The Great Brand Bubble of 2007 saw the announcement of roughly 36 new hotel brands. Then came the Great Recession and the bursting of that bubble. For hoteliers, being part of these new brands usually meant being part of large marketing programs and a direct line to hotel company resources, but they also meant placing a bet on something that was less than surefire. Some of those brands have gained traction, while others have struggled and a few were never heard from again. As a result, these last few years have provided an interesting laboratory experiment in what makes a brand successful over the long term. Here are some of the necessary ingredients that go into making a new hotel brand operate successfully.
1. Fill a Niche
For a hotel brand to be successful, it has to meet the needs of a significant number of potential customers. That might seem like a no-brainer, but executing that mission successfully is complicated and challenging. Niches and brands go together, and one reason that hotel brands continue to emerge is that so many new niches—boutique, wellness, sustainability—have been perceived by hotel operators, according to Chekitan Dev, professor of marketing and branding at Cornell and the author of Hospitality Branding. “While it is still too early to pick winners and losers from the legacy brand firms,” Dev says, “primarily because the recession messed things up, the brands that will succeed tap into lucrative emerging markets by offering a more exciting, engaging, and thoughtful lodging experience.”
With IHG about to open the first Even hotels in Norwalk, Conn., and Rockville, Md., the wellness niche is set to face its first test. Adam Glickman, head of Even, says IHG has put a lot of focus on developing a brand with consumer needs at its heart. Since the initial concept was conceived in 2010, the company worked with traditional focus groups and in-home focus groups. After massive research, Glickman says, “We realized that there was a changing market landscape with brands like Lululemon yoga clothing and Greek yogurt signifying a huge growth in the wellness sector. And that’s where we saw our opening.” He adds that it comes down to meeting a need for consumers that currently isn’t being met and creating a sticky brand that they can connect with.
No company knows this better than Starwood, which launched two pioneering brands just as the economy was tanking. For its most recent launch, Aloft, the select-service brand that has slowly gained traction after the downturn, the focus, says Brian McGuiness, senior vice president of global brand development, has consistently been on the next generation of travelers. From the beginning, Starwood wanted Aloft to be international quickly. “Our idea was that the next generation of travelers had a lot of universal characteristics,” he says. “They were tech savvy and early adapters. Never trendy but always on trend.”
2. Use the research right
Founders of new brands inevitably boast about all the research they have done—with consumers and with other stakeholders like developers. But gathering data and using it properly are two different processes. “Just because millennials say they are environmentally sensitive does not mean they want bulk shampoo, low lighting, and no linen changes,” says Bjorn Hanson, dean of New York University’s Tisch Center for Hospitality, Tourism, and Sports Management. “Everybody is trying to appeal to millennials, but it’s not that easy.”
Once the need is determined, the next step is clear positioning. There are two paths to this goal, Hanson says. One is to be like another brand that has been successful. Another is to be completely different so people will notice—like the Pod hotel in New York, or Ace hotels, which have stood out in a cluttered field of boutique and lifestyle hotels. And it doesn’t hurt to have or achieve critical numerical mass quickly. “There are small hotel groups with high profiles,” Hanson says, “but developers like to see something in the ground. If there are two hotels and no signed contracts, no developer wants to be third.”
For multi-brand operators, the lessons learned are valuable for the next brand to come. “We have applied what we learned from the Andaz launch to the launch of other brands, including the rebranded Hyatt House and the recent launch of Hyatt Ziva and Hyatt Zilara, our all-inclusive brands,” says Sara Kearney, senior vice president of brands for Hyatt Hotels.