Wyndham, Choice, Accor and Carlson CEOs debate branding

BERLIN—Eric Danziger, president and CEO of Wyndham Hotel Group, summed up the feelings of most here at the International Hotel Investment Forum when he lamented the current state of the industry.

“It’s less bad, but still bad—and I think that’s pretty sad, obviously, that we celebrate ‘less bad,’” Danziger said. “As soon as we can start seeing some positive signs instead of less loss, it’s just going to be wonderful.”

Hubert Joly, CEO of Carlson Hotels, immediately increased his popularity on stage when he said that he’s now “sitting on a pile of cash.” Joly, whose company recently announced its “Ambition 2015” plan for future expansion, said they feel the crisis is over.

“This is the time to invest,” Joly said. “It’s a cyclical industry, so it’s better to invest at the bottom of the market than at the top of the market.”

Stephen P. Joyce, president and CEO of Choice Hotels International, said while he wasn’t sitting on the proverbial pile of cash today, he “can get some.” And he indicated that Choice is in the market to buy one or more brands.

“We’re very interested, obviously, in rounding out our portfolio,” Joyce said. “We make no secret that we’d like to [buy] a full-service brand. It would be great if we had one with a little bit of international expansion, as well. We are looking.”

Joyce explained that, coming out of a tough year, it might even make sense for some companies to trade brands, and that could be beneficial for both partners.

Branding brands
There was some disagreement about what really makes a brand a brand, and how to properly create a brand that has consistency across markets yet retains some semblance of place and region, especially internationally.

Joly said they try to start with asking, ‘What is the essence of the brand?’

“So for Radisson, we’ve said it’s vibrant, it’s contemporary, it’s engaging—and that should resonate throughout all of the guest experience. So, it should resonate in the style of the rooms, in the style of the lobby, in the service attributes,” he said.

Joly said it is a consumer-led approach, focused on the guests and the developer and other stakeholders.

Danziger said brands should be like rubber bands and should stretch to a point without breaking.

“What I’m against is that for years, brands typically sit there and say, ‘Here’s a new brand standard. Let’s push this thing out.’ Many times, it’s done on research, many times it’s done because a competitor does it. … I think a brand should only develop a standard that that segment and that brand’s customer values, appreciates, wants and is willing to pay for. If it isn’t that, it ought not to be a brand standard.”

Danziger noted that he’s never met a customer who stayed in a hotel because it did or did not have crown molding in the room.

“To make a standard that isn’t valued by the customer is a burden on the developer,” he said. “I do think that a brand should have some flavor, some feeling … but I think they ought to be done in a much more reasonable [way] that the industry has perhaps done in the past.”

Gabriele Burgio, chairman and CEO of NH Hoteles, cautioned that brand standards might not be that important to guests—in his company’s surveys, interior design placed 14th on a list of most important features of a hotel, far behind service and sustainable practices.

Gilles Pelisson, chairman and CEO of Accor, also stressed that different segments have different amounts of flexibility.

“We try to keep the room, especially in the economy segment, very standardized. … The more you go to midscale and upscale, you try of course to have an international product, which will accommodate international [travelers] in a few key cities. When you go to secondary cities in every country of the world, then you go more local because the domestic market is more present,” Pelisson said.

Joyce said consumers are confused by the plethora of brands in the marketplace, and it is only when a company has significant distribution that consumers get some clarity.

“But if you’re in the conversion business, your issue becomes the support and service levels in the hotel, the basics … and then some things that define the property in the consumer’s mind,” Joyce said.
Joyce said over the past decade, consumers in the U.S. are demanding less stringent consistency, as long as service levels are there. He explained that some regionalism is a more desired trait.

“We’re trying to be appealing to the franchisor, from a value proposition of what are we providing versus what they’re getting, and then secondly to put a proposition in place for the customer that is reasonably consistent across a number of products that may not be physically [consistent],” he said.

Staying loyal
Danziger surmised that most consumers have three or four loyalty cards in their pocket, but large hotel brands have to play the loyalty game because consumers expect it.

“I don’t expect that we’re going to be the only card in the wallet, but I do want to be one of the cards,” Danziger said.

“I do think people carry cards, but the reality is most frequent travelers tend to favor a program. The points players will go out of their way to stay in a hotel that fits their needs location-wise … but within the brands they’re working with,” said Joyce. “If they have four to five cards, one of those cards is getting 60 to 70 percent of the business.”

Several CEOs threw out numbers of how many loyalty program members they had signed or will sign, but Dangizer reminded the audience that the key is active loyalty members.

“The goal of a true loyalty program ought not to be how many people you can sign up, it’s true usage. I think the measurement is about ‘what is an active member?’ … It matters who is aligned with you, who is connected with you and is a true user,” Danziger said.

Joly said that loyalty programs have evolved, and successful hotels will maintain a dialogue with these frequent customers and market to them.“The most sophisticated programs do a very good job of mining the data and providing opportunities to guests, and therefore, to the owners,” he said.

Still a luxury backlash?
Danziger said there still is an issue with the “optics” of the luxury segment. He said CEOs are afraid of appearing in The Wall Street Journal stories about companies that are holding meetings in high-end properties.

“Public companies disclosing they had a meeting or shareholders meeting at a Ritz-Carlton or Four Seasons—they don’t get to get value for saying, ‘hey, we got a great rate from them for $169.’ The headline is, ‘XYZ stays at Four Seasons,’” Danziger said.

But Joyce argued the phenomenon is mostly a U.S. one.

“In Asia, there is no backlash against luxury,” Joyce said. “As a matter of fact, there’s stronger demand than ever.”

Joyce said he feels the rest of the globe will lead the U.S. back to a more reasonable conversation about how meetings at luxury properties make sense in some business and incentive settings.