HotelsMag January-February 2016 | Page 32

“ We ’ ll continue to see that happening among really experienced oWners and operators that have the ability to truly create their own unique identities , access the various electronic channels and try to build loyalty on their oWn . there ’ s never been a better time for it .”
Special RepoRt : Soft brandS
performing above its competition in the Revenue Generated Index for the past four years , finishing 2014 with an RGI of 105.4 %. It also points to an HVS study that shows its costs as a percentage of room revenue at 3.69 %, compared with about 10 % for Autograph and 12.3 % for Starwood ’ s Luxury Collection .
The Design Hotels model also is different – more of a paper transaction , according to founder Claus Sedlinger , with fees based on the booking source channel and on volume . “ We do have our annual fees and we have marketing thresholds depending on the size of the property ,” Sedlinger adds .
Because Design Hotels is predominantly owned by Starwood Hotels & Resorts , a growing number of Design Hotels are bookable through Starwood ’ s websites , apps and Customer Contact Centers . Guests who book directly through Starwood channels receive select SPG benefits and earn points during their stays . While operating independently from Starwood , the partnership will boost exposure for Design Hotels across Starwood ’ s distribution and loyalty platforms .
The expanded partnership with Starwood offers a distribution and loyalty benefit to member hotels and does not change the business model of Design Hotels , whose sales , marketing and development teams remain distinct . “ It ' s fantastic ,” Sedlinger says , referring more to what Design Hotels gets through Starwood ’ s loyalty program . “ We are only in our third week now , but the results are phenomenal . It brings a very qualified and exactly the customers we are looking for , and there is such stickiness to that program and these customers are super happy to be able to choose out of our portfolio . It will give us a huge competitive advantage and we can already feel it . I mean , it ' s there .”

“ We ’ ll continue to see that happening among really experienced oWners and operators that have the ability to truly create their own unique identities , access the various electronic channels and try to build loyalty on their oWn . there ’ s never been a better time for it .”

– Neil Shah hotels and the various experiences from a consumer perspective , if you ’ re providing great service and you have something truly unique about your location or your property , you can rise above a lot of other assets in your marketplace because people can go to TripAdvisor ,” Hersha ’ s Shah suggests . “ The future of independent hotels continues to get stronger and stronger .”
Hersha ’ s Independent Collection properties are in truly differentiated locations and high-demand gateway cities – and within those gateway cities , neighborhoods that are actual destinations . “ They are recognizable to travelers , whether they ’ re coming to New York for business or pleasure , regardless of what they might want to go and see . We ’ re attracting people to Tribeca ( in New York City ) that want to stay and live in Tribeca for a few days .”
Shah says what also leads Hersha away from soft brands or hard brands are markets that already have a significant amount of demand ( more than 80 % occupancy ). “ In those situations , accessing customers isn ’ t worth the fees ,” he adds .
The Independent Collection recently introduced its own loyalty program and is doing more active cross selling . “ Our hotels are all very similar in terms of being in really interesting neighborhoods that are in demand and are recognizable ,” Shah says , adding that his team members are called “ locals ” and are trained to cross sell and take advantage of e-commerce opportunities .
At the same time , Shah knows when a soft brand makes sense . Take his two 80- room Autograph hotels in Miami Beach – the land of independent boutique hotels . “ Having a strong brand partner and access to their corporate and leisure loyalty programs have been very beneficial for us there ,” he says .
Shah points to his Rittenhouse hotel in Philadelphia , affiliated with The Leading Hotels of the World . “ It gives us access to a lot of European and Asian luxury customers that otherwise would be hard to distinguish among other luxury hotels or other independent hotels ,” Shah admits . “ What Leading does offer is good relationships with travel agents and consortia .”
At the end of the day , though , Shah believes the runway is long for similarly disposed collections like Hersha ’ s . “ We ’ ll continue to see that happening among really experienced owners and operators who have the ability to truly create their own unique identities , access the various electronic channels and try to build loyalty on their own . I think there ’ s never been a better time for it .”
For now , time will tell how the soft brands further evolve . As consolidation continues and brands increase leverage on OTAs , perhaps the likes of Hersha will have to reconsider their options .
28 HOTELS January / February 2016 www . hotelsmag . com