When travel started to grow exponentially 30 to 40 years ago, it created an opportunity for hotel management companies to grow by duplicating their success formula into other cities and countries. They offered hotel developers and owners an easy way to tap into the global travel boom by providing the technical expertise for professionally managing hotels to finding customers so as to provide the hotel owner a good return on investment. It was a win-win for the hotel management company (global expansion) and the hotel owner (the hired expertise). For the traveller, it was the assurance of familiarity in a foreign country. This need for reassurance led to the preference for global hotel brands among travellers as they traded adventure for safety and the familiarity of cookie cutter experiences.
Things changed dramatically over the past decade with the arrival of the curious leisure traveller, who travelled to explore and discover. Such travellers wanted to experience the authenticity of the destination, starting with the hotel they were in. Many independent hotels such as the Villa d'Este have strong historical ties to the destination; it was the former summer residence of the Cardinal of Como, Tolomeo Gallio. For the business traveller, staying at a locally famous hotels and entertaining there makes a statement too. For example, to stay, meet and entertain at the Baur au Lac in Zurich confers to Swiss clients the importance that you place on them. The advent of consumer-generated content has helped empower the curious traveller to choose independent hotels for their authentic local experience without sacrificing an assurance of quality; they can now have both.
A new trend emerges: Conversely, independent hotel owners can now express their artistic freedom without being constrained by standards imposed by a global hotel brand, or being locked down by 10-30-year management contracts. It is not difficult nowadays to hire the right professionals to create, design and fulfil a hotelier's vision. And if self management of the hotel proves too difficult, there are independent hotel management companies like Urban Resort Concept and General Hotel Management who can take care of it for the hotel owner. Beyond the desire for artistic freedom and not being shackled by long-term hotel management contracts, hotel owners want to tap the growing tribe of curious travellers. And creating and managing an independent hotel serves all three objectives.
Surviving the surge of chain hotels: Having built their own independent hotels, how will owners find customers for their new independent hotels? As an independent luxury hotel, they can join associations like The Leading Hotels of the World (LHW) and Small Luxury Hotels (SLH) to tap into their network to find luxury curious travellers. With global offices they have access to multiple segments of customers that an independent luxury hotel can tap into. It also enables the community of independent luxury hotels collaborate with one another to create mutually beneficial partnerships. The hotel chains have noticed the growing trend among travellers and hotel owners. They have responded to the market needs with their own offerings of independent hotel collections like Luxury Collection and Autograph Collection.
The paradox of choice: So how should a hotel owner choose? If a hotel owner has a hotel that has a great location and is appropriately sized to serve the demand for that destination, choosing to be an independent will yield a better return on investment as it will not be difficult to find customers for the hotel; the hotel can be self managed or managed by an independent management company depending on the level of involvement the hotel owner wants to have. If the location is not great and/or the hotel has too many guest rooms relative to the available demand (to maximise the available built up area), choosing a chain hotel management solution is likely to be the better approach; it can be a global brand or an independent hotel depending on the psychographic profile of the travellers to that particular destination.
Whilst there is a growing demand for independent hotels by the curious travellers, there will always be a segment of travellers who are not so adventurous and will want a known hotel chain brand experience. As such, there will always be a place for chain brands even as the tribe of curious travellers continues to grow.
By Philip Ho
(The author is Senior Vice President, Leading Hotels of the World)