You probably found this blog in our post about 'The Sneaker Test' where we tried capturing Hotels brand identity in a sneaker. That test is a prefect example of the weaknesses of hotel groups, and how brand dilution strips them from their identity. Curious about the post?
Lets dive into it. The Dilution Dilemma:
In the ever-evolving landscape of the hospitality industry, the question of brand identity becomes paramount. The giants of the hotel world, including Hyatt, Hilton, and Marriott, have expanded their empires with a multitude of sub-brands. Yet, is this strategy a masterstroke or a misstep? Let's delve into the Dilution Dilemma, examining the impact of a broad brand portfolio on the perceived value of these individual hospitality establishments. Note: In this blog we have used Hyatt as the prime example, yet these dilutions can be found in any major hotel cooperation.
The Branding Buffet: A Multitude of Identities Walk into the world of Hyatt, and you'll encounter a variety of brands – Grand Hyatt, Park Hyatt, Hyatt Regency, Hyatt Centric, and the list goes on. Marriott and Hilton have similarly crafted a constellation of sub-brands, each intended to cater to different demographics and preferences. On the surface, this strategy seems logical – broadening the market reach and appealing to diverse consumer segments all the while keeping up appearances.
The Confusing Tapestry of Luxury and Mid-tier: However, this abundance of brands has subconsciously created confusion as to what the individual brands actually stand for. What does a 'Hyatt' signify? Is it a byword for luxury synonymous with Park Hyatt, or does it denote a more middle-class appeal with Hyatt Place? The line blurs, and consumers may find themselves grappling with preconceived notions that may not align with the true identity of a particular brand within the portfolio.
Guilt by association:
As for my personal experience, a while back one of my friends started working for the Park Hyatt, which left me confused since this particular person is someone who admires top tier hospitality establishments. "Out of all the beautiful establishments in this city, a Rosewood, a Four Seasons and an Aman opening up soon, why would choose to work at the Park Hyatt?" After which they invited me to bring a visit. As a global citizen with a bachelor in Hospitality Management, I would never associate something that carried the "Hyatt" name with something as refined and elegant as the Park Hyatt. Guilt by association.. For me, 'Park' reminded me of the Park Plaza hotels... the Hyatt brand perception was more... Centrepiece staircase, a sprinkle of Las Vegas and some 'Roman emperor chic'. But hey, that might just be me, a Zillennial.
Coming back to the market reach, If one day, I have a lot of money in my bank account, I will now most certainly book a stay at the Park Hyatt. Hyatt will eventually just need to find a way to convince my fellow Zillenials to do the same.*
The Power of Distinct Personality: Consider brands like Andaz, Ritz-Carlton, Rosewood and Four Seasons. These brands have crafted their distinct personalities, becoming luxurious experiences rather than just places to stay. The Ritz-Carlton exhibits images of opulence and grandeur, while Andaz exudes modern sophistication. In contrast, a Grand Hyatt might inadvertently dilute these strong associations by existing under the overarching 'Hyatt' umbrella.
The Dissonance in Perception: The challenge arises when the consumer's perception is incongruent with reality. Everyone who studied business is probably aware of the so called "Gap Model", you need to manage expectations. A potential guest may walk into a Park Hyatt expecting a mid-tier experience, given their previous encounters with the broader 'Hyatt' brands. The stunning luxury, outstanding service, and architectural marvels become a welcome surprise, but the initial confusion has already left its mark. Furthermore, due to the increase in online bookings, this positive "Gap" between expectations and actual provided quality might never exist, as the consumer would rather book a hotel of which their perception is already "luxury".
Damage to luxury, benefit for a mid-range: The cumulative effect of brand dilution can be very disadvantageous. For luxury brands, using the umbrella name may lead to missed revenue, loss of potential loyalists, and an overall weakening of the brand's value. A diluted brand struggles to command premium pricing, and the loyalty weakens when consumers cannot distinctly associate a particular brand with a specific set of expectations.
Using a umbrella name has two sides, one where someone looking for luxury skips over the "Park Hyatt" due to t
he connotation to mid-range brands, and the one where a mid-range demographic decides to specifically choose to stay at the "Hyatt Place" since they know that Hyatt will always provide a certain standard.
The usage of the umbrella name might only be advantageous when applied to a budget or mid-range hotel.
Best Practices for Brand Portfolio Management:
Distinct Positioning: Clearly define the positioning and USP's of each sub-brand. Ensure that the essence of each brand is discernible to consumers. (Business 101: Create a positioning map, decide which brands benefit from the company reputation and which brands might be diluting their premium market positioning)
Strategic Naming: Craft names that inherently convey the brand's identity. Avoid generic terms that may lead to confusion. (Such as Grand, Park, Place, Inn & Suites. Those names do not only dilute your own brand, but could also create association to other brands. Park Hyatt, is it like Park Plaza and Hyatt? Both mid-range identities )
Unified Themes: While embracing conceptional diversity, maintain a unifying theme across the brands. This could for example be in service philosophy or experiential focus. (Always being welcomed with a "Thank you for staying with a Hyatt brand")
Communicate Effectively: Launch communication campaigns that not only promote individual brands but also educate consumers about the diverse offerings within the portfolio.
Brand Education: Invest in consumer education to mitigate misperceptions. Clearly communicate the distinctions between brands to manage expectations effectively.
Conclusion: Striking the Balance
In the quest for market dominance, hotel giants must proceed carefully and start thinking of strengthening their brands. Diversification is key, yet a delicate balance is required to prevent the dilution of the very essence that makes each brand unique. Consumers should seamlessly move from one sub-brand to another within the portfolio, knowing that the standards are the same, yet the experience will be distinctly tailored to the brand's promise. It's time for these giants to reevaluate their strategies, ensuring that each brand under their umbrella shines with an unwavering identity, freed from the shadows of dilution.
Curious about reversing this idea? From hotels to Sneakers to LVMH merging with IHG?
Read the article about the effect this would have on our industry here:
Open letter to Hyatt:
Dear Hyatt Corp,
Apologies, it might seem like I am roasting you, however, I actually chose to dive deeper into Hyatt since you are one of my favourite Hotels Corporations.
Your employees all speak very highly of the work culture in the properties as well as at the corporate office and your slogan "We care for people to they can be their best" is something that really seems to be true. (Unlike the slogans of many other big corporations)
We really want you to continue doing this for many more generations.
Therefore we thought you might actually benefit from us using Hyatt as an example.
We write articles for people so they can be their best ;)
Sincerely yours,
TheHotelFluencers.
* Takeaway for Hyatt:
With the current brand awareness, your existing demographic is projected to "phase out" in roughly 30-40 years. To appeal to next generation, the future global travelers, you will need a significant shift in brand strategy because the current approach most certainly will not excite the Zillennials and younger. How? Just do the same thing you did with Andaz. Each brand needs to have its own identity, its own USP's and its own demographic. Andaz shows that you already know how to do it! Just recycle that same trick, don't recycle the Hyatt name though.
Step 1: Create a brand positioning map, which brands "do" benefit from the Hyatt brand? Mid-range? Budget hotels? Getting the Hyatt standard :)
Step 2: Make sure your upper
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