What do you do if a branded hotel moves near your Independent hotel or inn? These 7 steps will ensure your property will continue to get your fair share of the business.
By Shawn A. Turner
REPORT FROM THE U.S.—Independent hoteliers need not panic if a branded hotel anchors itself nearby, according to owners and operators of independents properties.
These seven steps will ensure independents continue to get their fair share of demand by developing the Best Hotel Brand they can.
Step 1: Understand the competition
First, understand exactly what the situation is. Tactics will differ based on whether it’s a hard or soft brand that is encroaching on the independent, said Bashar Wali, principal and president of Provenance Hotels.
A hard brand likely would steal some business travel customers who are eager to earn loyalty points.
“If a branded hotel came literally next door? I would probably look a little more carefully at guest profiles,” Wali said. “I would try to ascertain what likelihood I would have in losing some of those (business traveler) road warriors. The points conversation comes up.”
The thinking changes somewhat if it’s a soft brand that moves in. Soft brands could end up siphoning away more demand for people who like points but are also after more of a unique experience.
Wali said independent operators must understand that independents are more nimble than brands—even soft brands—so the independent can more quickly adapt to the branded threat.
“What I have to do is figure out what is it you are offering and how can I be different from you?” Wali said. This could include partnering with local businesses and “shock-and-awe” packages as well as upping the ante on food-and-beverage offerings.
Step 2: Know who you are
Along those same lines, Larry Spelts, VP of business development at Charlestowne Hotels, said independents should not try to compete via imitation.
“Maintain that differentiation,” he said. “And if you don’t have that differentiation, create it and create it quickly. Being part of a chain is antithetical to being unique.”
Select-service competition will find it difficult to compete on an experiential basis with an independent, said Richard Musgrove, executive VP at Hotel Asset Value Enhancement.
“Frankly, it will be a very difficult task to adequately differentiate an independent select-service asset in that situation,” he said. “The reason being, the primary differentiators are service and people. And in a limited-service environment where people are less a part of it, amenities are limited, it’s just very difficult to (compete with the experience offered by an independent).”
He added: “The hard brand standards that bigger brands bring can really be a two-edged sword at times.”
Step 3: Protect your accounts
As Provenance’s Wali referenced, an independent’s customers will be under attack from the brands. This means customer retention will be of the utmost importance.
To prevent losing hotel points addicts, Musgrove suggested looking into a loyalty program designed for independent properties.
“Account protection will be a big focus,” Musgrove said. “How do you create unique experiences and provide the best service levels commensurate with the expectations of the guest?”
Step 4: Don’t compete on rates
Independent hoteliers should resist the temptation to slash rates in the face of new competition, sources said.
“If I am an independent hotel owner, I’m going to welcome a successful chain/flag competition coming into my market,” Spelts said. “It will potentially introduce some new travelers to my neighborhood. I’m confident enough that when they see my hotel, on their next visit, they are going to stay with me.”
Musgrove said some full-service properties hit customers with add-on fees. If an unbranded property operator understands this, the property could feature inclusive rates.
Sarah Bartlett, VP of revenue management at HotelAVE, said revenue managers should understand customers and competition. Revenue managers should have a seat at the table when it comes to performing strengths, weaknesses, opportunities and threats analysis as well as deciding which potential local businesses the hotel could partner with.
“It can help you drive rate,” she said.
Wali agreed rate-cutting isn’t the best option. It only takes one property to send a market’s rates into a tailspin. In this sense, brands can bring a level of rate sophistication to a market that might prevent such a thing from happening. “Giving away prices results in a race to the bottom,” he said.
Step 5: Keep your people happy
In addition to the prospect of losing customers, an independent hotelier also might lose employees, too, Musgrove said. Staff at the independent property might be wooed by the opportunities a new branded hotel could offer.
“As an independent, you need to be aware of that and how you can protect your own people as well,” he said. One option as it relates to employee retention might be increasing pay rates, he added.
A strong staff is essential to provide outstanding levels of customer service, Musgrove said.
“It comes back to people,” he said. “It’s always important in every hotel; you want the best people. But with an independent, it’s more important to have the best people at the property. As an independent, you don’t have the luxury of falling back on brand resources.”
Step 6: Elevate your hotel marketing
Charlestowne’s Spelts said independent operators should be sure their websites are optimized for search engines.
“If you haven’t been keeping your website up to date with the necessary content, then get a new website,” he said. “An updated website can be your lifeblood, and it should be already. If it’s not, then you definitely need to address it and have it optimized for as many organic searches as possible.”
The hotel marketing effort extends to executing well in order to generate positive online reviews, he said.
“That is the lifeblood of independent hotels competing next to chained flag competitors,” Spelts said. “Most travelers will look at reviews. If you have better reviews, you should win the day.”
Step 7: Service, service, service
At the end of the day, the best weapon independent operators have in their arsenal to use against brands is a commitment to customer service, sources said. Customers want to be treated like individuals, not data points.
“In my opinion, it all boils down to service, repeat customers and reputation,” Wali said.
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