What is the future of the voluntary chain model?

 width=The first voluntary hotel chain was created in 1946 byÊ Best Western and the concept was quickly followed by others. The 80’s saw a second major wave of new voluntary chains such as The Leading Hotels of the World, World Hotels, Logis, Inter-Hotel, Relais du Silence and Relais & Ch‰teaux.

They arose around a common aim: to gather hotels around values as a brand, but also to build a group to be stronger commercially through publishing a paper guide, having a central reservation system and providing a loyalty program. But with the arrival of the Internet, distribution strategies exploded and groups are progressively losing this distribution component.

Advertisement

What now is their added value?

Let’s talk briefly about the independent hotel business and why voluntary chains emerged.

The independent hotel business is in large part made up of family hotel businesses which are synonymous with human warmth, hospitality, authenticity and values. But these hoteliers are isolated – alone facing challenges and alone facing the market changes. This segment of the hotel business is often small, having 26 rooms on average per establishment (figures Coach Omnium Sept 2017). This makes the work of these hoteliers even more difficult, with few resources and little time to devote to anything other than delivering the best possible service.

Independent hoteliers have therefore typically structured themselves and grouped together in associations -Ê voluntary groups.

The idea was, and still is, to group together to benefit from synergies and mutualisation while preserving the specificity of each. Their development in the 80s was mainly to access more powerful marketing and commercial efforts.

And then the digital revolution arrived and it reworked distribution maps. Best Western was the first voluntary chain to offer an Internet access to its members as well as a Central Reservation System in December 1995. For the last three to four years, some hoteliers have been wondering if they should stay in their group while Booking.com represents 30 to 40 per cent of their turnover.

Some groups, like World Hotels and Best Western, then pro-actively chose to focus their efforts on the corporate segment, bringing to their participants a flow of corporate reservations. But this segment is also being targeted by the big OTAs – Expedia has its Egencia corporate offering and Booking.com decided to embrace corporate business and is signing global contracts to act as The Corporate Travel Agency of big institutions. EPFL University in Switzerland, for instance, signed a corporate contract with Booking.com. Some governments in South America decided to work exclusively with Booking.com to handle all travel bookings for their government. So the main added-value of voluntary chains is being eroded by the large OTAs as the volume of bookings via voluntary chains shrinks.

So the two main reasons why voluntary chains are losing members are the high operating costs for the members and the decreasing volume of corporate sales in the total sales of their members.

The obvious answer anyone would give to both issues is: bring more value to the cost paid by your members and bring value to your hotel members by bringing value to the final guests. In other words, be THE model for all independent hotels!

The point is – how?

Bringing more value requires only to lean down and pick up a bunch of new solutions targeting guests expectations and simplifying the hoteliers’ lives.

The travel tech world is full of new solutions now able to boost hotel sales while answering the needs of guests. Technology can provide a mobile app for bookings, build loyalty programs, provide a flexible price bidding solution available for independent hotels and voluntary chains, put a chabot on the hotel website to assist guests during their reservation, bring e-concierge services, upsell hotel rooms once the booking is done, manage guests feedback and ratings after the stayÉ.Ê There are many other hotel tech applications, all productive, easy to implement and connectable.

The issue for independent hotels is how to select the best tools for their needs, then to implement them and be able to easily change them if something better comes up on the market.

The responsibility of a voluntary chain management is to provide its members with all the services and support to succeed collectively as a brand and also individually.

I believe the 100 per cent centralised model of service procurement is dead. In order to perform today, new models need to be thought out and implemented and they need to be more flexible and more reactive.

To illustrate my point, let’s take an example. A bidding solution is identified by a voluntary chain as an added-value to boost direct sales and bring a new booking experience to the guests.

Options to deal with such a project

CASE 1

The voluntary chain could decide to integrate it with its brand website as a central bidding platform, to attract guests directly. All hotel members would have their own login and could post their offers on the bidding platform whenever they wish. Guests would discover this new feature on the brand’s website where they can bid their own price and would have no reason to book on an OTAs like Booking.com or Expedia. This strategy would demonstrate a decision to renew and strengthen the brand and differentiate it from its competitors.

CASE 2

The voluntary chain can also decide not to purchase and implement the bidding solution centrally but determines that it is better to let each hotel decide for itself – they would just provide the hotel with a toolbox. Hence, each hotel could choose to implement it on its own website, using the same bidding engine for its own property.

The same applies to many tech services linked to Revenue Management tools, CRS management, loyalty solutions etc.

In both cases, voluntary chains would certainly need to build their own team of specialists – digital, marketing and IT- whose responsibility would be to chase the best solutions on the market and provide them to all hotel members. In CASE 1, the team would manage the project from A to Z, till its final central implementation. In CASE 2, the team would choose the best solution in each category (bidding, concierge, loyalty, etc). The solutions would have been previously identified, compared, rated by the brand’s specialists, negotiated at group’s level, and then put at disposal on the brand web platform as a recommended service for the members.

If nothing is being done by your voluntary chain, I trust that you will go your own way and go to exhibitions (don’t forget the Food Hotel Tech in Paris in June) to pick your own solutions!

About the author

 width=Isabelle Jan is co-founder and manager of PrivateDeal SA, a Swiss company specialized in night & day-use bidding solutions for hospitality businesses. After several years of experience in hotel management and an entrepreneurship background, she is now focused on helping hotels to find new ways of attracting their Millennial guests while improving their direct bookings and simplifying yield management.

Advertisement
Should we remove the CV from talent acquisition?
Where is hotel technology going?
Menu