#37: Hotels Are Brands Too

Every consumer brand should take a page out of a hotel’s playbook

I did two things this weekend: stayed at a hotel (a Hampton Inn, for the first time) and checked out Airbnb’s recent stock performance.

I’ve never stayed at a Hampton Inn before, and going into the weekend, my expectations were modest. But I was rather impressed. Shout out to the Portsmouth location in particular. The rooms were clean and modern, the staff friendly, and the gym set-up impressive. However, the continental breakfast? Needs a lot of work. I’ve had better food in my elementary school cafeteria.

Now onto the second thing. Airbnb may be a great business model, but oh boy, it isn’t a great stock to own. Since its IPO more than 4.5 years ago, Airbnb’s stock is down 6%. That may be because they went public at too high a valuation, but it’s a tough look when Hilton and Marriott’s stock prices have grown 2.5x and 2x, respectively.

This got me thinking. A hotel is a consumer brand. And the top hotels happen to be top-notch operators too. Let’s dive into a few areas where hotels are head and shoulders above other kinds of consumer brands.

Storytelling

In fact, the best hotels are masterful storytellers who have a knack for crafting narratives around the emotional experience of travel. From the TV commercials during news breaks to the emails in your inbox and billboards that line the highway, hotels know their niche and tailor their messaging to get you thinking about what kind of lodging you need for your next trip.

The story the Four Seasons tells is different from the one Holiday Inn shares. Yet, they are both successful hotel brands that deliver consistency in the experience they advertise. Whether the hotel brand is ultra-luxury or budget-friendly, hotels are excellent at identifying their target market and creating their own persona to match their core customer.

Hotels don’t try to appeal to everyone. They identify who they want as their core customer and then build a hospitality experience for this type of person or group of people. Whether it’s high-end restaurants and a private beach for the quiet elite, or fast Wi-Fi and airport shuttles for business travelers, hotels pick their niche.

Consumer brands should take a page out of the hotel playbook on core customer engagement. If you’re building a subscription-based consumer business, focus narrowly on developing a product that your core customer wants and will purchase regularly. Then, similarly to hotels, invest in product quality and consistency as these elements become your brand on a long enough time horizon.

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Operational Excellence

Not only are they elite raconteurs, but hotels are also world-class operators. Their brand equity is built on decades of delivering a specific kind of hospitality experience. The core of a hotel brand is their aesthetic and service, tied together by consistency. Branding isn’t just the advertisements you see before booking a trip. It’s the training program, the management style, and the interior design that all work together to deliver a reliable experience. Operational excellence differentiates a brand name hotel from a mediocre bed and breakfast. Think about it: if you spend an obscene amount of money on a stay at the Four Seasons and the room isn’t clean, it’s unlikely you are willing to book your next trip there. Hotels know this and invest heavily in a high hospitality standard.

Consumer brands can beat out their competition by getting the basics right. Ship products on time. Answer customer inquiries promptly. Regularly check reviews for product feedback. Don’t overspend on underperforming ad campaigns. Know your financials inside and out. Maintain strong relationships with your suppliers.

Odds are, your competition is dropping the ball in at least one of these areas. Treat your brand’s consistency the way hotels treat theirs. One bad experience and the customer that you spent an arm and a leg to acquire may be gone for good. For hotels, their operational excellence is their brand.

One important distinction: unlike consumer goods brands, hotel companies rarely own their physical product (i.e., the hotel itself). They’re usually only the name of the building and the day-to-day operator, collecting a fee for their services (usually a percentage of revenue). Hotel companies rarely take real estate risks and maintain asset-light business models, owning very little besides their IP that is the brand itself. They bring in a real estate investment trust (REIT), a private equity firm, or a high net-worth individual to finance the construction of the hotel. Once the palace has been built, they are handed the keys and responsible for running the business that is the hotel, but don’t own the property itself.

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Loyalty Programs

A consumer business has no chance of long-term survival without customer retention. And hotels? They’ve mastered retention.
Hotel loyalty programs like Hilton Honors or Marriott Bonvoy flood your inbox with offers for free stays, new resort announcements, and exclusive member experiences. Their hotel programs offer status (think Silver, Gold, or Diamond) with increasing perk quality as you work your way up the ladder. Hotels turn loyalty into a game, and status is the prize.

Additionally, I’d include partnerships as part of their loyalty strategy. For instance, Hilton and Marriott both partner with American Express on co-branded credit cards. These partnerships give guests even more perks if they happen to carry a hotel-branded card. Also, these cards function as a customer acquisition channel as Hilton and Marriott gain access to Amex’s massive marketing engine and customer base. Furthermore, they serve as an additional revenue stream, creating the rare trifecta that is retention marketing, customer acquisition, and new sales channel.

You don’t need a complex loyalty program if you’re a small brand, but you do need to communicate consistently and authentically with your customers. Gather product feedback, learn more about what your audience is looking for from your brand, and boast about all the benefits of the products that you offer. You can do all of this through a solid email or SMS strategy.

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Need inspiration to revive your sluggish brand? Look no further than your favorite hotel.