BRANDING TWO BRANDS, OR NOT TO BRAND, THAT IS THE QUESTION 0 1453

“Luxury has become an exceptionally difficult territory in which to compete propositionally as well as to make adequate returns.”

Piers Schmidt, Founder of advisory firm Luxury Branding, based in London and Cape Town, explains why two local hotel groups which he has experience of working with have unveiled second brands within days and metres of each other

During September 2018 and within weeks, there were two significant announcements from The Lux Collective and Constance Hospitality Management: the two leading Mauritian hotel groups are to launch second brands – Salt and C Resorts respectively. Intriguingly, the inaugural properties of both debutant marques will be located less than a mile apart at Palmar on the East Coast of Mauritius.

What do these strikingly parallel developments tell us about the state of health and innovation capacity in the island’s hotel groups, a key player in the Travel and Tourism sector, which is forecast to contribute MUR34.7bn or 7.5% of GDP in 2018?

Judging by the recently launched website for the LUX* Collective, the success of LUX* Resorts & Hotels has emboldened Paul Jones to fabricate a house of brands, emulating the established stables managed by the global hospitality behemoths, including Hilton, Hyatt and IHG.

By adopting an opportunistic, multi-brand strategy, has Jones been inspired by the example of the merged Marriott/Starwood supergroup, which now boasts some 30 more or less discrete brands, addressing nine different segments? Or Accor surely the most innovative and dynamic of the big groups today which has overtaken Marriott, the world’s largest hotel group, with no fewer than 40 hospitality propositions of its own?

In addition to its eponymous marque, LUX*, which is now seven years old, and Salt, The Lux Collective will soon be managing two new hotel brands: Tamassa and Socio, about which we are still waiting for further detail. And that’s not to mention the Group’s successful Café LUX* franchise.

CONSOLIDATION VS. INNOVATION

What is going on here? Was it not only a few short years ago that local politicians and commentators were deeply pessimis- tic about the Mauritian tourism industry? In 2012, despite increasing supply, demand was more or less static, growing only 3.7% from 930,500 tourist arrivals in 2008 to 965,400 by the end of that year. A study conducted by the MTPA in 2012 in the is- land’s core market of France critically revealed that Mauritius was “losing its charm among French tourists.” Furthermore, the 2013 Global Travel & Tourism Competitiveness Index saw Mauritius not only yield its number one position in the sub-Saharan regional ranking to Seychelles but fall from 53rd to 58th in the overall table.

In remedy, a rapid diversification from the EURO to BRIC tourists was pursued but even in combination with a welcome liberalisation of air access occupancies hovered stubbornly in the mid-60s. The giddy days of 76%, last enjoyed in 2007 before the Eurozone crisis, seemed like a distant dream. Throughout this period, however, the four largest hotel groups (NMH, Sun, LUX* and Constance) continued to represent around 50% of the entire industry, a consolidation that did little to foster innovation.

During 2011, while we were working together on the development of the LUX* Resorts & Hotels concept and branding, I remarked to Paul Jones that Mauritian hospitality seemed to have gone dormant since I was a regular visitor a decade earlier. In 2002, we had been planning the launch of One&Only Resorts from its mother ship Le Saint Géran and preparing the re-opening of Le Touessrok, two resorts imagined and managed by the legendary South African hotelier Sol Kerzner. Even then, we had to admit, innovation, in the form of Kerzner International, came from an external catalyst.

REDISCOVERING THE MOJO

Fast forward six years and Mauritius hoteliers seem to have rediscovered their mojo. Rates and occupancies are at record levels, debt is back under control and share prices are outperforming the market. Not only can their success be seen domestically as local operators have co-developed hotels and acquired management contracts both within the Indian Ocean (Seychelles, Réunion, Madagascar and Maldives) and further afield in France (Beachcomber andLUX*), Italy, Turkey, China, UAE, Vietnam (LUX*) and Tanzania (Constance).

Until the September announcements from Lux Collective and Constance Hospitality Management, this growth in properties, owned or operated by Mauritian hotel groups, had been derived from one of two models: either by expansion of the house brand (i.e. Beachcomber, LUX*, Constance etc.) or by managing hotels, which failed to meet the ‘luxury’ specifications of those brands as independent properties (e.g. Merville Beach and Tamassa by LUX*).

