When appealing to the cost-conscious consumer, offering good value can enhance, rather than compromise, the all-important brand, says Catherine Chetwynd
In its publication Evolution or Revolution? How to Respond to Consumers' Demands for value, PricewaterhouseCoopers' retail and consumer division shows that the consumers who have had to economise have discovered that where low prices used to mean low quality, now they generally mean good value. The research also suggests that some punters are so satisfied that they may not go back to spending at the levels they did pre-recession.
Similarly, in the past 18 months, companies and business travellers have also looked for ways to save money. They have traded down in accommodation, and more meetings have become non-residential. As a result, in their struggle to gain and retain business without slashing rates and undermining their brand, hoteliers have been adding value.
This has varied from offering inclusive rates to investing in staff and service levels, reflecting a greater emphasis on consistency. Creative ways of packaging meetings have come into their own, as have loyalty programmes - for example, Starwood Preferred Guests now make up 44 per cent of room nights. "That is the highest in our history," says senior vice president North West Europe for Starwood Hotels & Resorts, Michael Wale.
Groups that have invested in their estate have put themselves in a strong position for the creeping recovery. This is particularly true of the budget sector, where product quality is good because the majority of stock is relatively new.
"At Premier Inn, we are giving a more modern, standardised product at a price point customers like," says its marketing director, Gerard Tempest. "In recession, customers think much more about value and they are less willing to accept compromise. We promise our customers a good night's sleep and focus the whole business around that. If they don't have a good night's sleep, we give them their money back. That is hugely powerful."
Premier Inn also refreshes every hotel every three years. "And we invest a lot in training," says Tempest.
More pillow talk comes from Crowne Plaza with the Sleep Advantage programme, which offers upgraded duvets and pillows, black-out curtains, and a guaranteed wake-up call (with your night free if it is not received within five minutes of the requested time).
Crowne Plaza London - The City has taken this idea one step further with a "switchoff" call. "In a modern business environment, people are often working in their room until late," says its general manager, Paul Brackley. Guests who book the switch-off call have an infusion and fresh fruit delivered to their room before they go to bed, "and this comes with a telephone call from guest relations to advise guests that it is now time to switch off," says Brackley.
Re-launching a brand in recession puts it in a strong position for an upturn. Aware that the words Best Western did not conjure up a strong image, the consortium took action. "We repositioned the brand as 'hotels with personality' to get a credible voice," says head of marketing and e-commerce Tim Wade. "Independent-minded people do not want uniformity, they want a unique and individual experience and as a group of independent hotels, Best Western is in a prime position to deliver this. It is about giving that personal service."
Maintaining standards is a lynchpin in this endeavour and the group makes a quality assurance check each year, alongside the VisitBritain check. In the past three years, 50 hotels have been removed from the brand.
Jurys Inn has also reinvented its properties as "Exceptional Everyday City Hotels". The group's marketing manager Suzanne cannon says: "We introduced some consumer-driven product innovations with the business guest in mind, including Freeview TV, improved toiletries and comfy pillows and duvets."
In addition, she says: "We are re-launching our loyalty scheme at the end of this year for bookers and guests, who will be able to earn more-valuable points more quickly, and we are improving our online booking tools so that companies can see their negotiated rate and our best available rate, and will be able to get MI [management information]."
Choice Hotels Europe has improved brand standards at its Comfort and Quality properties, offering free internet access or wi-fi, upgraded bedding and a consistent breakfast offering. "It is important that business travellers enjoy the same level of service regardless of the city or location they are in," says Choice's director of UK sales, Brian Garvan.
Also in the interests of paying better attention to customers, Great Fosters has invested in a guest services manager. "If we are going to command higher rates, we have to provide a more personal service," says managing director Richard Young.
DEMAND PRICING
One consistent message in the ways hoteliers have added value is the determination to maintain the standards for which guests choose the brand. "We use demand pricing," says Starwood's Michael Wale.
"This allows us to respond quickly to market requirements, but we did not take away what our underlying brand messages promise - we did not take away value.
"When we get into recovery, as we are in London - 15 of our top 20 accounts are showing double-digit growth in room nights this year - we do not want to have inconsistent product delivery."
Starwood has also used a best rate guarantee programme and, "selectively", online travel agencies. "But as we move into the recovery phase, the business from those services has reduced," says Wale.
Great Fosters has employed demand management, launching packages such as Luxury for Less to tempt guests when occupancies are low.
BEAUTIFULLY PACKAGED
Add-on charges for ancillary services are particularly irksome to travellers and often entirely remove the benefits of a low rate. these items also provide a great opportunity for hotels to add value. Holiday Inn express has introduced complimentary hot breakfasts in hotels across the UK, and the Lancaster London improved its business centre.
"Customers can now print off boarding passes and access the internet free of charge, and we are looking to implement a policy where guests will have 15 minutes of free wi-fi per day," says the Lancaster's general manager, Stephen Kyjak-Lane. He is not the only hotelier extending value as the economy gets stronger - Malmaison and Hotel du Vin used their restaurants to leverage accommodation bookings, offering rooms for £10 a night if guests spent £75 in the restaurant.
