Things you need to consider when choosing to work with a hotel brand
By Hugh Taylor, Chief Executive at Michels & Taylor
With brands growing ever more dominant in the European hotel market, we talk to hotel management expert Hugh Taylor from Michels & Taylor about creating a hotel brand contract which lasts.
We talked to Hugh Taylor OBE about what to consider when choosing to work with a hotel brand.
1. Please explain a little about yourself and Michels & Taylor
I have been in the industry for over 25 years, starting out as a marketer, and have gone from being a Vice President at Hilton to Chief Executive of Michels & Taylor.
I was awarded an OBE for services to tourism and hospitality in 2008, and have previously been Chairman of the Hotel Marketing Association, Chairman of VisitEngland and Director of VisitBritain which were all fantastic experiences and ones I am very proud of.
I left the Hilton Group to head up an asset management company that oversaw £1.5bn of hotel assets for a consortium of owners in 2008. I spent some time sourcing my team, getting in the very best specialists from different hotel areas to create a senior group of executives who would become the core of Michels & Taylor after our MBO of the company in 2010.
The aim of Michels & Taylor is to offer a dedicated team of hotel specialists who can give the best advice and management support to hotel owners with the very highest level of service and knowledge. There are four core services we offer hotel owners: Asset management, hotel management, consultancy and brand negotiation.
2. What are the different things to consider from a hotel owner's perspective when working with a brand?
Firstly, think whether it is a sensible business move. Think whether the hotel will do better with a brand, what are the benefits to being associated with the brand.
Brands can bring increased revenue, new markets, loyalty programmes and new customers. But they also bring costs and whilst they're a great solution for many hotels, they don't always makes sense when you overlay the cost commitments they bring to the hotel. Michels & Taylor will analyse the business both with a brand and without and will help the owner make an informed decision on whether working with a brand will benefit their hotel.
3. Why is selecting the right brand so important?
Selecting the right brand for your hotel is important for many reasons. You want to pick a brand which will reflect the hotel in the right manner to the market.
It's a huge commitment and must be the right decision for the business. Signing a long term management or franchise agreement is the single most important document an owner will commit to, so it has to be right. Uniting with a brand defines the hotel and its core values. The guests care about the brand, so selecting the right one is crucial to ensure the right market is reached and the hotel is reflected accordingly.
Contracts with brands can be very long and the hotel will suffer if the contract isn't right for the business so it is essential to ensure the contract and chosen brand reflect well on the hotel.
4. What could go wrong?
Generally they don't, but when they do, it's normally in a number of areas. The relationship between the owner and brand breaks down because the trust has gone between the parties, there is a misalignment and often a fundamental difference of opinion on trading performance – brand related revenue not high enough, brand related costs too high, and so on.
In the last year, Michels & Taylor have extracted clients from 18 hotels out of poor brand contracts and through asset management have ensured owners are back in control of their hotels and are partnered with a hotel brand which is beneficial to the hotel and the owner. Often, however, these are legacy deals where the contracts were signed some years ago when the economic climate and industry structure was quite different and we certainly don't see anything like as many going wrong today.
5. From a hotel owner's point of view, why would you select to work with a hotel brand rather than work independently?
There are many things a hotel brand can offer a hotel owner which the hotel cannot gain from trading independently. A hotel brand can offer a loyalty programme of much more power and reach than an independent hotel can deliver themselves. Distribution is stronger with additional exposure to new markets, which generally delivers an increase in revenue and subsequent profits.
It can tap into new markets and can raise the hotels profile. Provided the branding is chosen well, then it effectively positions it in the right market and associates the hotel with others of a similar standing and profile.
6. Are the main big brands always the ones to go for?
The biggest brands are not always the best, but it really depends on each individual case. A large amount of the decision depends on what the owners of the hotel want and what the market needs.
Big metropolitan locations can benefit from a big brand but niche alternative brands can also offer high levels of differentiation. There are arguments for each, but, as I've already said. it really does come down to what the hotel owner wants for their hotel.
7. What advice can you offer to a hotel owner considering working with a hotel brand?
Make sure you have all the facts and know exactly what you're signing up to before committing. Signing a contract which hasn't been optimised for the owner can have a significant effect on a business, and as contracts are often long in duration, they need to be well considered.
Michels & Taylor are one of Europe's leading hotel asset management, consultancy and hotel management companies with an impressive client portfolio. Hugh Taylor OBE heads up Michels & Taylor along with his partner Sir David Michels and has over 25 years' experience in the hotel and leisure industries.