Hotel Brand Study

April 8, 2013 !Gaurav Venkateswar & Jeremy Berens

Photograph by Hotels Paris Rive Gauche

The AssignmentChoose two brands from L2 Think Tank’s Hotels Digital IQ Report: one ranked as "Average" companies, and another ranked as "Challenged".

Briefly describe the brand identity of each brand.

Identify and describe the strategic challenges that each brand faces.

Make recommendations for how each brand can move up in the rankings

Brand Essence

Iconic, locally authentic, unexpectedly unique luxury

experiences

Premium sensory experience of the Pacific Rim

Brand Identity

Brand identity is a unique set of brand associations that the brand strategist aspires to create or maintain. These

associations represent what the brand stands for and imply a promise to customers from the organization members.

!- David A. Aaker, Building Strong Brands.

“”

Brand IdentityBrand identity is a unique set of brand associations that the brand strategist aspires to

create or maintain. These associations represent what the brand stands for and imply a promise to customers from the organization members. !

- David A. Aaker, Building Strong Brands.“ ”

The name Orient Express harkens back to the glamorous and romanticized journey across Europe from London to Istanbul. It operates the Venice-Simplon Orient Express as a revived version of the original train. Their video ads evoke a sense of the classic grandeur associated with the Orient Express as well as the unique cultural experiences offered at their hotels. Their videos communicate that a stay at one of their properties is not merely a luxurious accommodation, but furthermore an immersion into the local culture that surrounds it.

The Orient Express identifies its brand as a promise of unique experiences. It strives to present a memorable, luxurious, and culturally authentic experience specific to each hotel’s location. These attributes are described on their hotel web site as well as on their investor relations site. It prides itself on a diverse collection of location “spanning land and water, adventure and relaxation, local individuality and iconic opulence.” Thus, although it is one brand, each location feels unique to its culture (e.g., its hotel in Cuzco, Peru has Incan/Spanish qualities, while its hotel in New York has an upbeat urban feel).

Brand IdentityBrand identity is a unique set of brand associations that the brand strategist aspires to

create or maintain. These associations represent what the brand stands for and imply a promise to customers from the organization members. !

- David A. Aaker, Building Strong Brands.“ ”

Pan Pacific brands itself as a premium hotel brand blending the unique culture and heritage of the Pacific Rim with discreet elegance and personalized service. It also emphasizes the idea that its hotels provide experiences that enliven the senses. It identifies with a unique Pacific culture but also talks to the uniqueness amongst the various locations in the Pacific. The blend of Pacific culture and sensory enjoyments is offered amongst other things through fusion cuisine and unique spa treatments drawing upon elements of various Pacific cultures.

It also showcases that it has been voted as a top hotel for business travelers. There is no comprehensive YouTube channel, but the Vancouver location has a channel where many videos talk about food creations (e.g., making mooncakes, hard lemonade, soya and mirin sable fish, etc.), showcasing the culinary sensory enjoyment that Pan Pacific promises.

Strategic Challenges

Targeting Luxury Travelers Rather than Business Travelers Dependent on seasonality of leisure travel Limits locations for growth as only certain cities are poised for luxury hotels

Emphasis on Unique Local and Cultural Experiences Locations must be compelling enough for differentiated experience Limits locations for growth

Skilled Management In 2011 General Manager of Orient-Express Sydney said in Australia there is a shortage of skilled labor for operational management

This hotel was eventually sold in 2012 to another hotel group

Management Structure Hinders Change Shareholder structure and Bermuda law allows for directors to elect themselves Shareholders have no real say in director election Company has poor performance but directors hold power and infusion of new talent is difficult

Directors rejected takeover bids from Jumeirah Group and Indian Hotels Company. Both these companies have been performing well (much better than Oriental Express)

Impact of Recession Travel patterns changed as people more controlled on how disposable income is spent

Business Meeting Destination With economic recession, discretionary spending by companies impacts how much revenue is earned by business-related travel Voted one of the Top 25 business hotels, but its branding efforts do not aggressively position it toward this high-value segment

Fragmented Marketing Limited Digital Media Presence

Facebook page is the only social platform Pan Pacific Seattle has a YouTube page, but there are no unified page for all locations No presence on other social platforms

Takes away from a unified brand experience Takes many clicks to navigate between location sections on web site

Difficult to asses brand identity Storyline

There is no compelling promise or story to tell Chain feels fragmented

Differentiation Pan Pacific does not offer compelling differentiation in its marketing

Special spa treatments and Fusion Pan-Pacific cuisine are easily replicated and perhaps expected at any top hotel in the Pacific rim Personalized service is easily replicated at any top hotel

Impact of Recession Travel patterns changed as people more controlled on how disposable income is spent

Recommendations - Overall

In terms of the “Clock Model”, we recommend that these firms commit to an exceptionally strong bias toward post-purchase activities.

