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The inevitable feud between chain managed vs. locally branded hotel management model

Date: Tue, 09/03/2019 - 06:42
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PaM++ reveals the true variable of the model decision is ultimately the travelers.

Bangkok, Thailand - Relating to the long-standing debates combined with the inquires received from industry colleagues as well as clients regarding the polemic topic of Chain management model versus hotel owner management model, today PaM++, a leading hospitality branding and marketing communications consulting firm, tenders insights from various perspectives.  

The Owners’ Options

One of the issues that hotel owners have inconclusively debated is the decision to self-manage their own hotel (locally branded, owned and managed), brand it as a ‘boutique’ hotel; or to appoint a hotel management company, either local and international brand, (chain) to take over the full operations.

Remarks: To provide a clearer example, a locally branded hotel that has put itself on the map since its inception is Cape Dara Resort, Pattaya.  For a chain hotel, there is countless number of hotels in Bangkok alone; however for the sake of examples, W hotel, an international brand or Centara, a local one. 

The Owners Choose the Path, or the Path the Owner

There are definitely pros and cons in choosing either options.
Hotel management companies, in Thailand, mostly offers full-scale operations model of which could start from the pre-opening stage to operations stage.  With that, comes the marketing power, economy of scale, global distribution system, credible names and expected brand standards.  On top of that, brands themselves invest substantially in marketing their own products on global as well as regional levels; hence enabling individual hotels to leverage on the brand awareness. Loyalty Program is still something of the present, believe it or not.  Travelers value the rewards system and with the wide network of hotels around the world under one loyalty program, it just works!  Lastly and supposedly, more qualified candidates lean towards submitting their applications to a chain hotel with perception of a better career path, superb welfare and benefits. Unarguably, these beliefs are oftentimes true.

Hence, for owners, a choice a hotel management company yields copious apparent advantages, and possibly the most worry-free route with no pain from trials and errors. However, costs that affect bottom line numbers as well as inflexibility come along with the convenience.

On the other hand, operating hotel on one’s own and brand it however one wants still appeals to many owners.  Top reasons, when asked, are; keeping the legacy of the family name, flexibility in conceptualization of the hotel, flexibility in being creative with constant changes, lower bottom line operating costs as there’s no various fees involved, and no large initial investment that usually derives from hotel brand’s design and construction requirements.

In this day and age, travelers seek for more and demand for creative innovation.  Being one step ahead of the competition is key, of which usually involves being creative and keeping up with the trends, if not to lead them. Hence, flexibility and prompt decisions are key in planning for innovative sales and marketing plans.   This is hard to do with hotel management companies as they need to keep their brand standards intact for worldwide consistency. Operating own hotel also gives owners a chance to offer more authentic experiences to guests from brand story, to product offerings, to innovative service style, all that are in sync with the owner’s vision, instead of answering to brand standards.

Lastly, size does not matter when operating one’s own hotel.  As mentioned, it is all about the owner’s vision and business goals.

Who is the main contributor to this matter?

Past decade has seen the fast-changing behavior of travelers, thanks to the world of technology and digital advancements.  Travelers now have the world of travel information and research in their hands.  Amadeus’ recent study categorized travelers with a fresh look; instead of categorizing them based on the conventional factors (age, income, geographical source, profession, interests), Amadeus categorized them by the types of travel experiences they desire to encounter (agriculture, adventure, eco-friendly, or local living for example).  Travelers have evolved, so must hotels.

With well-screened information in the palm of their hands, travelers are starting to pay less attention to the big names but more on what hotels have to offer; if it fits the experiences they are seeking for the trip.  Perhaps, this is one of the main reasons for the birth of ‘boutique hotels’.  Thailand’s Ministry of Tourism & Sports speaks out about how today’s travelers give more weight to the hotel’s ‘branding’ over just the ‘brand’ and most weight lies on the creativity and innovation of the product and service offerings.

1 + 1 = 3

All being said, it may seem that owners should opt to manage their own hotels and locally brand it however they wish, but be mindful of own infrastructure, management team, capacity and experiences.  Lack of any of those things could mean a disaster.

This could potentially have been the reason why Chains have expanded rapidly on the Collection branch on their brand portfolios.  Collection of individual hotels gives owners the individuality but yet offers the professional management.  Imaginably, this is the best of both worlds for certain owners.  , 

In short, at PaM++, it is a strong belief that the decision should start first with guests in mind, knowing what they want and how the hotel should meet their expectations and beyond.  Whether you can do it on your own, or you need professional help is first thing that should be considered for long term success and sustainability of the hotel.