The hospitality sector has always been competitive but with the rise of alternative accommodations, more and more brands being launched and rapidly changing consumer demands, the challenge of – and the need for - differentiation has intensified. But there isn’t a formula to ensure that your offerings stand out, with hospitality companies adopting different strategies to distinguish their brands in a crowded market.
Appeal to everyone
Speaking with Philip Lassman, vice president – head of development Northern Europe at Accor, he says that for Accor, differentiation starts with a wide diversity in brand offering, with the breadth of choice catering not just to the varied preferences of guests but also those of owners.
“You can't just say there’s only a choice of one or two or three because every hotel is different, every owner is different, every market is different and brand awareness in every country is different as well. You need to have that menu card of brands so the owners won’t be restricted in their choice. And that's what makes us very popular - we've got that benefit and there's a lot of white space between those brands.”
He adds: “We have mandated design brands and brands where you can be creative and free and flexible. And that that's really crucial because depending on the type of services that the brands will provide, there’s the opportunity to be a bit more creative in design but still offer the same quality – it’s just the look and feel that’s different.”
For example, while Novotel and Mercure both fall under the midscale category, their unique identities—Novotel’s focus on performing well for both business and leisure customers and Mercure’s local inspiration—make them distinct and appealing to specific guest profiles.
He also notes that having a breadth of brands is beneficial when it comes to investor decisions as having options means appealing to a wider range.
Or a more focused approach
In contrast, Hyatt has taken a more focused approach, with Anna Corkill, regional vice president – development UK & Ireland at Hyatt Hotels noting that while others pursue a growth-in-numbers approach, Hyatt chooses to be more selective.
“A unique selling point for us is that we’re not saturated. Growth is important but not to the point of saturation as we want to look after our existing owners. While other hotel brands have multiple properties in every city – and Hyatt does want hotels in every city – we don’t need tens and tens of hotels per city,” she says.
This selectiveness allows Hyatt to deliver a family feel and a sense of community, says Corkill.
“We’re not servicing so many hotels so we still have that family feel especially from a franchising point of view. We only started franchising in 2017 but we’ve grown with the owners and so we know what they want. We also still own some of our hotels so actually we know how an owner thinks. Looking at the support we give, it’s really concentrated on those hotels. We’d rather have two great owners in a city than have 20 satisfactory ones and that’s why a lot of our existing owners come back for more.”
In discipline, Lassman agrees. “While we have people coming to us because they like what we do, you can’t flex too far otherwise you ruin what you’ve created. So we have to maintain that discipline in our brands – when you don’t own bricks and you own brands, the value of the brand is more important than any one individual asset so sometimes you have to say no to some people.”
Separately, Corkill notes that all of Hyatt’s brands sit at an aspirational level which means that from a sales point of view, guests choosing to stay in a Hyatt know they’re getting a luxury level product.
Loyalty programs
But both Lassman and Corkill agree that building strong loyalty programs is crucial for sustaining differentiation in today’s market.
Lassman notes Accor’s strategy includes working with intermediaries and partners to build the visibility of brands to potential guests and then utilizing loyalty programs to ensure those guests are not just retained but also book directly in future.
“It’s about the relationship we have with all these intermediaries, how we complement each other and how we take advantage of our size and scale to provide unique benefits to our partners - our partnership with Booking.com is very strong because of our scale and that’s a huge advantage for our partners.”
He adds: “It’s not about trying to take these guys on and beating them. It’s about trying to work with them in a collaborative manner – we’re realistic enough to know we can’t change guest behaviour entirely on our own but over time, we can influence them through our loyalty programs. However they book, we own the stay – they’re staying in our beds and so it’s about building our understanding of them so their preference is to come directly to us. You have to be consistent in how you transform the guest experience and get that guest buying directly with you next time.”
Corkill agrees, stressing that when it comes to differentiation, it’s about working on loyalty programs as well as the experience given in every hotel.
“Our World of Hyatt loyalty program really works and our amount of loyalty members per hotel far outshines all our competitors. Through the loyalty program, we know our guests better and through technology, you can get to know more about their stays and habits. It’s about making sure that when guests come to our hotels, they have an experience that’s personalised so it’s not just a hotel stay.”
Corkill also adds that a greater emphasis on wellness and wellbeing globally means that incorporating wellness initiatives is key to delivering a memorable guest experience and standing out. Additionally, she stresses the importance of not adopting a one-size-fits-all approach to food & beverage and ensuring that hotels aren’t cookie cutter but have subtle touches which reflect the city in which they are located.
In today’s increasingly competitive hospitality market, Accor and Hyatt exemplify different yet successful approaches to differentiation, with both companies utilizing loyalty programs and unique guest experiences, among other strategies to ensure their brands have distinct identities that resonate with guests, owners and investors.