International Marketing and Branding for Hotels - Literature review Example

International Marketing and Branding for Hotels Literature Review Literature Review The International Hotels Group plc Annual Report says that the world hotel industry has approximately 15.5 million rooms. The hotels are broadly segmented as branded where multiple hotels use the same brand name and independent (non-branded) hotels. Branded hotels make up over 53% of the total hotel market. In the US, around 70% of available rooms are in branded hotels. In developing markets such as China and India, branded hotels account for a lower 45% to 55% of total available rooms. The five leading branded hotel companies (IHG, Accor, Hilton, Marriott and Starwood) account for 30% of the branded hotels market and 65% of new hotel rooms in construction (IHG Annual Report, 2014). With such a predominant share in new hotel room construction, branded hotels will lead non-branded establishments by an even larger margin in the future. 2. Warwick Clifton of Global Hotel Group and Brand Analysis, writing on the Hospitality Net website says that international hotel chains have penetrated most leading countries around the world. The chart below shows the percentage penetration of branded hotels in various countries (Clifton, 2013). (Chart from Clifton, 2013) The increasing market share of international chains in the global hotel industry leads to each chain adopting a unified marketing and branding approach so that international travellers get to expect and receive a common and familiar experience in hotels in all parts of the world. 3. The Handbook of Hospitality Marketing Management edited by Haemoon Oh and Abraham Pizam also talks of the increasing market share of branded hotels. The share of total room supply by branded hotels in the US increased from 61% in 1990 to over 70% in 2000. The handbook also points out that a majority of business and leisure travellers prefer to stay at branded hotels rather than ‘unflagged’ operations. Hotel guests perceive relatively lower risk in choosing a branded hotel as compared to choosing an independent hotel (Oh & Pizam, 2008, pp 88-89). 4. Prof. Chekitan Dev of the Cornell University writes that the hotel industry has become a complex, fragmented, global and competitive brand business with over 300 international brands operating in the market. The brand structure in the hotel industry varies from owner operators, to managed properties and franchisees. Managed and franchised hotel properties often change brands. Prof. Dev writes that there is an urgent need to fill many gaps in our understanding of brand management in relation to the hotel industry (Dev, 2015). 5. The American Hotel & Lodging Association (AHLA) reports that in 2013, 41% of their customers travelled for business and 50% travelled for leisure. The profile of the typical business traveller is male (64%), age 35 – 54 (52%), employed in a professional or managerial position (61%), with an average household income of $ 127,000. These customers typically travel alone (77%), make reservations (96%) and pay on average $ 143 per room-night. 40% of all business travellers spend only one night per trip at a hotel, 23% spend two nights and 37% spend three or more nights (AHLA, 2014). Leisure travel typically is by two adults (54%), ages 35 – 54 (32%) and age 55 + (32%). The average household income for leisure travellers is $ 96,000. The typical leisure traveller often travels by auto (82%), makes reservations (94%) and pay on average $ 123 per room-night. 50% of leisure travellers spend one night at the hotel, 26% spend two nights and 24% spend three or more nights (AHLA, 2014). These typical customer profiles help the hotel industry in developing their marketing and branding strategy. 6. David Kwun of the Rosen College of Hospitality Management, University of Central Florida, writes that the importance of brand management in the hospitality industry was amplified in the 1980s when there was an explosion of new hotels and restaurants in the US to cater to the baby boomer generation entering its peak earning years. This generation had a different lifestyle and an increased number of dual income families (Kwun, 2014). The opening of new hotels and restaurants led to intensified competition and saturation in some segments of the industry. Consumers had difficulty in evaluating the large numbers of hotels and restaurants in the market place. Major hotel companies responded by developing multiple brands targeting specific market segments. For example, the Wyndham Worldwide and Marriott Corporation now have close to 20 brands. The Intercontinental Hotel Group and the Starwood Hotels & Resorts have close to ten different brands (Kwun, 2014). 