This was an approach we pioneered with Sugar Beach, La Pirogue and Coco Beach (now Long Beach), the Sun Resorts hotels that were ‘Managed by’ One&Only.

During strategy reviews at One&Only and LUX*, I recall vigorous debate about the most appropriate form of brand architecture to accommodate properties like Sugar Beach and Merville that fell short of the minimum luxury (hardware) standards that had been specified for the house brands.The issue became all the more vexatious given that the service and guest experience in these 3 and 4-star properties was often on a par with that enjoyed in their fancier and more illustrious siblings.

Given these circumstances, there was al- ways the potential to introduce a second tier brand or ‘diffusion line’ under which to house these poorer cousins. Indeed, there were plenty of precedents for this ap- proach: Courtyard by Marriott was an early pioneer of brand extension but from pure- play luxury operators, Evason (Soneva), Angsana (Banyan Tree) and Vivanta (Taj) are prominent examples.

TIME FOR CHANGE

In Mauritius, this strategy met resistance for a variety of reasons. Frequently, Board directors deemed the introduction of a second brand as an unwelcome distraction from management’s proper focus, which was to grow the luxury house brand. Whether this fear was grounded or not, with access to only two or three properties to flag with a second brand, its slight physical presence and modest marketing budget would make it difficult to gain traction. Additionally, we faced an inconvenient truth: Coco Beach and Sugar Beach or Tamassa and Merville Beach were as distinct from one another as they were different from the main lines One&Only or LUX*. Would it be possible to build a credible brand if it was stretched across resorts as diverse as Tamassa and Merville Beach? To this day, the evidence suggests not as LUX* Island Resorts will not only be managing the four brands of its Lux Collective but continues to market and operate Merville Beach and Hotel le Récif in Réunion Island as independent properties. Although I am sure it has little intention of rolling out either of these as a brand, the same assumption applied to Tamassa until recently.

SO, WHAT’S CHANGED? WELL, FOUR THINGS.

First, the increasing need for customer segmentation. In common with the supply side of most industries, the fundamentals of a hotel or resort offering are very similar. The basic accommodations, facilities, food & beverage outlets and those all important immersive experiences are largely the same.

When it comes to demand, however, it is all about horses for courses. There are at least 400 brands of wristwatch available today. Their products perform the same basic function and most of them keep the time as accurately as the next. And yet most of these brands will survive because one man’s Panerai is another’s poison. So, too, with hotels and resorts. There are Aman ‘junkies’ and Four Seasons devotees that would never be seen in the lobby of The Ritz-Carlton. While there is little perceptible difference under the hood between many of the 30 Marriott brands (e.g. The Ritz-Carlton vs. St. Regis), theirs is an exercise in badge engineering.

Closer to home, a loyal client of Prince Maurice would probably feel less comfort- able at LUX* Belle Mare whose own client feels more at home there than at the St. Regis Le Morne. So long as there are sufficient numbers of customers with distinctive tastes and different levels of spending power, producers will be able to slice and dice their offerings ever more thinly to meet the needs and aspirations of precisely defined and deeply understood market segments.

Second, most global hotel companies now employ an asset-light strategy pitching themselves against one another for the same lucrative management contracts. The leading Mauritian hotel groups are no exception. Rather than developing new assets for their own account, groups may even prefer to dispose of their bricks. LUX Island Resorts Limited, for example, off-loaded Tamassa to Grit on a sale and leaseback basis for US$40m in 2016. Going forward, Mauritian operators will also be seeking to grow the distribution of their brands via the acquisition of management contracts, a model that requires no capital outlay and produces attractive annuity income, which is much cherished by stock markets but deceptively difficult to execute.

Here’s the rub, though, and our third driver of change. Owned or not, luxury has become an exceptionally difficult territory inwhich to compete propositionally as well as to make adequate returns. The capital budgets it takes to develop at this level have escalated significantly and the long-term operating costs of luxury hotels are increasingly prohibitive. As a result, there are fewer promoters developing in the luxury segment than previously and yet there is an increasing number of asset-light management companies chasing the same deals.

This double whammy produces a buyers’ market for hotel owners and however at- tractive your Brand Concept, however powerful your sales, distribution and marketing and however impressive the results you are achieving with your owned properties, third-party owners are seeking bulletproof track records achieved on behalf of investors like themselves. They crave the reassurance of a management company that is able to demonstrate repeated and sustained success in relevant markets with equivalent projects. Of equal importance, so do the banks providing the debt portion of their project financing.

