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Brand Building Is a Fantastic Marketing Investment for Hotels. Why Do 85% of Hotels Avoid It?

There are lots of debates in the hospitality industry about brand building. According to a recent industry-specific survey, over 85% of enthusiastic hotel marketing managers would love to grow the recognition of their property, but their plans get refused due to “budget” reasons, and because it will not generate an instant ROI.

As the #1 issuer of hotel and resort specific brand audits, we had brand related discussions with hundreds of hospitality companies from all shapes and sizes.

For any successful business, its brand is its greatest asset. As Blair Brady wrote on Forbes:

No matter the industry, product, customer or size, a company’s brand is its single most important asset. Your brand isn’t just your logo. It’s how you interact with the world — from your customers to your employees — and it all stems from the brand. So, what do you do with your most important asset? You protect and grow it.

Blair Brady @ Forbes

A recognized hotel brand benefits sales, marketing, and revenue in several ways

It is not a secret that hotels and resorts with strong brands do better business both online and offline. But let’s get specific and break down what benefits a strong and reputable brand will provide?

  • Consistent, increased demand
  • Opportunity to charge higher than average room rates
  • Less exposed to market imbalances
  • Higher e-commerce conversion rate on the brand website
  • Shorter sales process
  • Lower cancellation rate
  • Excellent marketing efficiency & ROI
  • Organic and earned media features

Unfortunately, the opposite applies to hotels with a low brand value:

  • Inconsistent demand
  • The hotel is locked in the price-location competition
  • Exposed to market swings
  • Lower website engagement and poor booking engine conversion rate
  • Lengthy and complicated sales process 
  • Frequent requests for discounts and price negotiations
  • Increased cancellation rate – guest will book a better hotel if they can afford
  • Low to average marketing efficiency & ROI
  • No earned media features, need to pay for PR

So why do 85% of independent hotel management teams avoid investing in their brand growth?

For less successful businesses that still manage to get by with minimal and mostly unmanaged brand recognition, having a powerful and reputable brand seems like a luxury. This is a short-sighted approach that might save money in the short term, but cost revenue growth and business development opportunities in the long run.

Sadly and surprisingly, the number one reason why hotels companies do not invest in brand growth is being delusional. 

Hotel schools do not cover branding, and subjects regarding marketing are just scratching the surface. Lacking a proper brand management framework, hotel marketing managers and Marcom colleagues have no choice but to monitor irrelevant social media and web performance metrics – which will lead to false and inaccurate conclusions.

Most common reason: delusional self-evaluation of brand strength

When talking with hotel management teams from properties with poor brands, we often face delusional claims about their brand and marketing management strategies. In most cases, they are under the impression that their hotel has strong brand awareness.

Needless to say, when their hotel brand audit and brand awareness measurement reports prove the opposite. With brand awareness less than 5% among in-market travelers looking for hotels in their destination, and even worse brand like-dislike ratio results, hotel managers often get shocked when facing the reality of their brand strength. 

Before getting their audit report, they typically expect good results because of one or more of the following reasons: 

  • “We have marketing agreements with travel agents”

Travel agents don’t care about building a brand for their hotel partners. They are not interested to make them popular. Yes, they will hang a poster in their office and place a brochure next to their sofa and desks but practically that’s it. Sometimes they will also post a lackluster 90s style post on social media, which will reach only a few people.

  • “We do PR in several countries”

Most hotel PR companies and local representations are worthless. In 90% of times, extended PR costs and activities in specific regions showed zero results in terms of brand awareness, compared to areas without PR activities. There are a few notable exceptions – trusted and proven PR companies like segara and Lobster Experience covering the GSA market for luxury hotels worldwide with spectacular results.

  • “Our Booking.com ranking is high”

That only means two things: probably your hotel is too cheap, or you pay too much commission. Having your brand website ranking high and getting tons of organic traffic indicates a strong brand. OTA rankings do not.

  • “We get most website traffic from XZY country”

How much is the most? How much traffic do you get compared to your competitors? What percentage of total visits for relevant keywords end up on your website and converts? These are the questions to consider when evaluating brand strength based on web traffic stats.

  • “Our social media reach is the highest in XZY country”

Same as with web traffic: how do your reach and engagements compare to other hotels and resorts in the destination? 

Second reason: lack of support from hotel owners and key stakeholders

The second most common reason for avoiding brand building for hotel and resort companies is the lack of budget. Hotel management companies and hotel general managers need the owner’s approval for significant investments, and in many cases, the stakeholders will not see brand building as a priority. Common reasons are:

  • It does not offer a fast return on investment
  • They are not confident with the team’s expertise
  • They plan to sell the hotel in the foreseeable future
  • They plan to change the management company or rebrand the hotel in the foreseeable future

Third reason: lack of in-house brand management skills

In some cases, we were working with hotel marketing directors and general managers who were keen on exploring brand development, but they were not confident with the skillset of the hotel marketing team.

  • Lack of demonstrated brand management expertise
  • Inability to create a brand strategy
  • Lack of brand management related business intelligence
  • Lack of skills

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