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Sir David Michels on the shape of the coming recovery
The outlook for 20 key markets, from China and the USA to Germany, Brazil and Libya
Is it time to change in-room technology standards ?
How the crisis will affect luxury in 2010
Editorial input from 25 hotel industry CEOs
2010W h a t t o e x p e c t i n t h e y e a r a h e a d
This excerpt from the Hotel Yearbook 2010 is brought to you by :
Ecole hôtelière de LausanneThe Ecole hôtelière de Lausanne (EHL) is the co-publisher of The Hotel Yearbook. As the oldest Hotel School
in the world, EHL provides university education to students with talent and ambition, who are aiming for
careers at the forefront of the international hospitality industry. Dedicated to preparing tomorrow’s executives
to the highest possible level, EHL regularly adapts the contents of its three academic programs to reflect the
latest technologies and trends in the marketplace. Since its founding in 1893, the Ecole hôtelière de Lausanne
has developed more than 25’000 executives for the hospitality industry, providing it today with an invaluable
network of contacts for all the members of the EHL community. Some 1’800 students from over 90 different
countries are currently enjoying the unique and enriching environment of the Ecole hôtelière de Lausanne.
Boutique DESIGN New YorkBoutique DESIGN New York, a new hospitality interiors trade fair, will coincide with the 94-year-old International
Hotel/Motel & Restaurant Show (IH/M&RS). Designers, architects, purchasers and developers will join the hotel
owners/operators already attending IH/M&RS to view the best hospitality design offerings as well as explore a
model room, exciting trend pavilion and an uplifting illy® networking café.
Hospitality Financial and Technology Professionals (HFTP)HFTP provides first-class educational opportunities, research and publications to more than 4’800 members
around the world. Over the years, HFTP has grown into the global professional association for financial and
technology personnel working in hotels, clubs and other hospitality-related businesses.
Bench EventsBench Events host premier hotel investment conferences including the International Hotel Investment Forum ;
the Arabian Hotel Investment Conference and the Russia & CIS Hotel Investment Conference. Bench Event’s
sister company, JW Bench, is a benchmarking company that has launched the Conference Bench and the
Productivity Bench. An industry first, the Conference Bench, measures performance data for conference space
in hotels throughout Europe.
Cornell University School of Hotel AdministrationFounded in 1922, Cornell University’s School of Hotel Administration was the first collegiate program in
hospitality management. Today it is regarded as one of the world’s leaders in its field. The school’s highly
talented and motivated students learn from 60 full-time faculty members – all experts in their chosen disciplines,
and all dedicated to teaching, research and service. Learning takes place in state-of-the-art classrooms, in the
on-campus Statler hotel, and in varied industry settings around the world. The result: a supremely accomplished
alumni group-corporate executives and entrepreneurs who advance the industry and share their wisdom and
experience with our students and faculty.
HsyndicateWith an exclusive focus on global hospitality and tourism, Hsyndicate.org (the Hospitality Syndicate) provides
electronic news publication, syndication and distribution on behalf of some 750 organizations in the hospitality
vertical. Hsyndicate helps its members to reach highly targeted audience-segments in the exploding new-
media landscape within hospitality. With the central idea ‘ONE Industry, ONE Network’, Hsyndicate merges
historically fragmented industry intelligence into a single online information and knowledge resource serving
the information-needs of targeted audience-groups throughout the hospitality, travel & tourism industries…
serving professionals relying on Hsyndicate’s specific and context-relevant intelligence delivered to them when
they need it and how they need it.
WATGOver the course of the last six decades, WATG has become the world’s leading design consultant for the hospitality
industry. Having worked in 160 countries and territories across six continents, WATG has designed more great
hotels and resorts than any other firm on the planet. Many of WATG’s projects have become international
landmarks, renowned not only for their design and sense of place but also for their bottom-line success.
BRAnDInG
What is it exactly that a hotel brand represents ? As JAMES STUART, Managing Partner of THE BRAND COMPANY in Hong Kong, explains, it’s not about the name and the logo but has everything to do with the customer experience. The CEO, he argues, must become the Chief Brand Officer.
« Inside-out brands »
OK, so the first part of the logic goes something like this :
a brand is a hotel company’s most important competitive
advantage because it’s pretty much the only element of the
entire customer experience that cannot be copied. In this age
of relentless technological catch-up, leapfrog and product
innovation it’s nigh-on impossible to stay ahead of the
competition based on what you do. You may be the best value,
most efficient, best located, most « wired » and best equipped
hotel now, but someone round the corner is inevitably looking
at, and about to improve on, what you’re doing as we
speak (and if you’re in China – as I am – it was probably done
last week).
