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Broken bonds, dying brands

Vijay Verghese, Editor, Smart Travel AsiaHotel behemoths are slowly moving further away from their customers who are offered a fiction of choice and cut-rate guarantees.

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by Vijay Verghese/ Editor

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AS HOTEL companies consolidate and morph into behemoths the oft trumpeted refrain is that travellers now enjoy vast choice and wondrous cost efficiencies due to economies of scale – all in one place. No more hair-pulling searches. Find all the hotels you could possibly consider, on one site, under one flag. If you think that’s too good to be true, you’re right. Mega hotel groups are the fairy godmothers of much cheerful gobbledegook.

Hotels are moving further away from their customers and media that might help influence them. They are becoming less competitive and more expensive despite the veneer of choice and online pricing gimmicks for the benefit of customers, all dangling the lure of ‘best price guarantees’.

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It has been a steady process of disengagement, now accelerated by accountants the world over feverishly consolidating back end systems, reservations, and accounting. With huge acquisition costs, investor focus has corrosively moved to cost cutting. This has often been at the expense of the marque.

{brands, groomed and built over generations with loyal followings are seeing their hard-earned value frittered away overnight by finance pooh-bahs...

On hotel sales and marketing titles the rather forlorn ‘and marketing’ been tossed out of the window, a needless intellectual burden and expense. The new giants are less interested in philosophical positioning than on quick results, clicks and bookings. The result has been a serious atrophy of once-prized brands that have disappeared in the online click storm where bookings rule.

It is axiomatic that a prized brand will earn more than a less desirable product. Yet, brands, groomed and built over generations with loyal followings are seeing their hard-earned value frittered away overnight by finance pooh-bahs with big pens but small vision. Trapped in the monster merger menagerie, many hotels have lost their lustre and ability to attract premium travellers. This is as much a problem for befuddled peripatetics trying to make a smart choice as it is for hotel owners seeking room yield.

The common argument trundled out by mega-corporations is that everyone knows their logo. This does not hold water. Travellers today focus on highly individualistic experiences offered by ‘child’ brands rather than the marble and gloss promise of the ‘parent’ brand with a recognisable logo. Many disregard logos altogether and simply pick the best price.

To use a metaphor, let’s say I want to marry one of the Marriott daughters because I trust the Marriott family name. So what’s the problem? Everyone knows Marriott. The problem is Mr and Mrs Marriott have several hundred daughters, each with a different personality and character depending on design and location. One is lively, the other sedate, one is classic, the other contemporary. Which one to pick? This is the classic traveller's dilemma. And this is where individual hotels suffer as their unique personality is sidelined to make way for corporate guff.

A travellers’ takeaway is based entirely on his or her experience with a specific hotel (the location, bed, staff, food, décor, saucy waitress, loquacious bartender, and service), NOT the logo. Again, despite carrying the same family DNA, the Park Hyatt Saigon is a far cry from the Park Hyatt Seoul. Mandarin Oriental Hong Kong is a hushed black marble classic while the Mandarin Oriental Guangzhou is a timber-floored urban retreat with mossy flourishes and the MO Taipei a Cinderella castle. In China, the scramble for properties as hotel chains expand (often with highly unrealistic targets) has resulted in several poor selections that do not stand the test of time. Knowing the logo is not enough. A traveller needs to see and ‘feel’ the hotel’s personality. It is often said, and rightly, that luxury is a feeling, an emotion – not an algorithm. No matter how clever, formulae don’t feel. They compute averages.

What mergers have done is centralise negotiating power in the hands of huge corporate entities that are trying to reverse the downward price squeeze by wholesalers (who want better margins for their multi-item packages for travel retailers). And they are working hard, if unsuccessfully, to eliminate the online travel agent (OTA) middleman. That’s business. Falling room prices are a fiction unless travel suddenly drops.

And the press is slowly finding its direct relationship with hotels disrupted by the emergence of large public relations companies that are emerging as the new content brokers placed squarely in the middle of what was until now a simple and friendly transaction. The problem here is twofold. Firstly, most self-respecting papers do not run readymade PR content fawning over some hotel or the other. Much of this autopilot content (albeit often well produced) is disregarded by quality media though some is used by cash-strapped bloggers. Slapdash press releases by ingénues sitting halfway across the globe are instantly binned. Quality media channels prefer to create original content with angles that suit their audiences.

Secondly, a PR concern based in London or New York (for an Asian property say) further distances local media, which in the past simply called a friend at X hotel (or strolled across) to get accurate and timely information. Now there’s a long wait even for simple queries. At the end of the day a diluted relationship with a product results in diminished or curtailed coverage by the media for the simple reason that X hotel is out of sight and out of mind.

Mergers do offer one potential benefit to travellers. With greater geographical spread for hotel companies to wheel out ever-bigger consolidated loyalty programmes, customers can collect a great many points – but only if they stay within the family, which means forking out more and staying away from steep discounts elsewhere. It's a cycle out of which there is currently no escape unless, as with some more intrepid, people step off the grid to sample independent offerings. More and more people are making that choice. And they should continue to do so. It is the only available lever to counter the stranglehold of monopolies.

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