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To scale or not to scale? That is the question for hoteliers

Christian Lukey

Head of Hotels - APAC, Amadeus

With unprecedented change rocking the hospitality industry to its foundations, many hotels are left wondering what their best course of action is.

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Large players, it seems, have been pursuing a two-pronged strategy: they’re getting larger via mergers and acquisitions and they are also creating an increasing number of what is termed ‘soft brands’, where independent properties join a large chain but retain a good degree of autonomy. This concept enables larger players to not only continue to grow and increase their penetration but also introduce new ideas that are potentially targeting new markets or segments.

The thinking from hotel giants is that if there’s a concept that can reach a specific marketplace or certain customer segmentation, then there is a reason for that brand to exist. While that might be treading on what has traditionally been the remit of independent hotels and small chains, the drivers are different. Hotel giants, like their smaller counterparts, must keep moving and innovating in order to demonstrate value to customers.

But that presents its own set of challenges in terms of trying to drive innovation at scale. What’s interesting is that, to combat these challenges, many of the large chains are adopting a ‘think global but act local’ approach. For some players, that means treating each hotel and its team as a single property with the sole aim of providing an unforgettable experience for each guest.

Others have taken the definition of local and broadened it, so that they are also providing services to the community at large. AccorHotels is the best example of this with its recently launched AccorLocal concept where the hotels promote their services to non-guests. This could mean access to services provided by the hotels such as fitness classes and spa facilities, or using the hotels to pick up deliveries or dry cleaning.

Independent hotels and small chains don’t have the problem of implementing innovation at scale. Their advantage is in being agile: they can implement new concepts, products and services quickly, and then learn and adapt to meet needs. The ability to recognize and personalize services for guests is also an advantage over larger players, who are often labelled cookie cutters and lacking in personality.

There is now widespread recognition that, although acquisition is one way to grow and increase presence, it has to be combined with a guest-centric approach and innovative thinking. Maintaining the status quo is not an option when travelers have so much choice at their fingertips. Whether small or large, hoteliers have to demonstrate the value they provide.

For more insights from key industry players, have a look at our report, Open the door to opportunity: collaborating to win in the hotel distribution playing field.