A brand, on the other hand, is related more to the way you
do things, and if this brand is built on the unique culture,
relationships within and heritage of the organization (as, in
part, it should), it cannot be copied, however hard technology
tries to invent some kind of culture-copying software. Culture
is too, well, human for that.
Now on to part two of the logic-flow : the simple definition
of a brand is « a perception » – what people think of what
you do and, more importantly, how they feel about you. So
what creates these feelings ? Everything you do that impacts
on the guest : your products, your services, your processes,
your people and the rest. That being the case, it seems
to follow that you first need to create a brand-centered
organization, effectively and consistently capable of delivering
a style of customer experiences that creates the desired guest
perceptions of who you are, what you do and the way you do
it (your brand).
Wow, so this brand stuff is really about shaping organizations
and the entire guest experience ?
Yes.
Cool, so I guess the hotel company CEO always plays the crucial
role in conceiving and implementing brand strategies, both
within the organization and to customers ? I mean, she or he is
always the driver of the brand, right ?
Er, well, often, not really…
And the brand strategy is pretty fundamental to a company’s
financial health in the long-term, so I guess that people like the
HR Director, the Finance Director… in fact, come to think of it,
all the departmental heads in a hotel group play a pivotal role is
establishing and nurturing the brand ?
Yes and no. Yes, it is crucial to long-term financial well-being.
No, you will usually find ownership of brand strategy and
implementation in hotel groups nestling in the office of the
Director of Sales & Marketing.
Well that doesn’t seem to make much sense… marketing’s only
one part of the mix. Our view exactly.
So why is it that so much brand-related activity seems to
focus on names, logos and advertising ? The answer can be
traced back several hundred years to when farmers stuck
hot « branding » irons onto their cattle, leaving a scar that
differentiated one owner’s cows from another’s. In the mid-
19th century, companies started using the term to describe
the symbol (subsequently « logo ») that differentiated their
products from others’.
All this was OK as a means of naming and packaging
differentiation : after all, many beers, toothpastes and cooking
oils were similar, so branding-as-packaging was fine. It was
often the key point of difference.
But then – just to make the whole branding thing a damn sight
more complex – in the latter decades of the 21st century, along
came the concept of corporate and service brands. Consumers
started caring about the values and ethics of the companies that
supplied the products they were buying. And as service brands
emerged, it became clear that the contents inside the can (the
organizational culture and the manner of dealing with customers)
was a huge point of differentiation. In other words, the packaging
became disproportionately less important as the distinctiveness
of the customer experience became much more so.
But the brand industry (and many of its clients) merrily carried
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on treating brands as packaging and making advertising
agencies and identity consultants very wealthy. It just seemed
too complex to change the brand-as-packaging method
into a brand-as-customer-experience approach, particularly
for communications and design specialists and marketing
managers, who were generally not well versed in the finer
points of Organizational Analytics and Change Management.
And the hospitality industry seems not to have escaped this
wrapping-paper approach to brand development. Think of a
great name, craft a sumptuous logo and create some exotic
advertising, and there you have it : your brand. All of which
leaves the brand strategy completely unconnected to the rest
of the organizational constructs and customer experiences.
But… a glimmer of hope is appearing as we head towards
the second decade of the 21st century, often in the guise
of smaller, newer hotels or hotel groups, who seem to be
recognizing the huge challenges but undeniable logic of a
brand-centered approach to organizational management.
In September 2009 we interviewed 30 entrepreneurial hoteliers
from across Asia. We wanted to know what it was they
were doing to create brands that were often punching above
their weight.
The chart you see here is a summary of one of the key outputs
of the research. The interviewees were asked what they felt
were the key drivers of brand perceptions among their guests.
As you’ll see, top of the pile came People and Products, while
bottom of the heap came Logos (and related designs) and
Names. Bear in mind these were relative ratings : we’re not
trying to suggest that the right name and logo is unimportant.
But these results turn traditional brand-thinking on its head :
brands are about what you do and the way you do it, not the
way you wrap it all up with a nice pretty ribbon.
So what else did these 30 brand pioneers have to say ?
Style more than standards
The industry needs to stop obsessing with standards and
become more focused on nurturing a unique way of operating
within the organization and a unique style of delivery to
customers. Of course brilliant basics are critically important.
