Owners of independent and boutique hotels increasingly are seeing the benefits of joining soft brands with the condition that their unique selling points remain intact.
LONDON—The popularity of soft and conversion brands has now fully engulfed the hotel industry as InterContinental Hotels Group—one of the few remaining holdouts—has announced it will launch its as-yet-unnamed soft brand in June.
AccorHotels does not have a soft brand, but did make a well-publicized attempt to add up to 10,000 independent hotels to its booking platform, a scheme it abandoned last November.
Hoteliers who are part of this movement understand the benefits of adopting stronger, larger distribution channels and marketing clout while being allowed to retain much of their properties’ independence, according to panelists at this week’s Boutique & Lifestyle Hotel Summit.
Speaking at a panel titled “Operators, soft brands and independents,” sources said what should be most vigorously marketed in terms of such assets are their unique selling points.
Nick Turner, principal at Laura Ashley Hotels & Resorts, is in the process of growing his firm from its current roster of two hotels to approximately 100 via conversions, and he said the benefits to owners are many.
“We’re providing value immediately at a premium via refurbishments and relaunches,” he said. “There is no loyalty program per se, but the loyalty of our customers is considerable.”
Robert Swade, CEO of Grace Hotels, said it’s important for independent hotels and smaller, boutique brands to continue to underline the value proposition and guest experience.
“All our hotels are different. We do not have a detailed design manual,” he said.
Philippe Bijaoui, chief development officer for Europe, the Middle East and Africa at Wyndham Hotel Group, said his company’s Trademark Hotel Collection soft brand—which Wyndham launched last summer—has a specific segment and operating strategy. Trademark currently has 64 hotels and another 18 in its pipeline.
“It will sit in the upper-midscale segment, although I prefer to say ‘first-class hotel,’ and we really give a lot of freedom to those hotels, at least from what I see from other brands,” he said. “Owners get all the same benefits as other hotels in the Wyndham system, and ultimately for us if the guest is happy, we’re happy.”
Preferred Hotels & Resorts focuses on “bringing in more top-line revenue, while having minimum risks for owners with short-term agreements,” said Brenda Collin, the firm’s managing director for the U.K., Ireland, Nordics and The Netherlands.
“New destinations provide new experiences to our luxury travelers,” she said, adding that Preferred has approximately 700 hotels under its umbrella, 43 of which are in her region.
“We also work with some chains. We’re seeing more interest from developers and investors who want the benefits of soft brands but will not join a recognized one,” Collin said.
Panelists dismissed the idea that the benefits of joining a soft brand might be offset by additional costs passed on to owners.
“We have management contracts, but what we do not have is a list of centralized charges that we pass to ownership,” Grace Hotels’ Swade said. “There is a lot of frustration from owners as to layers of costs, but (our model) plays into the type of investment structure you would have at pre-construction with (earnings before interest, tax, depreciation and amortization) and other guarantees.”
Collin said at Preferred, in-depth analyses of return on investment are presented to owners.
“In my region, the cost to the owner is about 5%, and if you compare that to online travel agencies, it is a no-brainer,” she said.
Laura Ashley’s Turner said on average soft-brand conversion costs £5,000 ($6,700) per key.
“Our goal is not to make money from fit-outs. There is a competitive licensing fee, which can depend on the condition of the asset we’re converting,” he said.