveler with an emotional link to Holiday Inns, for instance, will have no feeling about or towards Candlewood Suites (unless they had separately engaged with that brand). Having said that, the Master brand in many of these cases acts as what is referred to as a “shadow endorser” – that is, from the background the quality and other attributes are endorsed by the master brand (which, in many cases is supported by the uploading of softattributes from the loyalty program Page 2

When a traveler can associate an unknown property with a

brand they are familiar with, they can immediately understand what the property is and how it might fit into their needs.

(see below). This is the category in which Procter and Gamble fits, and this has done well for them! It has also done well for the hospitality companies that use this go-tomarket strategy. Marriott, Hilton, Best Western, on the other hand, fit into the category of Branded Houses: in this case, the company is the brand (Marriott) and the divisions are all sub-brands (line extensions, product extensions, etc.). In this model, when staying or engaging with one of the sub-brands, consumers know that it is related to the master brand, and this information strongly influences their perception of the sub brand. A traveler that is familiar with and loyal to Best Western will transfer this loyalty to a hotel that has the Best Western Executive Residency banner, and will have a fairly clear understanding of what to expect. Here the Master brand is the direct endorser – as goes the perception of the Master brand, so goes the perception of the sub brands. If Apple has a major hack, sales of subbrands such as Macs and iPhones are impacted. And, having explained this, it’s important to note that in the past few years many of the hospitality groups in the Brande House category have included sub brands that are distinct and that they try to distance from the master brand, similar to the strategy in the House of Brands category, with the intention of distancing specific sub brands from the master brand.

WHY AM I TELLING YOU THIS?

Because soft branding works for consumers when they are marketed in the Branded House category. Brands fulfill specific needs for consumers, and the more emotionally complex the need, the more these brands achieve importance. Simply put, brands in the hospitality are important to travelers because

They help navigate the vast choice landscape – familiarity with the brand helps consumers choose which hotel to stay in unfamiliar locations – while this seems functional, it is deeply emotional because of the inherent fear of making the wrong choice. The endorsement of a Master brand makes the traveler feel confident in his or her decision.

They provide a framework of understanding – when a traveler can associate an unknown property with a brand they are familiar with, they can immediately understand what the property is and how it might fit into their needs They provide a level of trust. A hotel associated with a specific brand will not “rip me off,” or exaggerate in their listing, or do any of the myriad things hotels can do to ruin a trip. They define my status both externally and internally: in some cases this status is composed of prestige needs, but in most cases it is more prosaic. But in every case it is a strong component of the hotel choice. They provide a list of functional advantages (including such things as reservations, loyalty program, SM presence, etc.) that make the choice easier. Without going into it in depth, both categories of brand strategies provide these advantages to a greater or lesser extent. Overall, though, brands such as Marriott and Hilton are, from a consumer point of view, more useful in that they deliver more strongly against these 5 needs.

COUNTER-INTUITIVE

It may seem counterintuitive that a soft brand which is based on the principle that the Master brand plays no overt role, would best be served by a brand like Marriott that operates in a Branded House environment. Surely it would be better served in an environment where the Master brand plays no role? Page 3

The answer, as the success of Marriott’s Autograph Collection attests, is no. The question is: why?

SOFT BRANDS WORK ON TWO in addition to fulfilling the 5 critical needs, the clear positioning of soft brands connects consumers to what the hotels

really

are, and how they may (or may not) fit into their

trav-

elling lives

DIMENSIONS

For totally independent travelers these independent hotels are exciting, uncommercialized, undiscovered, experiences. They can, and do, engage with the hotel totally unaware (well, not totally, but largely unaware) of the brand affiliation. For them the brand affiliation makes no difference because, based on who they are as travelers, they do not need the benefits (emotional or functional) that brands promise. However, these travelers are few and far between. Historically travel agents acted as mediators and provided some sense of assurance that an unknown property would be okay. In the absence of agencies, this mediation is attempted by sites such as Trip Advisor, but this, as anybody who has tried to book a hotel room in Rio can attest, very often just adds to the confusion. Knowing that the small, local hotel that looks so good online, is endorsed by Marriott and is connected, however loosely, goes a long way to making the choice easier. And knowing that the subbrand of Marriott to which it belongs is defined by the fact that the brand relation will not be dominant (in fact will be almost totally in the background) meets the need for a sense of adventure and independence.

REAL BRANDS VERSUS SIMPLE COLLECTIONS

In both the case of Marriott Autograph and Hilton Curio, the marketers have approached the divisions in text-book consumer marketing methodologies. By understanding the emotional needs of the target travelers, they have each defined a brand of independent hotels that, while independent, have a commonality that is deeply relevant. In these cases, the brands add another layer of usefulness to the consumer: in addition to fulfilling the 5 critical needs, the clear positioning of the soft brands connects the consumer to what the hotels really are, and how they may (or may not) fit into their travelling lives. Simple “Collections”, such as Starwood Luxury Collection or Preferred Hotels, do not have a common brand thought that runs through all the properties in the collection (other than: luxury or expensive)

SOFT BRANDING: THE ANSWER TO EVERYTHING?

Yes –maybe not everything, but a lot of the needs of sophisticated, affluent, travelers looking for a more complex emotional experience from the hotel they choose. For sophisticated independent travelers, the soft brand does not interfere in their travel experience, allowing the independent hotel to be what it has always been. But for brand rejecters, well organized soft brand systems are a gift from the travel Gods!

Protean Hospitality is a boutique brand strategy advisory firm focused on helping our hospitality clients drive growth. We combine our business/category expertise with tenacity, balancing rigor and creativity, to uncover new opportunities for hotels, resorts and hospitality brands. For further information on this and other Protean Hospitality studies contact: Laurence Bernstein, Managing Partner, 416 967-3337 x 101; Bernstein@proteanstrategies.com Www.proteanhospitality.com Page 4