Jens Egemalm, Director of Distribution at Pandox RMC, gives a candid account of debranding a hotel, including the pros and cons
In a world of ever-expanding international chains, long-term management contracts and the lure of established guest loyalty, most traditional hoteliers would frown at the idea of debranding their property to become an independent. Often, hotel owners have stayed in the safety net of a big brand which promised them more customers, a wider marketing reach, consistent performance, state-of-the-art technology and simply higher returns. So naturally, deciding to go solo raises questions.
The challenge is clear. Stepping out from underneath the branded umbrella comes at a hefty price. It might in some instances mean losing high-volume negotiated accounts, no international sales representation or less advantageous Global Distribution System (GDS) connectivity. However, being free of potentially restrictive brand guidelines can also bring a hotel long-term advantage if it plays its cards right.
Three months ago, no one had heard about our new independent hotel, which is located in a capital city in Northern Europe. Today it is well positioned in the market, produces more bookings on the key online platforms than any other hotel in the city and is consistently stealing market share from well-established hotels, branded and non-branded. And on top of that, we haven’t spent a single euro on sales and marketing. How did we achieve this? Our strategy was threefold:
Set up simple and profitable distribution
Historically, IT infrastructure and general digitalisation have been perks reserved for the big players. In an era of Online Travel Agencies (OTAs) where commercial activities and open interfacing can be outsourced, independent hotels can now pick and customise their distribution landscape to suit their particular needs without systems, process or staffing levels being dictated from elsewhere.
In our particular case, the decision was made to only distribute on high impact channels instead of spending countless hours setting up a complex distribution structure. We chose the top two OTAs in our geographical market, our own booking engine and GDS. A critical realisation for us was that the awareness and conversions that we were able to generate by working with the OTAs were far beyond what we would have been able to achieve by ourselves.
Establish a solid online reputation
Quick reality check: debranding almost always means that an existing product needs to be reintroduced into the market from scratch. Its new personality and offering needs to be effectively positioned to ensure a direct uptake. Potentially daunting – but also an excellent opportunity in times when guests are increasingly looking for unique experiences rather than the safe but sterile and unexciting stay at a chain hotel.
For the launch of the hotel we set a very competitive pricing strategy. When launching a new product, you aren’t in a position to charge premiums for an unheard of, untested hotel. With that said, we didn’t dump the rates – instead we leveraged marketing opportunities with strategic partners, specifically OTAs. Not only did this help to fill the hotel but indirectly it positioned the property well on the third party websites in the longer term, a benefit still felt today. But most importantly, the real win was that the first guests felt they enjoyed extremely good value for money. And as the review scores gradually rose, so did the price point.
Exploit your agility
An independent concept knows no limits in terms of design, communication, staffing or creativity applied to internal processes. This can seriously pay off when it comes to profitability and customer satisfaction. We chose to invest in making the customer experience, from research to post-stay, as seamless as possible. We enhanced touch points where staff could connect emotionally with the customer, such as greeting each arriving guest personally in the lobby. On the flipside, automation was written all over non-emotional touchpoints by providing mobile check-in and outs, for example.
Obviously, it is crucial to weigh the benefits carefully for every hotel and market before taking the leap into the unknown. In our case, to date, our hotel’s debrand is selling more rooms, at a higher rate, and at a lower acquisition cost than it ever did under the branded flag. We may have a higher commission bill; but on the whole we have also gotten rid of brand and loyalty costs, we spend less in payroll through automation and have a more productive operation with more satisfied guests. Going solo was a break for the best.
You might want to read our data analysis: to brand or not to brand?
Jens Egemalm is Director of Distribution at Pandox RMCMore by Jens Egemalm
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