IHIF: How and when to tap into hotel brands
A host of hotel experts came together this week at the International Hotel Investment Forum (IHIF) in Berlin to discuss the value of a hotel brand.
Joanne Dreyfus, head partner of THL France, Deloitte, kicked off the session by suggesting that three values brands can bring to a hotel are: a distribution platform; loyalty, as long as the brand delivers on its brand promises; and employee engagement if the brand can deliver that same experience to its employees.
David Kellett, vice-president development, Europe, InterContinental Hotels Group, said the strength of a brand comes through in its ability to drive revpar and described IHG's business as "a brand business", emphasising why getting the brand and the hotel right is so vital. Angel Palomino, director at Spanish investment company Azora, which has approximately 10 hotels across the world, said he also looks for the ability of a brand to capture a local community.
However, Yu pointed out the importance of knowing when to not brand a hotel, using the company's 319-bedroom, four silver AA-starred Belfry hotel in Wishaw in the UK as an example, which she described as "a brand in itself".
When it comes to troubleshooting, Andreas Ewald, managing partner at Engels & VÁ¶lkers Hotel Consulting, said it is better to see the problems with a brand sooner rather than later by closely monitoring a hotel's performance, and even better applying due diligence before choosing an operator.
"It's not only KPI reports that investors are looking for now - they want to understand how strong the distribution platform is," he said.
Yu suggested ensuring the owner's interests are aligned with an operator's, especially with bigger brands. "It's important to make sure you have a voice at the table," she said, adding that owners can have contracts with smaller brands with more "teeth" - such as termination clauses - not so much with bigger brands.
"It's very important you sign a contract that protects you as an owner," added Palomino.
But when it came to the issue of OTAs, although acknowledged as a problem, the panel was also prepared to embrace the positives. Isidoro MartÁnez de la Escalera, chief marketing officer at NH Hotels, said OTAs give the company an opportunity to be seen by markets the brand does not have much of a presence in, using Indonesia as an example, where nobody would go directly to the brand website anyway.
Yu also added that OTAs have given smaller, boutique brands an opportunity to reach customers. "I think it's important to see it as an expensive tool rather than an enemy," she concluded.
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