In a crowded market for scarce management contracts, small local players, such as those starting to emerge from Mauritius, may still catch the eye of an owners’ representatives and their advisors and this is one of the reasons why one should never discount the value of personal relationships. Nevertheless, as negotiations proceed, it quickly becomes difficult for an ascent and unproven management company to match the metrics and ratios of a Four Seasons (with its mono brand focus) or a Marriott with its reputable stable of thoroughbred brands, each boasting reams of performance data to lend credibility to its projections. And that’s before they even mention the secret sauce, which is their global loyalty programmes.

Fourth, in small destinations, there is market saturation to factor. How many Constance or LUX* resorts can an island sustain? LUX* has three in Mauritius but would it be able to gain Tour Operator support or find even more direct business and airline seats for a fourth in the South? Constance has two resorts in each of Mauritius, Seychelles and Maldives and I know they wouldn’t want yet more rooms in the Maldives, if for no other reason than to hedge their market exposure.

On the other hand, when it comes to risk management, where better to develop more product than in the destinations where you operate successfully already? On that basis, it makes total sense to develop depth in places where you know how to operate and where both consumer and trade trust your reputation in those markets.

It’s to address this quartet of challenges that the international groups have architected carefully, segmented and regulated multi-brand portfolios. And it’s for these same reasons that the Mauritian operators are following suit.

TOWARDS A NEW MODEL OF SISTER BRANDS?

Constance Hospitality Management an- nounced its intention to launch a sister brand to Constance Hotels & Resorts to the European trade in May 2017. The result of more than a year’s development work since then, C Resorts, has been thoughtfully positioned and conceptualised not to cannibalise the Group’s luxury brand. It will offer a distinct proposition designed to appeal to long-haul leisure travellers to largely package tour destinations like Mauritius and Seychelles.

While Salt is also opening its first proof of concept hotel in Mauritius, I believe it won’t be long before we find LUX*’s seasoned sibling sprinkled in less conventional, fly and flop destinations. Salt’s promise of “meaningful” travel experiences designed – in the brand’s own words – for “cultural purists, modern explorers and mindful travellers who travel to satisfy their curiosity and challenge their perception of the world” seems better matched to the more off the beaten track destinations favoured by younger and truly free, independent travellers.

These recent developments are clearly encouraging and we wish both the new ar- rivals every success. One word of caution, however, in closing. In recent months, we have been approached by two internation- al operators whose brand aspirations have got the better of them. These are independent hotel groups both of whom have reached around 20-25 properties open and under management with another 5-10 in their pipelines. Their issue? Too many propositions and too many brands for the number of properties with not enough clear water between them. The resulting confusion in the minds of the consumer and owner communities alike now needs to be undone and the portfolio both simplified and rationalised. Although it makes interesting work for us to untangle the mess, maybe Four Seasons have had it right all along – one brand.

ABOUT PIERS

Piers Schmidt is Founder of Luxury Branding, an advisory firm based in London and Cape Town which assists luxury organisations with elevating service and transforming experiences.

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HOW TO USE YOUR PERSONAL BRAND TO ALLEVIATE YOUR BUSINESS PROFILE Comments Off on HOW TO USE YOUR PERSONAL BRAND TO ALLEVIATE YOUR BUSINESS PROFILE 181

Whether we believe so or not it is in our DNA to sell both ourselves and any tangible product we can regain enough influence to promote, in the outcry for both attention and reiterated self-absorption, the tactical selling tools we use to advance our way into the hierarchy of society and manufacture relationships is the very tool we must interject into our career proposition. This leads to purposeful sales and trustworthy partnerships.

It dawned on me recently that the trajectory of my personal life lies effervescent in all notion of proprietary influence, from the recommendation of small purchases such as hula hoops, books and sun cream, to more permanent life changes with influence of recommended breakfasts, vitamins and health alleviating foods. Yet minor, these personal wins got me thinking about how to use the attributes of your vocal whims to succeed in business.

Firstly consistency, the closest people to you, family, friends, partners, may see you regularly enough to see whether you are upholding any kind conscience and impactful life plan, this could be turning vegan, cutting out alcohol or changing your sleeping pattern. Showing consistency is a sure-fire way to get you noticed for your strong will and desire for meaningful change, this goes hand in hand for any career and business endeavours, constantly being active, communicative and visible on a cross platform of social media will build your authority and express a clear narrative to your readership.