If you don’t have them, no one will care what your brand
is all about, but they are simply points of entry that can be
copied by others. Many talked of the decades-old star rating
system as an albatross round the industry’s neck. Is it five-
star ? I want to build a four-star ! These ratings have become
meaningless nowadays anyway as many dream-mongering
hoteliers have stretched the credibility of the descriptions of
each rating beyond the point of no return. But in any event, the
rating systems never gave consumers clues about the nature
of the experience they would receive : i.e. their key points of
differentiation. Brands do.
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BRAnDInG
BRAnDInG
The brand and the organization are inseparable
« Our brand started with a clear idea of what and how we
wanted to be and was then woven into every part of the
fabric of the company. We’re first and foremost a culture as a
brand….it guides the way we do things internally which gives
us a great platform for expressing the brand consistently
and believably to our guests, » said one of the hoteliers we
talked to.
It’s about instilling a strong sense of brand from the word
go and holding true to the essential principles that bring the
brand to life, regardless of who is steering the ship at a given
point in time. We sense that a number of larger hotel groups
either lacked a strong brand culture at their outset, or did not
« bottle » and hold on to what made them special, different
and valuable in the first place. If you don’t know what it is that
makes you special, it’s much more likely that you’re going to
lose it, without realizing that you have.
The message from the group we spoke to ? For the customer
and the brand to be as one (in other words creating a strong,
lasting bond of trust), the organization and the brand first
needs to be so.
Brands, culture and service must share the same bed
How many hotel organizations actually align « people
processes » with « brand development » ? If your people are
at the heart of driving brand perceptions, isn’t this is critical ?
Surely the head of People Development (HR) should be one of
the most important brand drivers in the organization ? Stop
for a moment and consider to what extent the person or team
responsible for « human capital » in your organization is able
to help inspire and nurture a brand-centered organizational
culture. It’s the view of many of the interviewees that precious
few HR people understand and have the skills for such a
task. They’re not particularly brand-literate. That’s not to
criticize HR folks : it’s just that they’ve rarely been asked to get
involved in brand matters. It’s the responsibility of those who
lead organizations to make sure that those responsible for
« people » within an organization are just as responsible
for « brand ».
The majority of those we spoke to don’t believe many hotel
groups align any aspect of « people development » with their
brands effectively. Likewise, our own experience suggests that
large numbers of hotel groups rather blithely say that their
service people are their most important brand-builders, but
when you scratch the surface there’s precious little going on to
ensure that the unique qualities of the brand have found their
way to the mindsets, attitudes and behaviors of the service team.
A number of smaller, newer hotel groups are hiring people
based on behavioral principles that underpin the uniqueness of
the brand: in other words hiring more on attitude and mindset
than skills and experience – and often hiring from outside the
industry. Likewise for coaching and performance management
systems : these companies are nurturing and measuring styles
of behavior, not just tangible results. In the end, what these
companies are simply doing is trying to measure the way
in which every individual in the team is reflecting and
expressing the very thing that makes the organization special
and successful.
Why would you not want to be measuring and rewarding that ?
The CEO is the CBO (Chief Brand Officer)
David D’Alessandro, former Chairman and CEO of John
Hancock Financial Services, said in his book « Brand Warfare, »
« The safekeeping of the brand is the CEO’s responsibility.
If a company is going to be successful in the long-term, the
CEO’s first concern has to be the brand. Brand has to trump
even short-term financial questions, because all the financial
measures, everything from market capitalization to margins are
directly affected by the health of the brand. »
We hear CEOs from across many industries saying they are the
ultimate brand manager. Yet, in many cases, they are confusing
« brand » as a description or name for the organization with
« brand » as a definition of what the organization stands for
and what the nature of the relationship with customers is all
about. Far too many leaders are referring to the former, with
little clarity about what their brand is all about and even less
what their role is in shaping and building it.
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The simplest way of looking at the value of the hotel CEO’s
role in shaping and building the brand is to consider what
happens if he or she abdicates this responsibility. The result is
that it gives everyone else in the organization an excuse not
to be a brand builder : department heads, team leaders, new
recruits, part-timers. If the CEO isn’t living the brand, then why
should they ? It’s obviously not important to him or her, so why
bother ? And if the people across the entire organization are
not living the brand, then we would argue that you have no
brand at all. You simply have a commodity that will never allow
you to realize your financial potential.
