Cover Story

Success in synergy

That's what hotel companies are looking at - exploring peripheral services in travel and hospitality, whether it is to make the guest experience more fulfilling or to ensure that the hotel brand grows. By Sanjeev Bhar

The growth in the hotel segment is increasingly becoming a symbiosis of alliances. Collaborations with hotels and allied services are making the market an interesting study where the scope of hotel brands is stretching its reach for presence as a strategic move for success.

The Indian hospitality sector like other growing sectors is proving to be very dynamic in nature. Hotels are now looking at evolving by associating their brands with different partners for augmenting the brand growth and adapting to the competitive landscape. This goes beyond their survival instincts; it is seen as branding strategies by taking numerous small steps.

Need for alliances

Getting onto a growth roadmap is undoubtedly impossible for a business unless it is synchronised with its immediate environment. In case of hospitality, the sheer magnitude of the allied industry has taken the sector by storm. The growth of car rentals, travel portals and airline networks has made it mandatory for hotels to associate themselves with these sectors.

Such associations are proving to be a vital parameter for their success. B Hariharan, VP (Sales & Marketing) at ITC Limited - Hotels Division, concurs, "It is not possible to escape association with other brands within the hospitality purview. Today, marketing alliances have become an inevitable part of the hotel business, where the focus is more on taking the branding and marketing association forward."

What's more, hotel groups are not restricting themselves and moving to terrains where their brand is absent to allow them to enter unknown markets and tap their potential. Deepa Misra Harris, VP (Marketing) at Taj Hotels Resorts & Palaces, says, "It is important these days to have marketing alliances with other hotels, especially in markets where there is no presence of your brand or if there is a presence then in a limited manner."

For instance, Taj has entered into a marketing alliance with Okura Hotels & Resorts, Japan, which enables both parties to develop cross-promotional opportunities and leverage each other's strengths in their respective markets of dominance. "As we grow to become a true international company with a strong world footprint, it becomes vital to give our loyal customer base an option of perfect stay where we might not be present," Harris adds.

The various alliances that are taking place these days have one common string running through them. Companies want to access a target audience beyond their immediate reach, if not directly then indirectly. Radhika Shastry, managing director (India Subcontinent), Group RCI, observes, "It is increasingly becoming vital for hotels to keep its inventory levels high. In such a scenario, hotels are now recognising the fact that having an alliance with timeshare players will work best."

Timeshare, today, offers various models of successfully-operating properties like traditional timeshare, condominium hotels, fractional ownership and private residences clubs. According to Shastry, these models help hotels sell an assured number of room nights for a defined period of time. Thus, along the timeshare's growing acceptance by the affluent Indians, hotel companies are gearing up with properties that would exclusively cater to timeshare models by setting aside units in given established properties in India. "The timeshare concept, apart from ensuring room nights, also ensures that the brand travels to distant regions of the world," Shastry remarks.

Leveraging representation

Brand identification has become the core focus area for hotels. Devyani Raman, CEO of Luxury Marketing Council - India, says, "The fact that hotels in India are targeting HNIs and emerging affluent in different world markets, it has become vital to classify their brands in the eyes of their target groups by associating with the right partners."

Therefore, associating with other brands plays a key role in making people from other parts of the world relate to Indian brands in a positive way. Sanjay Sethi, managing director and CEO of Berggruen Hotels' Keys, says that any sort of alliance is more important for the budget segment. "It is this segment that needs to have a strong presence and representation and need to get into an integration process to promote itself," he says. Moreover, alliances are looked upon as a critical issue for single-point destination where traffic tends to be restricted.

Hotels are also looking at alliances with organisations like Leading Hotels of the World (LHW) or Worldhotels that accredit properties to pre-defined standards on a world platform. This can help hotels access a wider market. Mark Greedy, area VP (Asia Pacific) of LHW, describes the benefits of being part of LHW. "The luxury consumers tend to select those brands with which they can relate to and therefore they go for a niche segment even when selecting their hotel rooms. Secondly, distribution facilities that LHW offers coupled with branding exercise that we carry out from time to time help member hotels immensely," he says.

Reiterating this is Roland Jegge, VP (Asia Pacific) of Worldhotels, who says that there are some basic parameters that customers across countries look for in hotels. "We are looking at hotels in India that would qualify to offer exclusive experience to our customer base. Our member hotels enjoy a certain reputation that is exclusive." Nonetheless, Greedy cautions, "There are some strict parameters that hotels need to adhere to with constant checks being carried out to carry forward the association with members, as membership at LHW is earned."

Brand recall

Alliances in business shouldn't be seen only in terms of revenues or accessibility to a larger market. The true nature of having an alliance also comes from the fact that brands are recognised, especially among the core business groups not in line with the direct objectives of a company.

Hotels are therefore lining up with car rentals, travel portals, online travel agents, GDS providers and so on.

One of the key segments is the aviation sector for various kinds of programmes - from miles reward programme to revenue sharing promotion. Harris informs, "Taj Group has a strong representation through airline loyalty programmes. We have a marketing alliance with 15 airlines that enables distinguished frequent travellers in those airlines to redeem their travel points for a stay with us."

Also, a marketing alliance of any sort goes beyond the benefits that a brand gets by way of visibility. "It also provides acquisition of a new customer base. Alliances with partners of equal stature further reinforce brand values. It is vital today to have a strong presence and be accepted by the global audience," she adds.

Hotels forging strategic alliances with different sets of service providers would be a trend that will come to fore as a direct consequence of some operations detaching themselves from hotels' diktat. Furthermore, some services that are vital for bringing customers to a hotel or facilitate their travels - from lodging to transport - would play a decisive role in customer preferences.

Adding a word of caution though is Sethi who remarks, "There is no drawback per se, especially in case of marketing alliance between hotels with a peer in another country. But one should always be clear about their future intentions. Aims and objectives should not clash." Harris gives an instance of Taj and says, "It is not necessary that we are restricting ourselves to the Japanese market. But understanding that there is no such plan at the given moment, it is wise to have an alliance and ultimately, representation. There is a lot of synergy that partners can derive from an alliance in their markets of dominance."

Marketing alliances of any sort goes beyond the benefits of a brand for high customer base. An alliance with the right partner shows the character of the company and takes the brand ahead. Considering that first-hand experience of products and services play a crucial role in making a brand big, strong marketing representation will go a long way for hotels to have a presence where it has none.