Secondly, stay within your remit, I don’t mean isolate yourself and pigeonhole your talents, I mean stay clear to your niche, a continuous stream of career changes and sector interest broadcasts a message of uncertainty and disorientation, ( I certainly speak from experience on this one ) trying to find your passion and enjoyment is one of life’s downfalls, but stick with a specific talent and explore the territory around it instead of moving on to the next.

From my personal experience I started out in fashion journalism and decided some years later I hated fashion, and decided to move into PR and marketing, however realising some months down the line, I loved journalism I was just located in the wrong sector, finally now finding my feet with specific concentration on the luxury market for female pioneers. 

Distinguish yourself from the sheep, it is harder now more than ever to create and imagine something that solves a problem and fills a void, with endless pop-ups of data driven ads and access to more content than we can ever consume, finding un explored territory is nigh on impossible.

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There are thousands of consultants, marketers and PR agencies vying for the same end client, but in the race for the chase ensure your voice differs from others, usually you will find, every imaginative topic or multi-million-dollar idea you dream up has already been traversed. Hence, identifying and honing in on a unique niche will get you noticed far more frequently than choosing a conventional topic. Once your passions and talents are in line, devise strategies, marketing and sales tools that will not only directly hit your end consumer but those of a wider audience, gaining industry recognition and viable sponsors will build a loyal audience, then you just need to deliver on discussing out of the box ideas and selling with credibility and authority.

If your pipeline is drying up and sales seem a thing of the past then look into changing up your tactics, direct sales door-to door, telephone and email stratagems are so 2018, building meaningful relationships that align with company values, generating industry credibility and showing consistent and out of the box ideas will keep your buyers and audiences desiring more.

For more luxury, consulting and business related articles, visit:https://www.thecblifestyle.com/ or contact me directly at thecblifestyle@gmail.com

POSSIBLE FUTURES FOR A POST PANDEMIC TRAVEL INDUSTRY, PART 2 Comments Off on POSSIBLE FUTURES FOR A POST PANDEMIC TRAVEL INDUSTRY, PART 2 264

The first part of this series outlined the background to the disastrous set of circumstances that the travel, tourism and hospitality industry finds itself in.

It also outlined the first of four scenarios: Travel swings back to normal in 2021.

We continue with the next theory…

Scenario 2:  The end of mass tourism as we know it

In this future, the economic recovery plays out in similar fashion to the scenario described before. However, the emotional and social impact this crisis has on humanity is too deep for people to get back to the old normal.

Months of lockdown and new patterns in social distancing, bio-surveillance and our digital consumption will change travel at its core. Spending more time at home, a higher focus on hygiene and health and shunning away from crowded places will be the new normal.

These attitudinal shifts will also be reflected in policy changes in our daily life, such as health and safety regulations, data privacy and border controls. All of these trends have huge consequences on the travel industry

Urban-based crowded tourism will decrease in favor of outdoor and natural environments and long-haul destinations will be perceived as high risk compared to closer-to-home locations.

Tourist destinations will experience different fates. Countries that have traditionally been net tourist flow senders (Northern Europe, U.S., Japan, etc.) will win, while countries that enjoyed positive inbound numbers (Southern Europe, Thailand, Mauritius, etc.) will be on the losing side.

Beyond washing hands

In a rush to build confidence among travelers, hygiene protocols and labels have started being implemented across all destinations and companies from the early days of the outbreak.

Singapore was a pioneer in its announcing of a nationwide hotel audit scheme branded as the “SG Clean” label, regulating measures like temperature screening intensity at hotel entrances and disinfection frequency rates in common areas and guest rooms. 

Hong Kong quickly turned its airport into its first line of COVID-19 defense by sending all incoming travelers to the AsiaWorld-Expo upon arrival for throat saliva samples, as well as providing tracking bracelets for visitors tied to a smartphone app.

Elsewhere, Emirates has launched on-site rapid coronavirus tests that take 10 minutes for passengers landing in Dubai. The city of Madrid, badly hit by the virus, has launched its own “Hotels COVID-Free” quality stamp.

In this scenario, this patchwork of protocols and certificates all over the world generates confusion and mistrust across travelers. In a coordinated effort by governments, international tourism organizations and major industry associations, a new universally accepted health certificate label will be established in 2021 for air transport and hotel accommodation ensuring consistent standards worldwide.

