In this fragile post-pandemic recovery world, the hotel soft brand marketplace shows no sign of softening.
Contributed by Juliana Shallcross
Already a booming subset of the hospitality business before the pandemic, soft brands—both the franchise and independent varieties—have rebounded quickly in the past year, rapidly adding member properties around the globe. Meanwhile, new soft brands have continued to emerge, among them Accor Hotel’s Emblem Collection, Wyndham’s Trademark and Regency Collections, and Curator Hotel and Resort Collection, a portfolio of independent hotels formed by Pebblebrook Hotel Trust.
As travelers seek more lifestyle hotel experiences while hotel owners search for added operational and marketing support, the soft brand landscape is sizzling.
“It’s growing exponentially, hotels joining soft brands,” said Steve Turk, a Miami-based hospitality consultant, citing the pandemic’s wide-ranging effect on independent hotels in terms of revenue management, expenses, labor issues, and safety protocols as the main reasons for contracting with a soft brand.
But with more hotels joining up each day, is there really enough room for everyone, especially as larger hotel companies keep unveiling new collections? Many traditional soft brand executives say yes, pointing to the different types of collections for a range of hotels from luxury to 3-star, as well as the different needs of owners whether it be revenue management, operational assistance or marketing help.
“I don’t worry about more entrants into the (soft brand) space. There is a lot of space here,” said Chris Walker, chief commercial officer of New York City-based The Leading Hotels of the World, one of the oldest soft brand collections, formed in 1928 and consisting of more than 400 properties today. “And I think that we all do it a little differently.”
Pre-pandemic, Leading Hotels sought to diversify its collection geographically so that guests could have more Leading experiences around the world. Leading properties are pure-play luxury hotels with an independent style and spirit, a combination that’s been easy to pick up in Europe but more difficult in North America and Asia, and more so since the pandemic began. While diversifying remains a goal, Walker said Leading Hotels is adding smaller groups of hotels and tailoring their services to the needs of these collections-within-a-collection.
“We’re also looking at, who else can we appeal to?” Walker said. “What are those smaller groups of hotels that have maybe 6, 8, 10, 12 or 20 hotels that could still benefit from our scale? What kind of relationship could we have with them? And it doesn’t have to be a one-size fits all.” Some recent small group additions to Leading Hotels are Nayara Resorts in Costa Rica and La Reserve Group in Europe.
Other new strategies that Leading Hotels has implemented since the pandemic include getting in front of investors and owners earlier in the development cycle, ditching the fee for the Leading Hotels of the World loyalty program, and positioning their properties as sustainable and socially conscious.
At Newport Beach, California-based Preferred Hotels and Resorts, another independent soft brand collection, 56 new hotels were added last year and the company is on track to add about 80 this year, according to President Michelle Woodley.
The company also launched a new portfolio of sustainable hotels in November 2020 called Beyond Green. Coupled with the Historic Hotels Worldwide and Historic Hotels of America collections, and their PTG Consulting business, these offerings allow the company to really go to work for their member hotels.
“That’s what gives us the flexibility to really deliver the markets that are most meaningful to the hotel,” Woodley said. And it’s this flexibility that Woodley cites as an advantage over hard brands and the franchise soft brands from bigger hotel companies.
“Under Preferred Hotel Group, we can do different things and be flexible on how we do them,” Woodley added. A white paper released by Preferred Hotel Group last year enumerated this flexibility, detailing how independents fared better in 2020 compared to hard brands and franchise soft brands in terms of occupancy, ADR and RevPAR.
“Our hotels honestly could act a lot faster,” Woodley explained of the pandemic performance. “They didn’t have to wait for the brand to say, ‘Here’s now what your cleaning protocols are, here is now what your food and beverage protocols are.’ Independent hotels could act right away.”
For the Dubai-based Global Hotel Alliance (GHA), which works largely with independent hotel brands, their most attractive product for independent luxury hotels has been a loyalty program with nearly 20 million members. GHA recently added The Set Collection as well as the NH Hotel Group, totaling 40 brands and 800 hotels across 100 countries.
Yet, as loyalty programs changed, often becoming more complex and frustrating for guests to understand, the GHA realized its loyalty product had to evolve to ease these pain points and also to build an advantage against competitors.
“We started seeing a common trend of what consumers wanted and across the markets, regardless of what their reasoning was, they wanted simplicity, they wanted transparency,” said Kristi Gole, vice president, head of product for GHA. “They wanted to know, what am I earning, what’s the value of it, and then they wanted it to be easy to redeem and have choice on how they redeemed it.”
Guests enrolled in the GHA Discovery program now earn Discovery Dollars, ranging between 4% and 7% of the total bill, which can then be used upon the guest’s next stay and at property outlets. Members also receive 10% off room rates. For the hotels, GHA no longer charges fixed fees for the loyalty program, instead using a variable fee system depending on where the guest’s repeat stay originated—whether from the hotel itself or another promotion done with GHA. According to Gole, the loyalty program delivers an ROI that independent hotels couldn’t achieve on their own.
“We want it to be an attractive program to the end consumer, the hotel guests. And the more attractive the program is, the more that they’re going to choose to stay with the hotels that have that program,” Gole said.
The newcomer to the soft brand party, Curator Hotel and Resort Collection, which launched in early 2020, aims to help independent hotels, big and small, from an asset management standpoint utilizing some of the deals that its parent company, Pebblebrook Hotel Trust, has secured.
“We’re trying to put the whole toolkit together for the hotels, so they can tap into all these resources to help their top line as well as their bottom line,” said Jennifer Barnwell, Curator’s president. This includes more than 80 master service agreements, insurance policies, proprietary workflow systems, and pilot technology programs. Currently, Curator has 91 properties in its roster.
“We run the gamut of almost everything you need to run an independent hotel,” Barnwell added. “Because we’ve gone through exhaustive RFP processes and done tons of due diligence to end up with partnerships at better financial terms or cost terms than anyone can get on their own.”
Despite the rosy outlook from within the soft brand landscape, it won’t be immune to outside forces such as drops in demand, new lockdowns, or the ongoing staffing issues which Turk said could affect the standards often required of hotels to join a soft brand, whether franchised or independent. Turk also advised hotels to be certain they can deliver on their partnerships as being removed from a soft brand means having to start the process all over again.
Yet for now, to stay competitive going soft is a solid move for an independent hotel.