For most independent hoteliers, the decision to join an association such as Leading, Preferred, Small Luxury or Relais & Chateaux is a critical and complex decision.
All of these organizations have stepped up their game of late, with grand improvements to both their web and sales offerings so that they can all stay relevant as traveler behavior changes. Moreover, the impetus to participate is exacerbated by the proliferation of inventory in the alternate lodging sector – that is, Airbnb – coupled with the marketing behemoths that are the OTAs.
The costs of joining an association are not inconsequential, nor are the rebranding and conversion overhead costs, especially with regard to hard and soft goods upgrades to meet predetermined brand standards. For many smaller properties, this association relationship may represent the single largest component of the annual marketing budget. Accordingly, the decision requires due consideration from multiple departments.
Here are some discussion points and actions that should form a good part of your due diligence. I’ve set aside the obvious ones, such as understanding each association’s base and reservation fees structure.
- Provide case studies of comparable properties. Look for similar locations from other regions, property type, number of rooms and amenities.
- Define opportunities for learning about best practices. There is more to an organization than just revenue generation. Learn about opportunities for meeting and working with other member owner/operators, and how these get-togethers are facilitated. Associations are considered ‘soft brands’ for reasons apart from naming. They are peer groups, so look for opportunities to mingle.
- Determine the added-value generated through their buying power. Value is also generated through economies of scale on negotiated rates. But remember to value those programs that will work for your property with established priorities so that, if you decide to change, each task can be properly handled in sequential order.
- Calculate the real annual cost. Fees and reservations commissions are just the first steps. But, to get the most out of any relationship, you will have to participate in all appropriate sales missions, promotions and the regional/annual meetings. Try to get a handle on these hidden costs as well.
- Verify your obligations. If it exists, analyze the costs of their loyalty program and how CRM data will be shared or controlled. What restrictions (if any) will there be on your brand.com website? What programs are mandatory versus recommended? Is there mandatory sharing of databases?
- Learn about their marketing plans for your home market. What steps are they planning for your region/geography? How will they protect your interests from other member properties, hotels in other associations and branded competitors? How will assist with regional marketing efforts?
- Learn about their marketing plans for your most critical guest origin markets. Building on the last point, often members in these high-frequency locations can also form an important source of guest referral. Moreover, the guest origin locale may be different from your own or even what the association believes to be your bread and butter, both of which may necessitate a different approach.
- Know in advance if your admission will give you any geographic exclusivity. Will you ‘own’ that territory or be one of many? If there are already members in your location, what say will they have on your participation and are they well-respected peers? Do you have any say or veto power when it comes to newcomers to your region?
- Understand what their launch plan is for your admission. What will they do to get the relationship off to a rip-roaring start? For any launch, considerations must be given to not just advertising but also group sales, events and public relations.
- Learn the rules for departure. Similar to a marriage contract, the terms of engagement require details on the exit strategy. It is better to know in advance what these are as well as what conditions you will measure internally so that you know when it is time for a change.
Remember, you only get out what you put in. Once you sign, you need to fully commit yourself to the relationship. You need to be prepared, have buy-in from your team and ensure more than ‘lip service’ is given to your participation.
About the author
One of the world’s most published writers in hospitality, Larry Mogelonsky is the owner of Hotel Mogel Consulting Limited and founder of LMA Communications Inc., an award-winning marketing agency based in Toronto. His experience encompasses hotel properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Larry is also a principal of Cayuga Hospitality Consultants and is on several boards for companies focused on hotel technology. His work includes three books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013) and “Hotel Llama” (2015). You can reach Larry at larry@lma.ca to discuss hotel business challenges or to book speaking engagements.
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