Accor and Hyatt announced major upscale brand launches this week, demonstrating the increasing focus on branding in upmarket hotels.
But the flood of names arriving in the market has more to do with badging than the creation of long-term brand value which is seen in other industries.
Hyatt officially opened its first Andaz property on Monday, the Andaz Liverpool Street in London, formerly the Great Eastern. It is described as fusing a five-star offering with a boutique, design driven product. The brand ethos is “casual luxury”.
Accor, meanwhile, yesterday said that it wants to elevate Sofitel into the premium end of the international luxury hotel market. It is creating two sister brands: Sofitel Legend, which is a collection of unique properties; and So by Sofitel, a “creative, edgy and stylish offer”.
Accor has created a separate business unit to look after Sofitel, headed by Robert Gaymer-Jones as COO. He joins from Marriott International where he had been area vice president for UK & Ireland.
PricewaterhouseCoopers earlier this month said that the US had seen 34 hotel brand launches since 2005, with the luxury segment accounting for 18 of them. This was the largest number of luxury brand introductions in a three-year period since 1982.
Interbrands’s annual publication Best Global Brands ranks what it considers is the most valuable 100 brands in the world: not one hotel company is on the list. Hospitality brands are present in the 2007 survey (published this summer), notably the fast food giants such as McDonald’s, Pizza Hut and KFC and so too is Starbucks. The only travel industry brand is Hertz.
Certainly one factor why hotel brands do not feature is that branded hotel rooms are still primarily sold to business guests. Citigroup, for example, estimate that 80% of hotel industry profits come from corporate travel.
This varies by segment with typically the more upscale, the more business-to-business the hotel becomes. Nonetheless, the historic impact has been to diminish the direct role of the brand in favour of direct sales where what matters is the corporate rate negotiation.
As the hotel industry evolves, however, and a distinction becomes ever more apparent between operations and brand, the role of the brand can only become more important.