Is a chain’s size enough?
By Georges Panayotis, President & Founder of MKG Group & Hospitality ON
Growth is imperative in order for hotel groups to reach critical size to allow economies of scale, to justify their headquarters and technological investments, to strengthen brand awareness and develop strong negotiation power with all partners. "Big is beautiful" when the choice has been made to rival the other industry giants in order to exist on the hotel planet. But when does size become a handicap due to the weight and incoherencies of the network?
For several decades the determining role of hotel groups was to create standardized brands down to the last details in order to contrast with the joyous uncertainty of the supply of independent hoteliers. Reassurance was necessary and expected by customers whose basic needs for comfort, hygiene and efficiency were met with random responses. While these criteria are now considered standard due to a natural shift in the balance of things, standardization is now perceived as a lack of imagination. The development of boutique hotels in the city center relied on this desire for newness and surprise in a good way.
How can these two expectations be reconciled today? How can the security of a brand be combined with the personalization of supply and services? It is a real challenge that marketing teams are attacking more or less successfully. By generally abandoning growth through equity, hotel groups naturally rely on their partners who are owners and franchisees to concretize their vision of a locally inspired hotel industry. And this brings us back to the essential question of the added value of a brand in an economic model where online intermediaries control the biggest share of distribution channels.
We may observe a new redistribution of cards between hotel networks and operators on the field, if they return to the core of their trade. We must acknowledge that a kind of intellectual laziness had led generations of hoteliers to put keys to operations into the hands of the managers of the groups that managed and advised them and trained them to use their tools. They opened the door onto a vaster world than their little square of turf, justifying discipline and fees. It is precisely on this terrain that OTAs and other community networks are challenging them with considerable means and also technology that is now unquestionably in the lead.
Regulations must reestablish a more balanced contractual relationship between OTAs and hoteliers. It is indispensable for them to work on differentiation more vehemently, in terms of product and destination, the quality of their network, and even their customer relations. Thus, the comfort and strength that were once indispensable to brands, like their much-awaited new marketing plan, will lie at the heart of forthcoming negotiations with their franchisees. And that for the greater good of all.