Is there really value in luxury hospitality brands for the consumer?
As a hotel aficionado and frequent resident at the world’s best hotels, my impression is that today’s consumer is less loyal to a luxury hospitality brand than an attractive hotel property in a desirable location run by genuinely friendly and warmhearted people who are in the experience-providing business. With my QA hat on, being able to enjoy an authentic luxury experience takes both hardware and software, facilities and soft skills, to be on a high level, as opposed to just one of them.
There are lots of definitions of the widely used word “brand.” Here’s a definition that tries to summarize the essentials:
A “brand” is a name given to a product or service that helps people identify it, distinguishes itself from others in the market, while ideally enabling it to charge a (higher) premium. The cornerstones of a brand are trust and credibility.
The paramount goal of any hospitality brand is to stir consumers’ interest, convert them into clients, impress them during the stay, and turn them into regulars who ideally spread the word.
Branding is especially important in the luxury sector with only a few of the world’s top hotels being totally unbranded these days. Consumer belief is that a well-known lodging brand serves at least as a downside protection against disastrous hotel experiences. But does branding guarantee a pleasant or even extraordinary experience?
Let’s take a closer look at the likes of Aman, Belmond, Four Seasons, Mandarin Oriental, Park Hyatt, Ritz-Carlton, Raffles, Rosewood, Six Senses and St. Regis. Do they qualify as worldwide brands?
1. Established Business
They all have been around for decades. You don’t build a business with brand reputation overnight. It takes years of consistent work to become a brand
Brands are identifiable and recognizable. The sheer number of hotels located across the globe coupled with good marketing and (social) media presence lead to a high perceived value for the customer target group. The top hotel brands take advantage of their elevated status by leveraging their offerings and expanding rapidly across the globe. Rosewood and Four Seasons appear to be the most active in Europe these days. In Asia and the Middle East, most markets are heavily contested and in some cases even dominated by the usual players: Four Seasons, Mandarin Oriental, Park Hyatt, Raffles, Ritz-Carlton, Rosewood and St. Regis.
2. Premium Offering
Clearly, these luxury hotel operators are so well-known that they are in a position to charge premium prices for lodging and residential property. The top brands typically command even higher pricing power than co-brandings such as The Leading Hotels of the World, in part attributable to their huge loyalty programs with millions of members.
3. Consistency
Luxury hospitality brands can obviously not be consistent in the external appearance of their real estate, just as on the inside where most strive to blend regional elements with the brand’s heritage.
Within a brand’s property portfolio, typically not all the hotels are consistent when it comes to the state of the facilities. One can easily tell the difference between tired-looking, outdated properties in need of renovation and brand-new ones. As a guest relying on just one brand, you could easily become quite disappointed when certain properties don’t meet the high expectations developed during previous stays at the brand’s newer hotels. Typically, the above brands have their top properties in the hugely competitive Asian markets and Europe, where we have recently seen a number of bold redevelopments rekindling old-world charm by bringing prestigious addresses back to their former glory.
The human interaction between guest and hotel employee, i.e. service quality and emotional intelligence or staff engagement, could in theory be consistent, ideally with both components on a high level, if the human factor were not coupled with an arguably fundamentally flawed standardized bookkeeping approach to assess quality. Such a consistency appears to be a long shot.
4. Differentiation
Do lodging brands really differentiate, like BMW distinguishes from Mercedes?
The only differentiating brand that comes to mind is Aman. Aman, only established in 1988, has managed to be perceived as really special and different. Key features include boutique-style resorts and hotels with only about 20 to 80 rooms (except the two camps with 10 each), leading to a (more) personalized guest experience, minimalist-designed, larg(er) rooms for more privacy, and, as a result, the ability to command premium prices. Aman is not for everyone. Aman customers are less price-sensitive and instead more value-conscious. Aman has managed to build its own very loyal fan base, despite the absence and incentive of a commercial loyalty program.
Six Senses has always had an environmentally friendly approach with an emphasis on wellness. Not really unique anymore, but they are still being given credit for being a first mover.
St. Regis has always been proud of their full butler service approach, providing butler service not only to suites and villas but also to ordinary rooms. The question is, how relevant is this to the guest? Or is it rather Marriott’s massive loyalty program Bonvoy that draws people in the first place?
These days, there is a whole host of (luxury) hotel brands vying for business. Frankly, there is next to zero differentiation between almost all of the (luxury) hotel brands. If there weren’t a sign by the entrance, no-one would be able to guess the brand’s name. It does make sense to the owner of the property though, being able to replace operators without too much effort.
General Managers would happily tell you that their staff makes all the difference. How so? Since all GMs tells me that, whom should I believe? Or, if every hotel’s staff makes the difference, what would it be worth for differentiation? Quite interestingly, I can tell from my experience of having visited more than 400 hotels in Europe while staying in about 100 of them in the past 2.5 years, that the service quality has indeed been quite similar across brands, but unfortunately not similarly great.
In other words, the human interaction of which service quality is a component, is currently not a differentiating feature. So, there is a real opportunity to shine above mediocrity in case a brand aspires to truly exceed and differentiate.
I read many articles in which “hospitality experts” demand hotels strive constantly to “wow” their guests. I would actually be more than satisfied if they nailed the basics. Sometimes, trying too hard can be counterproductive.
5. Brand Promise
Luxury hotel brands stand for quality and superior guest-experience.
My impression is that hotel brands are first and foremost interested in maximizing profit. If quality were what many of them valued most, why would they operate hotels with hundreds of rooms? The more, the better? Not really: The bigger, the higher the potential profit and the less likely to provide the privacy and personalization that are key elements in a superior guest experience. Can’t have it all.
Brands need to authentically and credibly stand for something that the brand’s target clientele can easily understand, relate to and like. Sounds simple, right? Actually, not that simple.
Conclusion
The industry constantly publishes surveys about the best hotels and hospitality brands. Does it make sense? Not so much for the reader, as the results are not at all representative and actually rather random; however, they appear to be a great marketing measure for the respective publishing house as well as the hotels and brands that top such lists.
From my perspective, in the absence of differentiation, the only logical way to arrange a ranking of the best luxury hotel brands is by product consistency which includes both the easier-to-assess hardware and the harder-to-gauge software components. The general issue with measuring soft skills is that ideally they need to be evaluated more frequently than facilities in order to come up with a representative and resilient result, free of coincidences.
Applying this approach to today’s luxury hotel scene, Aman would have the ideal prerequisite to top such a ranking, without implying that they are close to perfection.
High-end operators that manage a smaller number of hotels, such as Bulgari, One&Only, and Oetker would need to be assessed separately as it should be easier to achieve consistency with a smaller number of hotels or resorts.
At the end of the day, from a consumer’s point of view, it all comes down to the individual hotel and not so much which company manages it. Certain brands are known for focusing on the luxury sector and are without doubt a good indicator when looking for an extraordinary hotel, but due to lack of consistency you should not rest assured that you will be guaranteed a true luxury experience.
To answer the title question of this article, yes, there is value to the consumer, albeit not nearly as much as the hotel brands wish for. Product differentiation and consistency are paramount but apparently very hard to achieve for luxury hotel brands.
Consumers are not loyal to hospitality brands so much as to certain hotels and loyalty programs.