In aviation, discussions around the end of the loathed middle seat on aircraft will turn into reality, food services onboard becomes a distant souvenir of another era, indicators like cabin air recirculation rates will emerge and face masks will be a part of new standard safety measures on planes.
 
Hotels will focus marketing efforts away from the beautiful pool landscape towards features like disinfection standards, touchless technology for all types of physical interactions and larger spaces between sunbeds. Hotels will switch to room-only food services, transforming breakfast and other food-related spaces into spacious lounges.

What will hurt a hotel’s balance sheet is the need to keep hotel occupancy rates low, with a health buffer of over three nights between guest stays in the same room to eradicate any risk of contaminated surfaces. 

The alternative accommodation industry will enjoy the advantage of being perceived as a less-crowded lodging option but will have a harder time building travelers’ confidence around hygiene and health standards.

Industry leader Airbnb will push hard amongst its hosts to establish a new set of cleanliness and disinfection protocols, but certain travelers will steer away from private accommodation for good.

The travel industry faces a soul-searching moment 

All these measures will have a dramatic impact on the industry economy. In a world where maximizing occupancy rates or load factor has been turned upside down, travel companies will have to take a hard look at their cost structure and their pricing strategies.

Some companies will feel the punch more than others. Low-cost carriers will be forced to rethink their business model. Their strategy of squeezing as many passengers as possible on aircraft, which in turn stay as in the air as much as possible, will become unsustainable. 

Network mega-carriers relying mostly on long-haul flights channeled through massive hubs will also face a gloomy future. Fewer long-haul trips and travelers shunning crowded places will trigger a significant downsizing of airlines with sky-high airplane orders and iconic airport projects coming to a screeching halt.

Short-haul flights, already under attack pre-coronavirus from the flight-shaming movement, will see the shift of travelers towards lower-carbon-emitting transport means like high-speed trains. 

Corporate travel apocalypse

One of the most radical transformations in societal attitude will be around business travel, fueled by virtual meeting practices adopted during the lockdown period and new corporate travel policies implemented to curb expenses during the cash crunch.

The irreversible decrease in business travel, by any measure the most profitable clients of the travel industry, will hit the balance sheets of travel companies like a sledgehammer.

The implosion of meetings and events activity during the crisis was a watershed moment for the industry. The unstoppable rise of virtual conferences and webinars during the lockdown period and the perceived danger of large crowd gatherings will transform major convention centers into indoor leisure spaces or city landmarks of a past golden era. 

The rise of a new distribution landscape 

Two types of travel intermediaries will suffer a Darwinian process of natural selection.

  1. Traditional offline travel agencies that were behind the digital curve will slowly fade into extinction in this hyper-connected world.
  2. The few travel management company survivors will be the ones rapidly adapting to a significantly smaller market and to a change in paradigm in servicing and duty of care.

On the online travel agency front, there will also be major changes in play:

  • Servicing and connecting with customers during the darkest moments of the crisis will turn out to be the most powerful loyalty program any marketer could conceive. Speedy refunds for cancelled bookings, transport and lodging rebooking alternatives for clients stranded overseas and an ongoing and candid communication strategy will win the hearts and pockets of customers.
  • Deploying bots and machine-learning algorithms, allowing for automation of back-office processes and customer service interfaces, will make the most successful players future-proof for disruption in the years ahead.
  • Many will integrate a traveler’s health data across the entire industry’s service chain, in an ecosystem where health information will become a mandatory data field for all actors.

Faced with our rapidly increasing digital life, where tech giants try to keep users locked into their ecosystem, the most successful travel players will start to integrate daily users’ services like inter-urban mobility, local entertainment booking facilities and food delivery services, in order to remain relevant in the customer’s mind.
 
This trend towards Asia-like super apps in the Western World will spark a frenzy post-crisis, with merger activity between travel tech giants and mobility and food delivery tech players, whose valuations suffered a massive downward correction during the economic deadlock due to their weak balance sheet.

* Check scenario 1 here, then 3 and 4 when they are published next week.About the author…

Mario Gavira is a tech executive, angel investor and board adviserAirlineAirportGround TransportationHotelOnline Travel AgencyPrivate AccommodationTours and ActivitiesCoronavirus