Article: Hotel Branding and Increased Revenues

How do the following two reports concern your hotel name branding? First an August report by Bear, Stearns & Co. said online bookings in the lodging industry are expected to grow from about $3.8 billion in 2000 to $15.5 billion by 2006.

The second being a report from Smith Travel Research of Hendersonville, Tenn., estimating that revenue per available room was down 4.8 percent through September compared to the first nine months of 2001 and that annual growth in online lodging revenue is beginning to outpace growth in the larger online travel sector.

Taken together it would appear that although the Internet is an increasingly important source of bookings for the lodging industry, it's also putting downward pressure on room rates. To who’s advantage?

We are all aware that online reservations via the large discount travel sites puts downward pressure on hotel rates because travelers can easily compare rates and the Internet provides an opportunity for independent hotels to compete with national companies. In particular, rates offered on third-party travel sites like Expedia are generally an average of 10 to 15 percent lower than standard rates.

As such, hoteliers as with retailers must closely monitor the rates and prices they offer on the Internet and develop strategies to encourage brand loyalty if they want to keep business and increase profits. In many ways it’s becoming almost a full-time job, just managing the Internet and you can leave a lot of revenue on the table if you're not aware of what's going on.

At issue is the fact that the character of the individual hotels is being lost in a grand pool of discounted room availability rather than hoteliers effectively marketing their individual hotel's amenities and services and taking reservations directly on the Internet.  You are training the consumer to buy on price, and unfortunately it isn't going to take long for the industry to start feeling the impact.

Hoteliers and other brand originators must begin to recognize that this time of “instant” communication they can no longer afford to turn their back on what happens at the retail level. With price as the only point of differentiation, both brand originators and hoteliers will find that there is brand value erosion in the minds of the buyers and when that happens, profit points collapse.

Additionally, not promoting a value proposition adds to the general lack of brand loyalty. We tend to think that branding comes first and a company’s success follows. In fact, when you look at successful hotels and businesses, no matter whether they exist on or off the Web, you will realize that a quality product comes first, infrastructure and service second, and only when these items are in place the brand evolves into success over a number of years.

Brand and brand image is a hotels most public face, as such It becomes imperative that hoteliers rethink their website both from a branding and Internet marketing perspective in addition to its capabilities in taking real time online reservations.  

Even a small hotel can become a big fish in the Internet room pool. Display your amenities and services to your advantage not that of others.  - John Shenton - December, 2002