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How Hotels Can Thrive in an Already Crowded Space
By Larry Mogelonsky
Recently, Great Hotels of the World (GHOTW) (www.ghotw.com) has ushered in an exciting new phase with its campaign to enter the North American hotel representation firm marketplace. I've been courtside for this, especially now that I've had the chance to properly interview GHOTW's Managing Director- Americas, Marshall Calder.
Aside from brushing over Marshall's grand strategy for thriving in this already-crowded space, I wanted to take a broader look at what a rep firm can do for hotels and why they may be imperative for an independent property's ultimate survival. Read on as Marshall touches on some very important points that extend well beyond this industry niche.
In your opinion, what is the mark of a good hotel representation firm?
One that listens! One that's committed to the success of its member hotels. The typical modus operandi for rep firms is to channel as many reservations as possible through the distribution channels they control. That's how the traditional rep firm gets paid after all, even though it's not always in the hotel's best interests. Success should be measured by the impact the representative has on its members' bottom line, not in how effectively it funnels reservations.
Representation companies also insist that hotels conform with rigid marketing strategies and programs, even if they deliver little value to a hotel. The principal objective of GHOTW is to work with each property and its unique parameters to improve revenue while also reducing expenses. This could include any or all of these specific goals: generating incremental business; driving top-line revenues; improving yields; reducing marketing/distribution costs; simplifying operations; new market development or otherwise building; and, strengthening their brands. The list is, well, exhaustive.
To accomplish these tasks, how do I know if I have the right representation firm working for my property?
All of the major representation companies do a relatively good job of aggregating the power of like-minded independent hotels to create marketing synergies, realize economies of scale and other network benefits. These are real and valuable benefits of affiliation.
On the branding side, however, the influence of representative and soft brands has waned. Travel agents, and especially consumers, are not influenced by a hotel's affiliation with a soft brand. The major demand generators for independent hotels in today's marketplace are the exceptional attributes of the hotel: its location, services, facilities, online presence, reputation and price. So, knowing whether one has the right representative goes to how well your rep understands your business situation and how skillfully they can marshal their resources to generate revenue for your hotel.
This is where GHOTW shines above: we care for the individual property above our own umbrella brand. I cannot state enough how intrinsic this creed is to our business model.
How has the rep firm model changed over the past decade? Where is it going?
The problem with the representation industry is that it hasn't changed! The other rep firms haven't properly upgraded their business models for the digital age and, frankly, they are headed for obsolescence.
Consequently, reps are not only losing share, but their failure to keep on top of the distribution landscape has left a void in the market. How can independent hotels effectively compete in today's tech-driven marketplace if their representation companies fail to offer viable solutions?
So, I cannot say where the industry as a whole is going. But, I can say that GHOTW is going in a different direction.
What are the chief differences between GHOTW and the other rep firms?
GHOTW is a ‘next generation' representation company. We are the only major rep that owns its distribution technology; an advantage we lever to drive our business strategy, to help our hotels compete more effectively in the digital marketplace and to create substantial cost efficiencies for our members. GHOTW is the industry's price leader.
We have dubbed our business model ‘Soft Brand 3.0'. It combines the best elements of traditional representation services, such as B2B and MICE sales, with our state-of-the-art tech platform, bespoke e-commerce and event marketing.
The advantage of Soft brand 3.0 is that it is totally hotel-centric. That is, we utilize our resources to generate new and repeat business from all source markets and through all distribution channels, not just our own branded channels. In that sense, we are channel agnostic. But, we also leverage our brand to garner interest from the corporate, leisure and MICE segments, where we enjoy extensive penetration.
So, lots of differences on the technology front? What are the advantages for member hotels?
Huge differences. Like most rep companies, GHOTW used to outsource its technology to third parties. However, we grew frustrated (as did our member hotels) with the inherent constraints of the big box systems and having to constantly cobble together fragmented and disparate systems, not to mention the cost. So, we set out to create a solution that would enable hotel operators to manage rate distribution and online content across all channels from a streamlined, cloud-based central reservation system. Also, earlier this month we launched our new internet booking engine, which is an uber-intuitive BE that utilizes a shopping carte functionality to enhance users' online experience and drive conversions.
Overall, the advantages for member hotels are clear:
Describe the level of communication that exists between affiliates and GHOTW? Do you see these evolving in the near future?
Every member property is assigned a Performance Manger and Business Analyst. This equates to two employees and GHOTW representatives per 50 hotels, the best ratio of its type for all international rep firms. Our performance managers work collaboratively with hotel GMs, Revenue Managers and other senior directors to set goals, tactics, success metrics and any other year-to-year objectives. Our managers are accountable and compensated accordingly for the fulfillment of the mutually determined goals, thus making the growth of the independent operator a highly incentivized activity and primary responsibility for our team members.
Where do you expect GHOTW to be in two years in terms of its presence in North America and the World? Five years?
GHOTW will undoubtedly grow from its current membership base of 200 independent, primarily European hotels into a global synergistic organization with member hotels in major business and leisure destinations. We also see an opportunity to private label our technology and other solutions to branded hotel companies that wish to distribute under their own brand, to unify their distribution ton a single technology platform and substantially reduce distribution costs. As for the five-year plan, I wouldn't mind being on my boat, somewhere in the calm, turquoise water that is Caribbean.
About Larry Mogelonsky
Larry Mogelonsky (firstname.lastname@example.org) is the president and founder of LMA Communications Inc. (www.lma.ca), an award-winning, full service communications agency focused on the hospitality industry (est. 1991). Larry is also the developer of Inn at a Glance hospitality software. As a recognized expert in marketing services, his experience encompasses Four Seasons Hotels & Resorts and Preferred Hotels & Resorts, as well as numerous independent properties throughout North America, Europe and Asia. Larry is a registered professional engineer, and received his MBA from McMaster University.
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