The industry where it's always time for a change

Everyone's at it - rebranding, that is. A change of image can be a crucial part of a company's strategy, but it's not without risks. Daniel Thomas investigates

It seems you can't move for a rebrand in hospitality circles at the moment. Hotels, pubs, restaurants and contract caterers are all getting in on the act - ranging from subtle changes such as Sodexho Alliance becoming Sodexo to more radical overhauls, such as Ultimate Leisure transforming into Premium Bars and Restaurants.

History has demonstrated that corporate rebranding does not always achieve the intended results.

The Royal Mail's £500,000 change to Consignia in March 2001 is widely recognised as one of the most disastrous rebrands of recent times. The brand lasted a little over a year, with the group forced into an embarrassing U-turn, returning to Royal Mail in June 2002 at a further cost of £1m.

New life?

But other rebrands, such as Andersen Consulting becoming Accenture and BT Cellnet's change to O2, have helped breathe new life into the brand.

So how can hospitality operators make the most of rebranding?

Mark Jones, chairman of Premium Bars and Restaurants - formerly Ultimate Leisure - said any rebrand must be strategic. The company changed its name last November after splashing out £36.75m on buying Bel and the Dragon from Gourmet Holdings and the Living Room chain from The Restaurant Group.

"I was concerned that all companies with the name ‘leisure' in the title were pure late-night operators," Jones said. "We decided strategically that this was a market we were going to reduce our reliance on and I felt a name change would be appropriate. But I did not want to do it until we had a strategic reason to do it."

Paul West, managing director at Ignite Marketing, which works with hospitality companies on brand strategy, said the Ultimate rebrand was simple but effective. "It positions the company at the premium end of the market," he said. "It's straight to the point - why beat around the bush?"

Jones warned that companies going through a renaming exercise wouldn't always get their first choice. "Have a shortlist of four to five and be happy that all of them are good," he said. "We liked the name Living Concepts but found it was a wooden floor fitter in Telford!"

One of the dangers of rebranding is losing a reputation that has been built up over the years. Marketing experts felt Conran Restaurants' change to D&D London early last year (following a management buyout) ran this risk, but one year on the group has performed better than expected.

That's the view of Ben McCormack, editor of restaurant guide Square Meal, who praised management team Des Gunawardena and David Loewi. "While Terence Conran was such a figurehead for the company, with a large media presence, Des and David have been quite savvy by not pushing themselves and instead promoting the company," he said.

"They have had a very successful launch with Skylon and seem to be in tune with what diners want."

Words and letters

Of course, rebrands are not always as radical. Some brands decide to chop a word - such as Premier Travel Inn, now the streamlined Premier Inn, at a cost of £21m - while Sodexho Alliance dropped the Alliance and the H, with a bill also running into millions.

The Premier Inn rebrand is designed to put clear blue water between the Whitbread-owned group and budget hotel rival Travelodge. While the move led some industry wags to ponder whether the latter might become Premier Travelodge, West said it was sensible. "Its research must have highlighted confusion in the market, so moving away from the association with Travelodge is the right decision," he said.

West was less convinced about Sodexo's move. "I can't see the benefit of investing millions of pounds in this," he said. "Is it really going to add anything to the share value? If I were a shareholder I would be questioning the move."

Amusement?

Sodexo's corporate line - "H is often associated with the hotel and food service business" - has certainly caused some amusement in the industry, but the company insists the rebrand is an important part of communicating its move from a caterer to a wider services provider.

But for contract caterers, the umbrella brand is less important than the sub-brands that the clients actually deal with day-to-day, according to West. "This is where the investment has to be made," he said.

Compass Group's restructuring of its fine-dining operations is an example of this approach. After years of aggressively acquiring businesses, the caterer has been simplifying its brands, with names such as Everson Hewett and Baxter & Platts eliminated in favour of an all-encompassing Restaurant Associates banner.

While rebranding exercises can be expensive and risky if not handled properly, there is no doubt they form an important part of any hospitality company's strategy, according to West. "You have to adapt to changing environments," he said. "If you stand still, you get left behind."

Additional reporting by Caterer reporters