The Inevitable Branding Feud Between Chain Managed vs. Locally Branded Hotel Management Model
The Owners’ Options
Branding is one of the issues and that has made hotel owners inconclusively debating about the decision to self-manage their own hotel (locally branded, owned, and managed), brand it as a ‘boutique’ hotel; or to appoint a hotel management company, either local and international brand, (chain) to take over the full operations.
Remarks: To provide a clearer example, a locally branded hotel that has put itself on the map since its inception is Cape Dara Resort, Pattaya. For a chain hotel, there is a countless number of hotels in Bangkok alone; however for the sake of example, W hotel, an international brand or Centara, a local one.
The Owners Choose the Path, or the Path the Owner
There are definitely pros and cons in choosing either option.
Hotel management companies, in Thailand, mostly offer a full-scale operations model of which could start from the pre-opening stage to the operations stage. With that, comes the marketing power, economy of scale, global distribution system, credible names, and expected brand standards. On top of that, brands themselves invest substantially in marketing and branding their own products on global as well as regional levels; hence enabling individual hotels to leverage on brand awareness. Loyalty Program is still something of the present, believe it or not. Travelers value the rewards system and with the wide network of hotels around the world under one loyalty program, it just works! Lastly and supposedly, more qualified candidates lean towards submitting their applications to a chain hotel with the perception of a better career path, superb welfare, and benefits. Unarguably, these beliefs are oftentimes true in today’s kind of branding world.
Hence, for owners, a choice of a hotel management company yields copious apparent advantages, and possibly the most worry-free route with no pain from trials and errors. However, costs that affect bottom-line numbers, as well as inflexibility, come along with convenience.
On the other hand, operating a hotel on one’s own and brand it however one wants still appeals to many owners. Top reasons, when asked, are; keeping the legacy of the family name, flexibility in the conceptualization of the hotel, flexibility in being creative with constant changes, lower bottom-line operating costs as there are no various fees involved, and no large initial investment that usually derives from hotel brand’s design and construction requirements.
In this day and age, travelers seek more and demand creative innovation. Being one step ahead of the competition is key, which usually involves being creative and keeping up with the trends, if not leading them. Hence, flexibility and prompt decisions are key in planning innovative sales and marketing plans. This is hard to do with hotel management companies as they need to keep their brand standards intact for worldwide consistency. Operating own hotel also gives owners a chance to offer more authentic experiences to guests from the brand story to product offerings, to innovative service style, all that is in sync with the owner’s vision, instead of answering to brand standards.
Lastly, size does not matter when operating one’s own hotel. As mentioned, it is all about the owner’s vision and business goals.
Who is the main contributor to this branding matter?
The past decade has seen the fast-changing behavior of travelers, thanks to the world of technology and digital advancements. Travelers now have the world of travel information and research in their hands. Amadeus’ recent study categorized travelers with a fresh look; instead of categorizing them based on the conventional factors (age, income, geographical source, profession, interests), Amadeus categorized them by the types of travel experiences they desire to encounter (agriculture, adventure, eco-friendly, or local living for example). Travelers have evolved, so must hotels.
With well-screened information in the palm of their hands, travelers are starting to pay less attention to the big names but more to what hotels have to offer; if it fits the experiences they are seeking for the trip. Perhaps, this is one of the main reasons for the birth of ‘boutique hotels’. Thailand’s Ministry of Tourism & Sports speaks out about how today’s travelers give more weight to the hotel’s ‘branding’ over just the ‘brand’ and most weight lies on the creativity and innovation of the product and service offerings.
All being said, it may seem that owners should opt to manage their own hotels and locally brand them however they wish, but be mindful of their own infrastructure, management team, capacity, and experiences. Lack of any of those things could mean a disaster.
This could potentially have been the reason why Chains have expanded rapidly on the Collection branch on their brand portfolios. The collection of individual hotels gives owners individuality but yet offers professional management. Imaginably, this is the best of both worlds for certain owners. ,
In short, at PaM++, it is a strong belief that the decision should start first with guests in mind, knowing what they want and how the hotel should meet their expectations and beyond. Whether you can do it on your own, or you need professional help is the first thing that should be considered for the long-term success and sustainability of the hotel.