The purpose of a hotel brand, at its core, is to allow the owner of a hotel to increase the number of rooms they sell and the rate at which they sell them. It’s no different from the purpose of any other brand – maximise value and increase volume. Marketing 101.
Classic measures of brand health look at awareness, usage and preference. These are great measures for assessing performance, but they only tell part of the story. To really understand the true value of a brand, you need to establish the premium that people are willing to pay to choose that brand over the alternatives.
The abundance of demand data won’t do the job in this regard. Big data (such as actual room rates) won’t tell the full story because those rates are influenced by so many factors: seasonality, location, product specifics, and even the skill of the revenue management team.
So, how can we find a brand’s true value?
To tell the true story of a brand, we need to strip out these other factors to uncover what the brand itself adds to (or even subtracts from) the price of a room. The only true judges of that are customers, and although they won’t tell you directly, we researchers have some tricks to get them to reveal it nonetheless.
We ask respondents to answer with a perceived price that they think other people – and that’s crucial – would be prepared to pay, but we don’t ask respondents to answer with a price; we ask them to answer with a difference. We also ask about hotels based in different locations, since geography has such a huge bearing on price.
The result is a measure of the additional value a hotel brand adds to its own rooms in the minds of customers, and it’s pretty powerful stuff. We think of it as the missing piece in the puzzle; we know how many rooms one can fit into a hotel, we know what it costs to affiliate with a brand and now, through Brand Margin®, we know how much that brand could add to your selling price.
Telling the whole brand story
However, while we consider Brand Margin® to be the missing piece in the brand selection puzzle, we don’t believe it is the definitive measure of a brand’s health. Many of the leaders are less well-known hotel brands that are nonetheless loved by a relatively small group of people. That’s why we went one step further, and developed Brand Advantage.
To get closer to a true measure of a brand’s advantage over its competitors, we believe it’s necessary to consider a brand’s reach. We therefore combined brand familiarity with Brand Margin® to produce our new Brand Advantage metric.
Brand Advantage uses indices, which allows us to compare across markets as a whole. At the top end, a maximum possible score of 100 would indicate that a brand is not only the most widely known in the country, but delivers the highest premium in its tier. Brand Advantage therefore delivers on the two key objectives of branding – value and, by proxy, volume.
At the lower end, a negative Brand Advantage means a brand is thought to subtract value from the intrinsic product. It’s not common, but it can happen.
Which brands hold a true advantage over others?
Let’s look at it in practice. Hilton tops the charts in eight out of the nineteen markets we’ve assessed, recording second or third place in a further five. It leads the Anglophone world, only missing out to dominant local brands in three of the nine European markets that are included. In China, Hilton trails only Shangri-La (which also leads in South East Asia), while in Brazil it places between ibis in first place and Mercure in third.
AccorHotels, as you might expect, complete a cleansweep in France. France also sees the lowest Brand Advantage scores of any top three, demonstrating that AccorHotels’ brands are almost as strong as each other in their home market. Spain, too, is led by international brands of domestic origin – NH Hotels leading Barceló and Meliá Hotels & Resorts – while India is dominated by Taj, ITC and Oberoi.
Marriott International records two top places with Sheraton (Japan and Argentina/Chile) – a brand that also achieves second place in Australia and Turkey, and third place in Italy. The core Marriott brand only manages second place, doing so in the USA, Russia, Poland and Great Britain, where it pushes Premier Inn into third place.
IHG sees its Holiday Inn Express brand take the top spot in Mexico and third place in the USA, while the Holiday Inn core brand registers second place in Italy and Germany, and third in China.
At a tier level, the global chains start to form interesting patterns too. AccorHotels tops most of the economy tiers and a handful of mid-market ones (and the luxury tier in France, of course). IHG is the reverse – Holiday Inn leads the mid-market, with a few top spots for Holiday Inn Express. Hilton dominates the upper full service tier and records a couple of ‘wins’ in the mid-market. Marriott leads the luxury tier and a few markets in upscale.
Want to know more?
Matt Costin from BDRC will be discussing Brand Advantage and taking the model still further at the Hotel Insights Forum in London on 11th September 2018. Tickets are available at www.hotelinsightsforum.com.
Alternatively, Brand Advantage reports are now available for Great Britain, France, Germany, Spain, Italy, Belgium/Netherlands, Russia, Poland, Turkey, USA, Brazil, Mexico, Argentina/Chile, China, Hong Kong, India, Japan, Australia and South East Asia. Want to know where you stand? Get in touch – [email protected]