The meteoric rise of soft brands throughout the lodging landscape in recent years has been well-chronicled. As such, executives from three major brand companies recently elaborated on what’s been driving the segment’s widespread success.
Convening for a session entitled “The Impact of Soft Brands” during the recent NYU Hospitality Conference, Noah Silverman, chief development officer, North America full-service hotels, Marriott International; David Pepper, chief development officer, Choice Hotels International; and Michael Morton, vp, owner relations, Best Western Hotels & Resorts, addressed a number of key issues ranging from target markets to brand standards.
Pepper talked about the price points where soft brands typically excel. “I think mostly it is upscale and above, and resorts, where soft brands work really well. The guest is looking for experiences in these gateway cities and larger cities. They’re not exactly looking for an experience when they’re in Kearney, Nebraska,” he said.
Pepper referenced the company’s Ascend Collection while diving further into market strategies. “We actually started Ascend because in these upscale urban markets—New York, Boston, Los Angeles—you’re not going to build a midscale hotel…That created this opportunity for us to start a soft brand to go into Boston and say ‘look we have all this demand and yet we have nowhere to put it.’ So that’s why these soft brands have been so successful. What we’re doing with all of these brands is we’re selling demand and we’re selling room nights. So we’re looking for locations where we don’t have a lot of product, but we have a lot of demand,” he said.
But while Pepper insisted the ideal markets for soft brands are generally more urban in nature, Silverman—who noted Marriott offers three soft brands; The Autograph Collection; The Luxury Collection; and Tribute—countered with a success story in a lesser known market in Iowa.
“Relatively early in the gestation of Autograph Collection an opportunity came to us for the Hotel Blackhawk in Davenport, which a group out of St. Louis had renovated into a super cool, independent hotel. It affiliated with Autograph and became a great story for the hotel, for the collection and really for the guest. I think one of the things that’s kind of interesting about these collections is that they do work sometimes in places that may not be thought of as natural or logical or high on the list of cities where you would think about a cool, independent hotel experience,” he said.
But how do the executives approach brand standards when it comes to soft branded properties?
Pepper offered the company’s approach when it comes to Ascend. “There are no brand standards. You don’t really want to have a brand standard if you want to be a unique boutique hotel…People don’t want a branded experience where the carpet’s going to be brown in every room in every hotel they go to. It’s got to be unique. What we do require is that it’s an upscale experience,” he said.
Morton underscored the point while referencing The Premier Collection, the company’s new soft brand. “There aren’t specific standards but there is a minimum AAA requirement and TripAdvisor requirements. So hotels have to maintain four-bubble or above or three-diamond and above for AAA. So it’s not the brand necessarily saying ‘caught you’ or ‘you’re doing this right or doing it wrong,’ it’s the customer,” he noted.
Silverman, meanwhile, was asked how the company approaches branding its three collections. “There are consumers out there for whom the big red M is a turnoff in terms of what they’re looking for in a hotel. What we want in many ways is to underbrand the hotels from the traditional Marriott badging so that those independent travelers that may get turned off by the idea of big brand affiliation don’t. On the other hand we also want the big pipe of Marriott International customers to be able to find them [the hotels] and get to them and use their points there and earn points there. So we’re trying to appeal to whatever segment of consumer is looking to stay in these kinds of hotels, whether they’re the traditional brand consumer or the true independent maverick who likes to shy away from the big brand companies,” he stated.
Morton, meanwhile, commented on some of the factors that should be considered by owners when making branding decisions such as brand representation on the market. He also emphasized the importance of the fee structure and touted the brand’s flexibility. “Are you paying fees on revenue that you have generated through the creation of your hotel versus are you paying for incremental revenue that you’re relationship with the brand can drive you? That’s been our secret sauce. If you’re out there driving a couple million dollars in business, you’re not paying us a percentage of growth on that and you shouldn’t. But if we’re driving demand through our channels to you then we share in that,” he said.
Silverman offered his perspective. “We take a slightly different approach to fees in soft brands. We approach it the same way as any of our other franchises where fees our paid on revenues, whether it’s incremental to business or not. I think part of that is when we first launched Autograph Collection in 2010 we had this internal debate with ourselves about what’s the right fee model, and we really didn’t want to put ourselves in a position where there’s a potential battle between us and franchisees about the source of business,” he noted.