Reinventing the representation role

I’ve always been fascinated by the role hotel representation firms have played in the hospitality industry at large. Like a medieval tale of knights banding together to vanquish a common foe, these organizations take smaller, independent operators and give them a fighting chance against the behemoth brand names through synergistic marketing efforts and by clueing them into modern technological practices.

Preferred Hotels & Resorts Worldwide, Leading Hotels of the World and Small Luxury Hotels — these are names that inspire confidence and assure guests of the integrity of their member properties. In the past, the tradeoff was straightforward: pay your dues via a combination of annual fees (typically based on a fixed amount per room) and commissions generated on reservations. Then, in return: worldwide travel trade, amongst other benefits.

The Internet changes everything, and it’s been interesting to follow how rep firms have adapted to the throes of the times — ensuring a consistency of quality throughout their cabal of hotels, even as the definition of quality is repeatedly upgraded. In particular, the growth of online channels has had a marked impact on the referral value of these hospitality organizations. Brand-identity crises are hitting these hotel and resort alliances just as much as they are striking the majors.

I’ve expressed my concerns over hotel commoditization ad nauseam, but the changing face of electronic-oriented travel has had a somewhat countervailing effect on independent luxury operators. In the face of rising costs of program participation, many owners and managers have become skeptical of their return on investment. The Internet has opened the floodgates for less traditional marketing strategies, and these operators no longer feel the choking dependency on rep firms to reach the international traveler.

It’s time for hotel representation firms to step up their game, and Great Hotels of the World (GHOTW) is on the vanguard. Established in 2001, GHOTW and its 200 affiliate hotels have a new value proposition as they formally enter the North American marketplace. Its business model is centered on proprietary technology, which:

  1. Extends a hotel’s marketing and distribution reach across all electronic channels — GDS, web, social and mobile — along with tools to publish and manage content across all distribution channels.
  2. Simplifies rate distribution and management with its Smart Channel Manager, which allows hotel operators to manage all rate distribution from a single screen.
  3. Offers a disruptive pricing model that reduces representation and distribution costs by 30% or more or, further, a subscription-based pricing model where one licensing fee covers all representation services, and distribution is effectively “free.”

Given these incentives, I wouldn’t expect GHOTW’s low share of North American properties to remain static, especially now that Marshall Calder has taken the role of managing director-Americas. As a past senior vice president of marketing at Leading Hotels of the World and before that at Preferred Hotel Group, he is one of the foremost experts on hotel marketing through representation firms. With some quick email tag, he was more than happy to comment on GHOTW’s new campaign:

“The traditional hotel representation model is becoming obsolete as customers increasingly book through new and emerging channels,” Marshall said. “The role of a hotel representative in today’s marketplace is to facilitate and aid hotels’ marketing and distribution efforts. To that end, Great Hotels offers a next-generation representation model that integrates the still relevant elements of traditional representation with electronic marketing and distribution solutions, enabling independent hotels to compete more effectively in today’s marketplace. We have also introduced a disruptive pricing model that promises to substantially reduce distribution and representation costs. We are able to do so because we own our own technology and we have a clear vision, changing the representation landscape for the better.”

The approach that GHOTW is taking is a wakeup call in the representation segment and definitely a hot topic to watch for the last quarter of 2012. In other recent news, Leading Hotels of the World moved to eliminate the fixed component of its cost structure in exchange for properties signing up a certain number of new loyalty club members. Clearly, efforts are being ramped up across the board in this sector to stay competitive.