Michael Prager: Hotel brands: are they meaningless?

Short answer is no, they are not meaningless, far from it in fact but are they infallible and reliable to a point where they can routinely support management decision making in procurement and programme selection? Well no, not really.

Back to basics

It's worth spending at least a couple of minutes on determining exactly what constitutes a brand? Much heat has been generated about this over the years but rather less light sadly. Simply put a brand is a sign or hallmark pointing out the differences between one similar product and another. The idea of branding goes all the way back to the ranch where each ranch would burn its distinctive mark or brand onto their animals' hides. One cow looks pretty much like another so there needed to be a way to differentiate them and that's where it all started.

But brands are much more than the visual identity of the product, they encapsulate the vision & the culture of the company behind the brand and most importantly of all they make an explicit, unambiguous promise to the consumer of what to expect when you buy or use them – and strong brands do that with utter, unrelenting consistency.

Examples: Coca-Cola is a carbonated drink, but it's so reliable that in countries where the water quality is questionable you can brush your teeth with it (I've done it too, in Accra, Ghana). Nike manufacture sports shoes and apparel but their vision that, 'if you have a body, you're an athlete' explains why they are different to the rest and both of these examples have used advertising brilliantly to encapsulate these thoughts into a single strapline; So Coca-Cola is 'The Real Thing', and if you wear Nike you can, 'Just do it'. Not quite that straightforward in service led brands and particularly with hotels is it?

On the one hand any service led brand is going to have more variability than a manufactured product, people after all will be people and if the chef, guest service agent or waiter is having a bad hair day it will probably affect his or her attention to service detail but there's more. Why are restaurants so good at driving consistency, McDonalds to Carluccio and hotels so not good? The fact is that the variability that you find in any of the big brands – before we even think about the so-called soft brands is way more than should be acceptable. In that sense the brand is not the infallible and reliable indicator it should be across the whole fleet for what the consumer will experience from using it. It doesn't affect every brand equally and the bigger you are the more difficult it is to control consistency but it is an issue for hospitality that seems to be more acute than other business sectors.

It's all about structure

The people piece is not so much the issue as the product piece. Unlike manufactured goods which are produced and consumed in relatively short order hotels last for a very long time, 30 years or more and to drive efficiency the industry some time ago split the bricks from the brains and the brand from the bricks so that it is quite possible and not unusual to find that any one hotel in a brand; and we're talking about the big guys here, a Marriott, Hilton, Holiday Inn etc. have a mixture of an owner, an asset manager, a management company and a brand that they franchise in their end to end ownership structure and that makes it a lot of things but simple isn't one of them and over time interests have become somewhat unaligned.

Example: Owners pay for product replacement, these are owner assets but operators pay for brand enhancement so take the (hypothetical to keep the lawyers away) example of a brand launching a new bed as part of its differentiation strategy, one of its brand hallmarks. Everyone agrees, great idea, after all a good night's sleep is at the heart of a great hotel stay. Operator says to owner you have to replace all of your beds (which will be in the hundreds for the most part) so a not insignificant expense. Owner says there's nothing wrong with my beds, I'll replace them as they fall due. Operator says no, it's a brand standard you have to do them now. Owner says if it's a brand standard you pay for them....you can imagine the rest. The end result is that brand enhancements, changes upgrades etc. tend to roll out over an extended period of time. It's a long train and what's at the front doesn't much resemble what's at the back and that adds up to one heck of a lot of variability.

What has tended to happen is that the operator owned brands have relied more on things they can totally control, the loyalty programme for example, as the pillars of their brand promise than they have on the physical infrastructure or service delivery of their franchised or co-owned product. That makes for strong channels but not necessarily strong brands. Incidentally 'soft' brands are almost always strong channel but weak product brands.

There are other influences at work here too. Does the firm value one more flag on the map over the rigid integrity of the brand? Often the answer is yes. A tweak here, an exception there, each itself pretty innocuous but added together all blurring the crisp identity of exactly how the brand promise gets delivered. The picture is not all bad, a great deal of the larger fleets are really very consistent but there will be exceptions and that means the brand is not the ultra-reliable tool it should be when it comes to procurement decision making.

Great, so what do I do about it?

Here's a little check list of smart questions to ask in addition to all of the RFP questions you already would

• What are the absolute, non-negotiable brand promises that (my) guests should receive in your hotels? NB if the list is longer than five or six be suspicious, they haven't nailed it. Write them down and give them to your travellers
• What percentage of your estate is non-compliant with your brand standards now and how has that changed year on year?
• How many hotels did you debrand over the past twelve months for noncompliance with brand standards
• What do you think differentiates you from your competitors (and who do you think they are) – you can take a view on the science or lack of it behind the answer
• Will you share your mystery shopper scores and customer sat scores with us (answer will probably be no but worth a try)

And finally...

Why do consumers stay with bad or weak brands? Why do people stay in bad marriages? It gets to the same issue. The fact is that brand switching isn't only driven by dissatisfaction, it's also driven by the availability of alternatives. If there is no alternative to a bad brand or product people will stay with what's available. Look no further than the old Soviet era automotive sector. Did any really want a Trabant? Really?

There is a way of measuring brand strength and here we swerve perilously close to the whole question of loyalty which is a subject for a future article, developed by the South African Jan Hofmeir and now owned by TNS which measures algorithmically the knowledge that one has about the availability of alternatives as a proxy for brand satisfaction; the hypothesis being the more you know about alternatives, the more likely it is that you're shopping the market and if that is the case then the likelihood is that you are dissatisfied, to some degree, with your current provider. And if you happen to be English you of course won't tell your current provider that you're unhappy, you'll just switch then complain to everyone about how bad they were.

On that basis what do you think is the brand that commands the greatest brand strength in the world?

Clue: I said Coca-Cola, I was wrong.

It's Heinz tomato ketchup. Think about it. It has been 100% consistent over many years. It always does what it says it does. Most people cannot name a competitor, the closest we get is 'generics', which isn't a competitor, it's a category of competitors.

Statistically, American housewives are four time more likely to change their husbands than their Heinz tomato ketchup.

That's a meaningful brand.