7. John O’Neill and Anna Mattila writing in the Cornell Hospitality Quarterly point out that branding establishes a set of promises to consumers and creates a differentiated identity for the services of one hotel from another, though the functional characteristics of the two hotels are not substantially different. Brands create a personality for an intangible entity and relates to customer emotions (O’Neill and Mattila, 2010). A hotel brand represents a relationship with its guests. Even if they initially choose a particular hotel by a random process, the experience of the facilities should leave positive recall to encourage the guest to return. Successful hotel brands focus on providing their guests with a unique experience and not merely on selling a service. Hilton Hotels, for example, operates both the Waldorf-Astoria and the New York Hilton hotels in New York City. Staying at one of these luxury hotels would be a different experience from staying at the other (O’Neill and Mattila, 2010). 8. 6. A study by David C. Gilbert, Jan Powell-Perry and Sianandar Widisojo at the University of Surrey, UK, in 1999 identifies Relationship Marketing as well suited for the hotel industry. Relationship marketing is effective when (Gilbert, et al, 1999). There is an ongoing and periodic desire for the service on the part of the customer The service customer controls the selection of the service supplier There exists alternative choices of suppliers Brand switching is a common phenomenon Word-of-mouth is an especially potent form of communication about a product There is the ability to cross-sell products. The study points out that substantial information on customers are already available with hotels from the check-in documentation and their spending habits during their stay. The hotel industry can therefore mount a relationship marketing campaign with existing customers through the internet in an effort to make them repeat customers (Gilbert, et all, 1999). The 1999 article talked mainly of customers using the internet through desktop or portable computers. In the present time, customers often use smartphones for web access and use the social media such as Facebook and Whatsapp to make choices about hotels. 9. The challenge to effective Relationship Marketing through the hotel website is that the majority of hotel reservations are not made on the hotel website but through intermediary travel websites. As shown in a 2007 study by Dr. Morosan of Kansas State University and Dr. Jeong of Iowa State University, over three quarters of respondents made hotel reservations through a travel website such as Expedia and only one-quarter even visited the hotel website (Morosan & Jeong, 2007). 10. Customer loyalty programmes have been a common marketing device since the 1980s in the services industry including airlines, hotels, restaurants and even supermarkets to foster customer loyalty. Customers earn reward points for each stay at a hotel and for money spent on hotel services. Accumulated reward points entitle the customer to preferential services, price discounts and other benefits. A study in 2010 by Michael McCall and Clay Voorhees reported in the Cornell Hospitality Quarterly points out that the proliferation of such loyalty programmes has led such programmes losing their effectiveness (McCall & Voorhees, 2010). References: 1) AHLA, (2014). “2014 Lodging Industry Profile”, American Hotel & Lodging Association. Accessed on 26 Sept 2015 from 2) Clifton, W., (2013). “The Global Hotel Industry: Big, Beautiful and Branded”, Hospitality Net, 11 March 2013. Accessed on 26 Sept 2015 from 3) Dev, C., (2015). “Branding Hotels”, Seminar on Hotel Brand Management at Harvard Business School, 2015. Accessed on 26 Sept 2015 at 4) Gilbert, D., Powell-Perry, J. and Widijoso, S., (1999). “Approaches by Hotels to the use of the Internet as a Relationship Marketing Tool”, “Journal of Marketing Practice: Applied Marketing Science”, Volume 5, Issue 1, pp 21-38, 1999. Accessed on 26 Sept 2015 from 5) IHG Annual Report (2014). “Industry Overview”, International Hotels Group plc Annual Report 2014. Accessed on 26 Sept 2015 from 6) Kwun, D.J., (2012). “Brand Management in the Hospitality Industry”, Journal of Tourism & Hospitality, Volume 1, Issue 1, January 2012. Accessed on 26 Sept 2015 from 7) Morosan, C. and Jeong M., (2007). “Making Hotel Reservations On-line: A Content Analysis Of US Travellers’ Comments”, Journal of Tourism, No.3, 2007. Accessed on 26 Sept 2015 at 8) McCall, M. and Voorhees, C., (2010). “The Drivers of Loyalty Programme Success: An Organizing Framework and Research Agenda”, Cornell Hospitality Quarterly, 51(1), 35-52, 2010. Accessed on 26 Sept 2015 from 9) Oh, H. and Pizam, A., (2008). “Handbook of Hospitality Management”, First Edition, 2008, Elsevier, ISBN: 978-0-0804-5080-3. 10) O’Neill, J.W. and Mattila, A.S., (2010). “Hotel Brand Strategy”, Cornell Hospitality Quarterly, Volume 51, issue 1, 27-34, February 2010. Accessed on 26, Sept, 2015 from Read More