Behind the big name brands

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As consumers, we tend to accept the brand propositions of hotel chains without question. That's the idea, of course. Fly into more or less any major foreign city without a booking (or browse the Internet for hotels in an unfamiliar destination) and you will find many of the same comfortingly familiar hotel logos that you do in the Middle East. Hilton, InterContinental, Sheraton, Holiday Inn, Novotel and the scores of other multinational chains and brands await you with the promise of a consistent lodging experience of a certain standard. The result of untold advertising budgets designed to keep such names ‘top of mind' together with a powerful associated ‘lifestyle proposition' rooted deep at some subliminal level of our consciousness, this slick reassurance leads us almost inevitably to a purchase decision (at least for the first night).

A little analysis would perhaps make us think twice before booking sheep-like into the next internationally- branded hotel. It's not that the brand promise ever really lets us down; because the chains do in general terms maintain consistent standards of facilities and services. It's just that we're not talking about some product churned out in thousands or millions from a factory. You can take a five-star hotel brand and logically compare it to a Rolls-Royce car or a Rolex watch, but cars and watches are in fact a much more consistent type of product than a hotel. This is not necessarily true of hotels.

Particularly in our region, luxury hotels are generally owned by one party and operated under management contract by an international or regional chain. The decisions regarding the architecture and interior FF&E (furniture, fittings and equipment) are generally made by executives working for the owner, not the operator. While hotel chains' technical services contracts do provide guidelines as to equipment standards, they are generally focussed on issues such as conformity with international fire safety and health standards, rather than aesthetic questions. In short, whether they are branded a One & Only or a Shangri-La, local hotels are really monuments to their owners, not to the operators.

There are of course, exceptions to this rule, and examples of hotels that are conceived much more like outlets of the McDonald's hamburger chain. Increasingly, as readers of HME will be aware, the Middle East will in years to come see the opening of multiple outlets of mid-market and budget chains that depend for their commercial viability on being built strictly to formula. Upcoming regional units of the three-star Express by Holiday Inn brand, for example, will all be built from scratch on ‘green field' sites and employ one of half a dozen architectural concepts, with no scope for variations. Only by following this development formula, which includes selection of sites that cost less than an agreed land price ceiling, can the brand's ambitious return on investment targets be met.

The extension of Middle East hotel chain ‘brand stables' into the midmarket is also provoking interesting challenges with respect to brand and sub-brand differentiation. The largest brand stables are well-known, with the region's ‘Big 4' international management companies - Inter- Continental Hotels Group, Starwood, Marriott and Accor - all boasting multiple brands, in all cases, resulting from historic take-overs, mergers and acquisitions at the global level.

Some minor sub-brands are being used as ‘alternatives' to the major sub-brands. For example, when Accor has a conflict of interests in introducing a new Sofitel or Novotel in a certain destination (typically when a management contract specifies a geographical limit in which no other properties of the same brand may be opened), it often proposes that the owner in question consider using the Mercure or Grand Mercure brands. These, while technically each offering a different lifestyle proposition, can effectively substitute Accor's main five- or four-star brands without loss of competitiveness in the destination. A similar policy has historically been applied on occasion by IHG when it has opened a Crowne Plaza near an InterContinental property.

In the future Middle East hotel market, it seems that the simple use of ‘alternative' brands will not cut the mustard. Whereas in the past the five-star chains have been happy in some cases to put their brands on what were effectively four-star properties, nowadays they are reluctant to dilute their five-star brands in this way. Hence the creation of a ‘new generation' of four-star brands, including a reinvented Novotel formula, Courtyard by Marriott and Four Points by Sheraton. The latter's slogan is: "Where value never means compromise. The full service hotel for people who want to pay less, not get less." The trick is for local operators of hotels designed by local owners, to translate such formulae into something meaningful in terms of pricing, service and amenity levels on the ground. That's typically a matter of persuading ambitious local owners not to go ‘over the top' in providing luxurious amenities, in a hotel that is, at the end of the day, supposed to hold something back.

The fact that brands and indeed entire chains exchange hands at an international level (think of Regent, Ramada and others) should only serve to underline how their differentiation is mostly about marketing, and far less a matter of real differences in product and service. Starwood's recent purchase of Le Meridien, for example, has meant that in many cities of our region, this huge company operates both Sheraton and Le Meridien hotels in competition.

There is much more to a brand than meets the eye. The wise consumer will understand that each hotel is in reality unique, even though it may be affiliated with a chain, and that a global slogan inevitably gets translated into a local experience, determined by a hotel's location, market orientation and market expectations. It is worth delving into web site information and seeking independent reviews that can highlight these factors.

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