November 15, 2013
In August 2013 Virtuoso made headlines across the tourism industry after ratifying what has become a global trend: ‘personalised travel is the new luxury’. Whereas there are still tourists looking for the ‘all inclusive’ package holidays, there is clearly a move away from classic, amenity-heavy chain hotels, to smaller and more intimate properties, according to an article in the South China Morning Post in April 2013.
Moreover, a hotel opinion survey carried by Burba Hotel Network in April 2012 about the preferences of over 1,000 hotel guests around the world, discovered that brands are less relevant than expected. The first consideration for travellers (61%) was location, followed by price (18%), brand affiliation (17%) and finally, amenities (5%).
As hotel and resort owners recognise this changing nature of guests and the opportunities it creates, they increasingly consider to develop and invest in their own brand, maintain their independence and add a local flavour. This is also in line with their objective of enhancing the value of their real estate asset.
It is clear, therefore, that the hospitality industry is witnessing a shift in the preferences of discerning business and leisure travellers, as they increasingly seek a more authentic and individual travel experience.
In the past, hotel and resort owners have largely relied on acquiring a brand and available management models to differentiate their properties and build their reputation. While the benefits are well-known (brands are recognised by consumers and are often regarded as an endorsement), an ever-growing glut of brands is creating brand apathy among consumers who are seeking more individuality.
Brand recognition at a high cost
There are clear benefits, of course, of being associated to a strong brand, in terms of commercial visibility and a certain level of consistency that consumers have come to expect. Often, however, this comes at the expense of creativity, individuality and a sense of location.
Owners, who have become wiser and more knowledgeable about hotel management and operations, are carefully considering the short and long term expenses that come with buying into a “cookie-cutter” model, especially when a hotel management contract with an international brand requires an average 15 years commitment and may carry hidden costs.
Here are some of the basic fees associated with a conventional hotel management contract:
- Royalties (in general, a strong brand requires a higher royalty, for as long as the relationship lasts)
- Cost of Entry (logos, operating manuals, training, etc)
- Reservation System Charges
- Marketing Assessments
- Various Cross- Charges (i.e. for corporate offices)
The question, then, arises: Is there a more advantageous model for aspiring hotel and resort owners?
This is what has led to the start of the ‘white label’ management company for hotels, resorts and residences, which is slowly but surely rising across the South East Asia, which is continuing to see a boom in hotel development. By engaging a ‘white label’ hotel, resort & residences management company, property owners are able to maintain their name and individuality while the management company provides them with bespoke and tailor made solutions adapted to their location, market and needs. Should the owner decide to eventually part ways with the company, the ‘white label ‘ solution relieves him of costly rebranding and the need to start all over again to establish a name.
Increasingly, owners no longer perceive individually-branded hotels as posing a risk in that they require more initial marketing and positioning in order to be established and to compete with the big brands. Many now are seeing individually-branded hotels as giving guests a more authentic experience, at costs that are significantly lower – and that they “own” the brand.
Even distribution is no longer an issue, as nowadays this can be solved by creating an attractive and user-friendly hotel website combined with a strong public relations campaign. Most of today’s conventional business hotel bookings are generated by the hotel website or online travel agents. Besides, for deluxe hotels and resorts, ‘white label’ hotel management companies generally offer an established contact network with selected luxury travel agents and media.
Owners are also seeing another distinctive advantage of working with a ‘white label’ management company in that it allows a more direct communication with the decision-makers, which also gives them a stronger say in operational matters.
Overall, this model allows independent hotel and resort owners to realise their aspiration, set and achieve the same quality standards of established brands, elevate the positioning and image of their property, while maintaining its essence and uniqueness – in a cost-effective manner to boot.