Can (or should) your hotel brand NOT be a hotel brand?

A brand is a promise. A promise that a product will behave in a certain way.

Sometimes, it is also a promise of how others will see you or how you will feel when you use the product, and even, unrelated to the product function, a promise of what you will experience while using it. These last promises generally have nothing to do with the product itself but are the result of marketing. For example, using any motorcycle will make you feel the wind on your face, but not every motorcycle will make you feel cool. Marketing will tell you that a certain cola will make you feel happy, or that smoking a particular cigarette will make you feel as a cowboy. Marketing that appeals to consumer’s emotions is called emotional marketing. Marketing that puts consumers through live experiences to create bonds with a brand is called experiential marketing, and the experiences themselves are called branded experiences.

Contributed by David Camhi, partner, Berger Singerman, Miami and Fort Lauderdale, Florida

Often, the emotional or experiential marketing campaign can be so successful that the experience or feeling itself transcends the product. People care less about the brand promise and how the product will perform, and more about the associated feeling or experience. We see that, for example, when people wear t-shirts with the logo of an unrelated product. This trend has become popular with residential real estate; developers now incorporate recognized luxury, automotive and other brands into their projects seeking to increase their visibility and status. These branded properties also incorporate architectural and design elements that reflect the brand, but they don’t really provide for any particular experience related to it.

Hotel brands promise that a property will have certain specifications and features in terms of room type and size, look and feel, operating standards, and types and levels of service. Hotel brands may also use emotional marketing and experiential marketing to promote their own brands – e.g. DoubleTree’s cookie. A few brands have adopted non-hotel brands to promise the feelings and experiences that such brands evoke; but these are mostly city hotels, which are not necessarily capable of catering to all of the guest’s needs, as opposed to resorts, especially all-inclusive resorts, which are designed to cover all the needs of a guest for an extended period of time.

What if you could design a resort that provides the guest with a branded experience of a particular product for an extended period of time, and then flag the resort with the product’s brand? For example, you could have a motorcycle-branded resort that would provide the experience of being a cool motorcyclist for a few days. Such resort would incorporate the look, feel and design elements of the motorcycle brand, and provide immersive activities that would allow the guest to live what a cool motorcyclist experiences and what the brand stands for, without having to buy a motorcycle. You could buy a motorcycle, join a club, buy the gear, grow a beard, change your lifestyle and ride carefree around the country. Or you could go to the resort, have the experience for a week, and then go back to your regular (boring) life. The possibilities are endless.

Now that we are excited about the prospects (at least I am), let’s focus on some of transactional issues that will arise. In addition to having a recognized brand as the hotel flag, it will be necessary to design for the guests the experiences promised by the brand, while having typical hotel services available as well. This will require the development of new hotel operational standards that strike a balance between the two elements, and that requires substantial investment and expertise. Some of the matters that will need to be negotiated and clearly defined in the license and other hotel agreements are:

• What is the licensing structure: If the new hotel brand is launched between the brand and a hotel management company, there are a few options for the structure:
  • Simple license/sublicense:
    • The brand gives a simple license to the hotel manager for the use of the brand in connection with the management of hotels;
    • The manager develops the standards and manages the hotel under an HMA, without a direct license between the brand and the hotel;
    • The manager pays the brand a license fee for the use of the brand.
• Separate license and hotel management agreement
  • The brand gives a license to the hotel owner, who pays the license fee for the use of the brand and the standards;
  • The standards are developed by the brand, the manager or both;
  • The manager operates the hotel pursuant to an HMA;

• Who develops the standards: The standards can be developed by the hotel manager or by a consultant retained jointly by the brand and the manager. Some key considerations related to this are:
  • If the standards are developed by the manager (or the cost partially funded by it), how will the manager be compensated for the investment? One alternative is that it owns the standards in whole or in part, or that it is appointed as the exclusive manager of the hotels for a period of time.  
  • It is important to define the role of the brand in the development of the standards.  Will the brand take an active role in the development, have approval rights, or only consultation rights? This can lead to conflict as the brand may have unrealistic expectations on what is feasible economically or operationally. Also, establishing set response/comment times for the brand is critical.

• What is the role of the brand once operation begins: Issues to consider include:
  • What approval, supervision or other rights will the brand have once operation begins? The brand may require the right to approve marketing materials, menus, modifications to the hotel, etc., which may interfere with the operation, or delay processes;
  • What obligations will the brand have? In particular, the success of the hotel may rely on the brand promoting the hotel, so it is important to define what the brand will be required to do for this purpose. 

If the concept of branded hotels follows the trend we have seen in other types of properties, we will be seeing some new and exciting concepts very soon.