Lindsey Ueberroth has been with Preferred Hotels & Resorts for more than 10 years—a family-owned business where her father, mother and brother all play major roles. During that time, the company has had a number of accomplishments, including strengthening its position as a global hospitality brand, helping its member hotels emerge from the global economic downturn and launching the iPrefer loyalty program. We caught up with Ueberroth to discuss these and other developments at the company.
1 HM: At Preferred’s global conference in November at The Inn at Spanish Bay, in Pebble Beach, Calif., you introduced plans to launch a new brand architecture to communicate a cleaner, simpler message to consumers. The new branding debuts this month. What was your overall thinking behind the adjustments, and what has been the member hotels’ overall reaction?
LU: The rationale was driven by evolving consumer expectations and changing travel trends. We realized that becoming more consumer-facing was vital to the future success of our company and our hotel partners worldwide. At a time when all the major chains are launching new brands to address specific demographics, Preferred is doing the reverse. As of March 4, 2015, we will move to one master brand, Preferred Hotels & Resorts, and all of our member hotels will be realigned into one of five collections. Luxury is very personal, and this new brand architecture makes it easier for consumers to find the independent hotel that will provide them with an upscale luxury experience in the fashion that meets their life and style preferences for that occasion, whether traveling for business or leisure.
The response to our strategic branding change has been overwhelmingly positive. The process of successfully executing a change of this magnitude requires a direct one-on-one conversation with each and every one of our 650 member hotels around the world. While this has been a major project for the team, we have heard resounding support for the new direction from the hoteliers. The new brand architecture is being well received and everyone is looking forward to the official launch, which will bring a new website, updated advertising and marketing, one common GDS code (PH) and multiple other benefits.
2 HM: We are just now at the tail end of Q1. What further initiatives or goals have you set for the company, and how is the rest of the year shaping up?
LU: The first quarter of the year has been strong for Preferred and our hotel partners. Looking ahead through the first half of the year, we have a pipeline of more than 50 hotels projected to sign by the middle of the year. Bookings remain strong, with double-digit percentage growth year over year and a projected 18 percent year-over-year growth in March 2015. Direct Connections is our strongest growth channel, with growth doubling month over month from between 5 and 6 percent in 2014 to nearly 15 percent in 2015. Over the past year, Preferred has formed strategic partnerships with online tour operators and wholesalers, such as GTA and BA Holidays, with whom dynamic pricing via Direct Connections benefits our hotels and the distributor. We are identifying other partners for 2015. Having a technology platform that provides versatility to our hotels in connectivity options is vital to the success of our brand. Finally, growth through our Internet Booking Engine, including mobile, is very strong with year-over-year growth in bookings.
Upon the successful launch of the rebranding on March 4, we will focus on extending our branded experiences to include Food & Wine, Adventure, Art & Culture, and Golf & Sporting, just to name a few. In addition, we will continue to expand our iPrefer guest loyalty program to include new benefits and new ways to reward and recognize our most loyal customer.
All signs point to this being an incredibly strong year for Preferred Hotels & Resorts.
3 HM: The large hotel operators—from Marriott International to Hilton Worldwide—are all creating soft brands to capture business from independent hotels. How does Preferred define a soft brand? What does Preferred offer independent hotels that the larger hotel companies cannot and, moreover, do you feel threatened at all by the big chains now playing in your space?
LU: Value and independence are key points of distinction for Preferred Hotels & Resorts. Today’s market has caused many of the owners with whom we speak to question the value equation of the more traditional brands. The Preferred model offers much greater flexibility, control and bottom-line value to hotel owners and management companies, striking a balance by providing contract terms that are more flexible, pricing that is more of a pay-for-performance model versus multiple fixed fees, and a strong global infrastructure comparable to what the major chains offer, featuring strategic sales, marketing, revenue management and distribution support. Our hotel partners appreciate the autonomy of being independent while not being charged excessively for their “natural demand.”
The fact that all of the major chains are launching their own soft brands is a validation of what Preferred Hotels & Resorts has represented for nearly 50 years. More than ever, today’s travelers want an authentic, personalized and unique lodging experience, which is exactly what truly independent hotels have always delivered. Under the Preferred brand umbrella, our company has always been a reliable, trusted seal of approval for travelers who are looking to book an independent hotel anywhere in the world. While the entry of these larger brands into this space does create more competition, it also highlights that it is the coming of age for the independent, driven by the consumer’s desire for authentic, unique experiences.
4 HM: The iPrefer loyalty program acts as the linchpin across Preferred Hotels & Resorts. It was launched a little over a year ago and now boasts well over 1 million members. What are you doing to make the program more robust, and how effective is it for your hotel owners?
LU: The program has greatly exceeded our expectations since its introduction as a points-based structure 18 months ago. Participating hotels, in particular, are very pleased with the results, as iPrefer is producing an average booking of more than $750, with guests staying longer and more often than before. Probably most exciting to our iPrefer properties are the ancillary bookings they are receiving. In fact, we found that 75 percent of iPrefer guests who were checking into a participating hotel for the first time had enrolled in the program at another hotel.
Currently, iPrefer provides meaningful instant on-property benefits such as free Internet (average of $15 per night at many properties), as well as priority check-in, check-out, and inclusive upgrades, and points toward free nights or cash back against the folio. The 57-percent growth in average monthly member enrollments is proof that the program is effective and valuable, and we are identifying ways to continue to evolve the model, which will include providing even richer instant benefits to complement the current points structure and partnering with other relevant travel organizations to expand the options available during the points-redemption process.
5 HM: The hotel industry is firing on all cylinders, with record demand and still muted supply. How does that position affect Preferred now and growth of its global business?
LU: Preferred Hotels & Resorts and its member hotels are ready for this year’s strong business demand driving a competitive marketplace. Consumers—whether traveling for business or leisure—are in control and well connected. We have equipped our hotels with an effective distribution platform to reach them while staying connected to corporate travel managers and leisure agents. It is promising to see corporate and group business rebounding and a stronger leisure travel movement than ever, with more people choosing to spend their free time traveling in pursuit of creating new memories and trying new experiences.
I am confident about our ability to grow the Preferred brand in all markets across the globe. We are placing a special focus on areas like China, Latin America and Africa, as well as select key cities in the U.S., such as San Francisco and Chicago. We continue to invest in our sales team around the globe and in areas like e-commerce and mobile to ensure we can drive more revenue to our member hotels.