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Independently Minded: The Power of Soft Brands

Independently Minded: The Power of Soft Brands

So far in 2017, two major hotel chains have announced the addition of a new soft brand to their brand portfolios. In January, Hilton’s Tapestry Collection joined the chain’s Curio Collection, and in June, Wyndham announced the launch of the Trademark Collection, representing the company’s first foray into the soft brand space. 

Soft brands are obviously popular, and this particular market segment is gaining share at an astoundingly rapid pace. While there may have been an explosion in chain-backed soft brands over the past few years, the idea of a hotel collection is nothing new. Preferred Hotels & Resorts—currently helmed by CEO Lindsey Ueberroth, who is featured on this month’s cover and interviewed in the following pages—has been playing in this space for 50 years. Choice Hotels’ Ascend Hotel Collection, the first soft brand collection from a big chain, launched a decade ago. Since then, more and more have joined their ranks.

So, what’s been driving the immense growth in this area of the industry? There are two factors at play. The first, to put it simply, is scale. In an era of consolidation, the security and power that come with being backed by a major hotel engine is invaluable, especially during the shoulder seasons. “Having a brand behind an independent property helps fill many different needs that the property might otherwise not be able to afford to address,” Julius Robinson, vice president of Marriott’s Autograph Collection Hotels & Tribute Portfolio, describes. “Do you need the assistance of a global sales organization to drive corporate business during the week? Or do you need a strong rewards system to help leisure occupancy on the weekends? A big brand can help accomplish those goals in a way a smaller, independent sales team might not be able to.”

But scale is just one factor. There’s also guest demand for unique experiences. “Guests today are looking for something that is completely different from their past hotel stays, and often different from what mainstream brands can offer,” Mark Shalala, vice president of development and upscale brands at Choice Hotels, says. “So, developers are looking for hotels that meet this demand.”

And there’s another reason developers are jumping on board quickly: The earning potential of soft branded properties, if properly supported, is enormous. “The rate cap for a soft branded hotel isn’t limited by other properties in its market segment or in its brand, because there are no hotels to compare it to,” Shalala explains. “If you’re delivering a great experience that guests like—it’s local, it’s authentic, and it’s what people are really craving—you can charge a premium for that experience.” As a result, many developers are seeking out markets with heavy branded inventory and finding a niche that can be filled with an independent property. The ability to fill those gaps with something that’s different and unique— but still backed by a major chain’s engine—lessens the risk of investing in an independent property.

In the right market with the right brand behind them, there is no question that independent hotels and the collections they belong to are making a major impact on the hotel industry. However, being in this part of the industry requires a passion for creating something new and exciting, something that doesn’t already exist in the hotel space. “Hoteliers looking to enter this space really need to be committed to investing in and building out that individual hotel’s unique brand and telling its story. The onus is on the owner to keep that individual hotel fresh and relevant,” Brian Povinelli, senior vice president and global brand leader of Marriott’s Premium Distinctive portfolio, explains. With so many options out there, it is imperative that hoteliers looking to join a brand do their research and learn as much as they can before signing a contract.  

 

Photo: Rooftop pool at The Hermitage, a Tribute Portfolio Hotel by Marriott, in Jakarta, Indonesia.

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