"It moved occupancy by 14 per cent year-on-year in Malmaison," says chief executive Robert Cook. "And we had a spend of £130 per room on Sunday nights, which in provincial UK is a lovely number to have." And cook will enhance the product as the economy gets stronger. "We are improving our minibar offering, the quality of the towelling and the bathroom amenities," he says.
Focus Hotels provides full service accommodation "at a realistic price, often close to budget hotel prices", says chief executive, Peter Cashman. This has successfully maintained and improved the group's market share. He anticipates business will hold up: "We believe business clients will look for value for money but will continue to use full-service hotels," he says.
Macdonald Hotels & Resorts continues to refurbish properties and is introducing new spa treatments and golf packages. "We are investing heavily in the core products of the business and we have introduced a more flexible approach to golf packages, as companies have moved towards pay-and-play rather than having full-blown membership," says Macdonald's sales and marketing director, Ruaridh Macdonald. "We are going to have to maintain the added value we have been offering but I think next year, in particular, will be a very tough year."
MEETING NEEDS
The recession has also inspired some worthwhile added value for event organisers. QHotels had finished a major investment into its properties when the downturn hit. "It was fortunate that we had a high-quality product in the conference market," says QHotels' sales director, David Taylor.
"We maintained a focus on price, on getting it right first time, and were able to pack in that value element and give a much more competitive proposition," he says. Taylor targeted the training and association sectors with packages that included extras such as free wifi, allowing up to a 20 per cent reduction in contracted delegate numbers up to 14 days before arrival, and 50 sheets of free photocopying. Partners and organisers also benefited.
Taylor is adamant QHotels will not withdraw the value benefits. "We are probably looking to include more because the uptake has been quite dramatic - it has given us the edge. People really want to see consistent and high-quality service and a terrific product."
BRAND AND VALUE
Macdonald Hotels has introduced Spoilt for Choice, which gives conference buyers and corporates vouchers for its hotels or for Love2Shop worth 2.5 per cent of the value of events costing more than £1,500. And Four Seasons' Meetings Made Yours includes options such as complimentary breakfasts, coffee breaks and internet access.
Luxury group Elite Hotels has a meeting offer of five delegates for the price of four and, says director of operations Simon Willis, "at the beginning of last year, we introduced a £50 credit per delegate, to be spent on hotel services. We had an event at The Grand that was worth £35,000 and we got the business on account of the £50 offer." He says organisers tried price over quality until six months ago but are now less fixed on the lowest rate. "If you are going to spend it, spend it wisely. Your delegates will thank you for it," he says.
BUYER'S VIEW
"London hoteliers are starting to strip out value and go back to rate," says head of UK hotels and venues for PwC, Sam van Leeuwen.
"At the beginning of the recession, the trend was added value. It was easier to get breakfast included into the rate and to negotiate on early check-out fees," she says. "Hotels use added value as a negotiation tool but it is going to be traded off. What is more important for you - is it early check-out or late cancellation fees? We negotiate much later check-out times, and cancellation up to 6pm on the day in London at no extra charge and 4pm regionally. Most are 12 noon on the day of arrival and some require 24 hours' notice."
She adds: "Broadband and wi-fi are the trickiest area. New-build properties include it but a lot of older ones are linked into deals that last seven or eight years and the cost is high. Carlson hotels offer free wi-fi and it is becoming more and more important. It is one added value we are demanding as part of our rate but now we are finding they are upping the rate by £10 to £15.
"There is such variety. You can be offered one hour free, which can be all you need, only to find the bandwidth is not big enough and you have to trade up to a hard-wired solution to get logged in. At one event recently, I found a colleague seated in the corridor, underneath the receptor, so they could get on to the internet."
And PwC's meetings have been reduced from four days to three (or even two) and, in some cases, delegates are sent preliminary reading. "Then they attend training for a day, jam-packed from 8am to 5pm," says Van Leeuwen. "It's a great way to manage cost."
THE FUTURE
The messages are consistent: there is cautious optimism and business is returning with less of an emphasis on price, although value for money still matters. Outside London, hoteliers are aware they need to retain the value they have built in if they are to survive in a competitive market. In London, however, the negotiating climate is getting tougher - just in time for the RFP season...
BRANDS
(those in italics are in the UK)
Carlson: Country Inns & Suites, Park Inn, Park Plaza, Radisson, Radisson Blu, Radisson Edwardian
Choice Hotels Europe: Cambria Suites, Comfort Inn, Comfort Suites, Quality Inn, Sleep Inn, Clarion, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, Rodeway Inn, Ascend Collection
IHG:InterContinental Hotels, Crowne Plaza, Indigo, Staybridge Suites, Holiday Inn, Holiday Inn Express, Candlewood Suites
Starwood Hotels & Resorts Worldwide:Le Méridien, Element by Westin, Aloft, Sheraton, The Luxury Collection, St Regis, Westin, W Hotels, Four Points