Why Are Big Hotel Brands Getting Smaller?

If you were (or are) an executive for a chain hotel, you couldn’t (or can’t) help but wonder how your property might tap into the river of profit that is flowing into the shared economy.

As AirBnb continues to grow a new slice of the global market, it’s clear that more guests are seeking local flavor in their accommodation choices. Why stay at a sterile, globally branded hotel when you can embed yourself in a local neighbourhood, with local art on the walls and artisan coffee in the cupboard? This may sound harsh, but many people are framing the question this way. Especially those who’ve already had positive experiences with the share model, and consistently look to it first when traveling. Many good local apartments are available with no branding at all. Except of course for the property owners themselves.

Should hotel owners and managers be quaking in their boots? Not exactly. The established hotel market still represents the largest number of bookings and occupancies worldwide, and studies show no sign of that changing. (In fact some studies suggest that AirBnB is actually increasing the market.) There will always be those who prefer consistency and professionalism to knocking on the door of a random apartment building.

That said, the call for local flavor is loud and clear. Guests know that their options have exploded, and that more properties (both professional and not) are competing for every dollar. This results in a more discriminating customer; one who doesn’t want to miss out on what friends and family (who may be using the share model) are experiencing.

The operative word here is “glocalization”—but unlike many catch phrases, there’s a lengthy Wikipedia entry devoted to it. Originally based on the Japanese term dochakuka, which means global localization, the sociologist Roland Robertson introduced the concept to the rest of the world way back in the 1980s, defining it as the commercial practice of simultaneously “universalizing and particularizing tendencies.” In other words, international products and services that have been strategically adapted to local markets are said to be “glocalized.” McDonalds, which adapts its menu to suit local tastes, is considered one of the first large-scale examples. If you’ve ever visited the golden arches in India or China, you know what glocalization is. Other companies like Whirlpool, Gillette and even Disneyland have all introduced glocalized products to suit their neighbourhood

The professional hospitality industry is being  catalyzed (or subverted even) by the sharing model in  and this is happening in clever ways.

For example, some executives are choosing to align individual locations with relevant local brands. An article in the New York Times explains that Accor Hotels has acquired a stake in the French chain “Mama Shelter” and expanded their restaurant/hotel concept, finally with a focus on F&B unique to their location!. The Los Angeles location has local film scripts in the rooms, and local chalk art in common areas. Depending on your tastes, this may seem like a ceding of professionalism and brand consistency, but it gives a local flavor. (Having said that, you still have to book via the generic AccorHotels website which sort of detracts from the idea.) For a really quirky take on glocalization, have a look at the Mary K Hotel in Utrecht, Netherlands.

In a sense, glocalizing tells guests that their experience is more important than the brand itself. It may not be everybody’s cup of tea, but it makes an attempt on some of the market share that AirBnb has grown. If a property has a locality that is distinct enough, and elements of local flavor can be infused into the branding (or unbranding), it could lead to a wider channel of popular demand in tomorrow’s hospitality market.

Numerous established brands, in cities across the world, are asking these questions: to what extent should our hotel, whether a local independent or a chain, create a fresh experience for guests?

The simple answer is, it should be considered if that is what the market is demanding It’s up to each manager, owner or executive to judge the value of such efforts in a given location because it won’t always work, and a thoughtful strategy may or may not be expensive to implement. But by being open to the idea of “unbranding” or localizing the experience for guests, owners and managers will at the very least another method to compete with the shared economy.

 

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