Deliver on your promises
Karl Popper once said, « Those who promise us paradise on
earth never produced anything but hell. »
It’s not only the hospitality industry that makes extravagant
promises, but it’s up there with the best of them (or the
worst, depending on whether the promises are kept). Take
these statements from hotel groups : « When perfection is
perfected », « The utmost in Asian hospitality », « A unique
refuge of timeless elegance, unwavering taste, and unrivalled
care and courtesy that simply cannot be found elsewhere »,
« Guests discover more than just a new destination. They
discover a new way of seeing things. »
Well, OK, no one is actually promising paradise, but these are
some pretty weighty commitments. We picked these out as a
sample from an industry that is full of lavish pledges. There are
many more from around the world. If the brands making these
promises deliver on them, that’s fine, although one wonders
how some of them can ever be delivered.
Our thirty interviewees felt that the discrepancy between
promise and delivery was a major weakness in the hotel
industry as a whole and reinforces some of the views expressed
earlier about treating brands as packaging rather than as a
driver of all the organization does and the way it does it. If the
brand, the organization and the customer experience aren’t
interlocked, then it’s hardly surprising that promises made
through external communication are often left undelivered by
the reality of the experience.
Many of them felt that far too many marketing promises create
unreasonably high expectations in terms of quality (for example,
the ubiquitous « world class luxury »), yet they are ultimately
bland and indistinct, leading to a fuzziness in customers’ minds
about what kind of experience they will receive. Fuzziness and
powerful brands don’t make good bedfellows.
The bottom line is you cannot say one thing and do another,
be it over-promising or making a promise that’s impossible to
decipher. If promises are broken – as between friends – it’s a
long, hard and expensive road back to re-building trust again.
HOTELyearbook2010
BRAnDInG
2010 crystal ball-gazing
Emerging markets, led by China and India in terms of scale,
are increasingly driving the hospitality agenda. One of the
most refreshing things about new markets is that they don’t
so much have to unlearn things as create things for the first
time. Although hoteliers in these markets may not always be as
sophisticated as their counterparts in developed nations, they
come to the table armed with two invaluable assets.
First, a relentless drive to succeed.
Second, an insatiable to desire to learn and improve on what’s
gone before.
China is sometimes depicted as a nation hell-bent on growth.
That’s partly true. But my experience has revealed a very
different side to the world’s most populous nation : a desire
not just to learn, but to create. Contrary to much mainstream
rhetoric, China is not just a country of doers, but a nation with
a growing number of inventors.
So if you assess the hospitality opportunity in China and add
in to the mix the relentless drive and inventiveness of the
Chinese, what do you get ? A fast-growing, but potentially very
different kind of hotel industry and one that wants to build on
the successes and avoid the weaknesses of the current crop of
Western-based global players.
In the last year I have got to know two delightful Chinese hotel
entrepreneurs. One runs a single luxury hotel in Hangzhou ; the
other is the COO of a nationwide budget hotel group which has
grown to 600 properties in 7 years (last year was a « slow » year
according to the COO : they only opened 120 new properties).
I mention these two individuals as they are united by more than
hospitality and nationality. They both share a fervent belief in
and desire to build their brands from within their organizations.
They see « brand » as fundamental to everything they do and
the way they do it. It is central to what they see as their path to
success. They understand the logic of what one of them calls
« inside-out » branding and are determined that their brands
become a way of life for those who work in the organization as
well as their guests.
Yes, China is still full of copycat brands and piracy, but we
see an increasing level of smartness and sophistication in
planning and execution in the hospitality industry in the PRC,
creating brands that are far removed from the world of pirated
fakes. They may not all work perfectly, they may not all be as
consistent as their polished western competitors and things
may occasionally fall off the wall because the construction
schedule was mind-numbingly frantic. But they’re learning and
changing fast and their focus is increasingly on where their
points of difference and advantage are. More and more of
them are seeing that this lies with their brands and that their
brand engines lie deep within the soul of their organizations.
Many predictions of the expansion of Chinese, Indian and other
emerging markets-based companies into regional and global
markets seem to be based more on the enormous scale and
speed of growth of those companies in their home markets :
in other words if you’re big enough, fast enough and wealthy
enough, you’ll be successful beyond your own borders. But to
suggest that growth and success will eventuate based entirely
on those factors is a little disingenuous.
The other part of the tale is the agility and inventiveness of
hotel companies in these markets to learn from and improve on
existing hospitality models – fast.
I won’t predict any radical new fads or trends for 2010 (after
all, branding is about the long-term haul), but I would venture
to suggest that as we look back on 2010 in 2020, we’ll view
it as a time when the existing illogical, outmoded and
financially irresponsible approach towards brand development
adopted by many hotel groups finally started to be replaced as
the « way to do branding » by smaller, smarter, entrepreneurial
hotel groups – often conceived and grown in emerging
markets – that viewed their brands as more than contestants
in a beauty pageant.
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