How better branding can help midscale hotels standout

Over the past decade, there has been a shift in consumer preference at both ends of the value chain. It’s a trend found in sectors such as retail, and hospitality is no different as midscale hotel brands have found themselves squeezed on either side as guests opt for cheaper economy hotels when on functional trips or go for pricier options when seeking the pleasure of luxury.

At a recent meeting of Hospitality Investor’s Investor Council senior stakeholders stated that in order to compete and survive, these hotel assets would need to evolve to meet these changing consumer needs. Part of that evolution, some experts say, could be a closer look at branding.

James Bland, director at BVA BDRC notes that in 1995, the Hotel Guest Survey - which conducts research amongst consumers into hotel brands – identified and tracked around 40 brands. However, in 2022, the number of brands tracked by the survey stood at 165, with Bland acknowledging that even more brands exist than those currently tracked by the survey.

And therein lies the danger. “With so many brands and so much noise, there’s the risk of just dropping off the radar. In efforts to compete, there are hotels that try to appeal to every hotel guest and try to be everything to everybody but in the process, get muddled. Those are the ones that are going to lose appeal. And I see that manifesting most in the midscale,” he said.

Emma Driscoll, associate director, hotel capital markets at Savills notes that while many hotels put in a lot of work on the brand side and go into a lot of detail, the sheer number of brands can be a little bit confusing for the average hotel guest.

“There are a lot more brands now than we’ve ever had before and it can be a little harder for people booking hotels day-to-day to identify the variability between all the brands under one umbrella,” she said.

Tourism growth

Post-Covid, it’s even more important to grab the attention of hotel guests, secure their loyalty and therefore the hotel’s income. According to the Economist Intelligence Unit, although global tourism arrivals are expected to rise by 30% in 2023 following 60% growth in 2022, they will still remain below pre-pandemic levels. Hotels therefore will need to do more to secure custom from the lower numbers. And this is where branding can help.

Research by BVA BDRC in 2021 found that brands add value in the mind of a consumer, also finding that a mid-market hotel is able to achieve an uplift of £17.21 by properly utilising the power of branding.

However, Bland notes that while brands add value in the minds of guests, failing to properly match branding to what a hotel offers can be very damaging when it comes to securing guests and keeping a hold of their custom.

So how can midscale hotel assets use branding as an effective weapon in the battle to compete?

The first thing, Bland says, is to home in on the targeted customer and have a laser-like focus on engaging with that particular audience.

“It is being very clear about what is being offered and using brand to amplify it. For example, to appeal to a young demographic that wants something vibrant and lively, explore trendy brands and then really lean into the messages that the brand is putting out there. Trying to be everything to everyone means everything will be very average. It’s about finding the brand that really communicates that hotel and what it has to offer.”

Emotional connection

Joy Nazzari, director of branding and design agency DNCO says another way to use branding effectively is going beyond the product offer and building the emotional connection, making use of a narrative and storytelling.

“People buy into more than just the tick list of product attributes like comfortable beds and a good breakfast. When people make decisions about what hotel they should stay in, they primarily access the emotional side of their brain, not the analytical side.

However, she notes that very often, many hotel brands don’t go beyond showing the product.

“They show the product very beautifully but there’s no narrative or storytelling. For example, when people think of Disneyland, it’s not just a theme park. Disneyland describes its purpose as creating magical experiences and that’s the feeling people associate with them," she said.

"If a hotel looks past the product and focuses on a unique philosophy which taps into people’s emotions, that can create an increased market share.”

When looking to get the most value from branding, Bland further advises that there needs to be a clearer understanding of all the components that feed into the a hotel.

“Stakeholders know the cost of affiliation, the cost of refurbishing and operating to a brand standard. What perhaps is missing is insight into what exactly the brand actually adds," he said.

He explains: “When opening a new hotel, there may be two companies pitching with one saying its brand’s ADR is at £150 and the other stating ADR at £100. While an ADR of £150 may sound more attractive, choosing it may be the wrong choice if that brand is primarily located in a metropolitan location in an expensive part of the country, compared with the other one which may be in a cheaper area.”

In cases like that, he says it may not be the brand that driving the value but rather the location. “Then, it’s about understanding all the things that feed into the price, rather than just looking at the price and thinking it’s all because of the brand.”

He stresses that really understanding and considering all aspects could be a key tool when exploring how branding could be used to ensure survival.

Real value

Driscoll adds that the true value of a brand lies in their global distribution systems. However, she notes she has seen investors being swayed by factors — like final look and feel or just liking a couple of related brands under the same umbrella — other than what they should, which is the strength of the global booking systems and if the brand fits with the market they’re looking at. 

“Does that brand deliver to that market already? Can they deliver to that market? What’s the loyalty base like?”

Finally, Nazzari says that to ensure a brand really adds value, it’s important it has a strong point of difference from others, in order to reduce substitutability.

“Creating a brand that can’t be substituted for another strongly supports a higher pricing model and that immediately drops down to the bottom line. Take many of the major hotel chains, you could swap their logos around and most people wouldn’t even know the difference. Really developing brand is an opportunity to break out from that sameness and have something unique.

"Spending and investing on a unique brand personality is a much smaller step to creating strong connections with people compared to spending heavily on improving the product.”