Here Today. Gone Tomorrow.

By Peter Warren -- HOTELS Magazine, 7/1/2005

As the CEO of a New York advertising agency, we’re faced constantly with the ups and downs of the business cycle. When a client’s business is off due to factors outside their control, such as a declining economy, my job is to help them realize that things will turn around and their marketing will be an important part of that turnaround.

One of the hardest hit industries in recent years has been the travel industry. The impact of 9/11, the economy, anti-American sentiment, protracted war and terrorism in Iraq and the Mideast - all of those had negative impacts one way or another. Trips were postponed and travel took a hit for a number of years. And when you’re in the airline or hotel business, there’s nothing more perishable and less valuable than an empty seat on take-off or yesterday’s unsold room or cabin availability.

Well, now we’re faced with somewhat of a similar situation, only in reverse. We do a lot of work in the hospitality industry and, right now, business is bouncing back nicely. With the hotels we work with, bookings are up, revenue per room is up, and discounting is way down. The economy clearly has picked up and consumers in general are responding by spending more than we might have expected only one year ago.

But we, as marketing specialists, must try to protect our clients from any temptation to cut back on brand advertising support during good times. To make a convincing case that marketing dollars spent today, which may not generate immediate additional revenues in the short term, will over the long term produce greater market share and increased business versus the competition. Because no matter how good the economy seems at a given moment, it will change. And those who remain steadfast in financial commitment to their brands will surely be the last ones standing over those who went for the easy short-term money.

Of course travel and hospitality marketing is very much a retail thing. Hotels think about their occupancy and average rate day to day, week to week, month to month. Slowly, unfortunately very slowly, travel related companies are only now beginning to realize that they are “brands”, which by definition make promises and create expectations. What we’re saying to our clients now is you should be concentrating on building awareness and a personality for your brand over the long haul. Brands are not built overnight, and while you’re taking care of your short term retail marketing needs, make sure to take a long term view as well. You must be asking the question “if I cut back on my brand image and identity marketing, what impact will that have on the relationship my customer has with the brand”? What will that do to my market share over the long term? “Share of mind” translates to “share of wallet”. Remember, your competition always plays a role in your marketing sales results, especially if you’re cutting back on your brand advertising and they’re not.

We always try and work with our clients to show that a solid advertising and marketing communications plan is an “investment”. The whole concept of brand value and brand equity is sometimes forgotten even in the best of times. And that would bring me to my next point. We caution our clients not to get “too greedy”. A lot of businesses in the travel industry are trying to make up for lost revenue during the recent downturn. If they try and accelerate their revenue goals to the extent that they think only short term without the necessary long term investment spending, then they put themselves at the mercy of an inherently cyclical industry downturn.

It all comes down to what really is the value of protecting a brand and building equity in a very competitive marketplace that will, over the long run, penalize short term thinking and quick-fix approaches.