The primary post-purchase vehicles available to hotels are Blogs/Forums, User Reviews, Social Networks, and Loyalty Programs. Therefore, it is crucial that Oriental Express and Pan Pacific develop strength in one or more of these tools. However, it is equally important that efforts in these arenas are consistent with the brand’s identity and increase its ability to clear the “three hurdles”.

The “Clock Model” is a framework modeling a firm’s investment in customer engagement prior to

interacting in a transaction with customers (starting at 12 o’clock), during the transaction, and after the transaction has completed (ending at 12 o’clock).

12

6

39

1

2

4

578

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Recommendations Oriental Express should focus on leveraging digital tools to allow customers to share/enhance their unique local experiences far better than any competitor.

BLOGS/FORUMS: Oriental Express’ website presently has a Traveller’s Lounge forum that allows members to exchange details about their experiences. However, membership requires a previous Oriental Express stay, which makes info about these experiences invisible to non-members (SEE APPENDIX A). This limits the population of travelers with which past customers can share. This hurts Oriental Express in two ways:

Past customers are cheated of the self-expressive benefit of bragging via experience-sharing, since fewer folks are interacting with them or commenting about their experiences.

Potential customers (who are not members) are not able to learn about others’ experiences, which would potentially entice them to stay at an Oriental Express property and spend additional dollars on tours/adventures.

Recommendations USER REVIEWS: Given that so much of Oriental Express’ brand identity is based on unique experiences, user reviews lend credibility and authenticity to Oriental Express’ marketed adventures. Thus, it is crucial that Oriental Express maintain its brand equity on TripAdvisor, the king of travel user review sites.

Presently, Oriental Express’ flagship Venice Simplon-Orient-Express train experience has overwhelmingly positive TripAdvisor reviews. However, it does still have six average ratings, six poor ratings, and 1 terrible rating. Of these 13 less-than-stellar reviews, Oriental Express only responded to one. If it does such a poor job of managing these negative reviews on its flagship experiences, it likely does the same or worse on less popular offerings. Thus, we recommend that Oriental Express invest in an employee dedicated to managing the brand’s TripAdvisor image/presence. Failing to do so, in a world where 63% of travelers consult reviews before booking (SEE APPENDIX C), is a significant misstep.

Recommendations LOYALTY PROGRAM: At present, Oriental Express lacks a loyalty program, which puts them at a disadvantage in terms of data capture and the associated leveraging of customer info/preferences to increase “number of stays” or “spend per stay” (SEE APPENDIX C). Consistent with its identity, we recommend that Oriental Express launch a loyalty program aimed at capturing customer info regarding preferred types of experiences (adventure vs. leisure; on-resort vs. off-resort; etc.). This loyalty program should establish switching costs by being linked to award experiences (i.e. X amount of loyalty points can be redeemed for unique local experiences/tours OR purchase of these experiences/tours translates to X amount of loyalty points). It should also tie-in with an investment in customer relationship management software that automatically sends an e-mail to a member post-experience. The e-mail should contain a link to a survey specific to the member’s recent Oriental Express experiences/activities. It will solicit specific experience feedback, which Oriental Express can use to improve their experiences.

An email marketing strategy capitalizes on mobile/tablet users' tendency to open most e-mails (SEE APPENDIX C). In addition, users survey responses will automatically update their profile, thereby provided Oriental Express with a better picture of their interests. This will provide Oriental Express more information that can be used to sell them future stays/experiences. This loyalty profile can also capture customers' Twitter handles, which Oriental Express can use to follow up with customers post-experience, or to proactively market to customers about future experiences. At a later time, Oriental Express can send targeted tweets based upon customers' experience preferences. Oriental Express presently uses its Twitter account to retweet customers' positive feedback or share untargeted information about its properties, which are less powerful activities (SEE APPENDIX B).

Recommendations

BUSINESS TRAVELER: Given that Pan Pacific was voted one of the Top 25 business hotels, we recommend that it reposition its brand to aggressively target high-value business travelers. Its brand essence should be This allows Pan Pacific to leverage the sensory-focused assets that it has already acquired/developed in order to pursue a new target segment with which it has already developed significant traction.

The heart of Pan Pacific's branding problem stems from its unclear positioning. It stresses its "sensory experiences" and good service, but so do many other brands, and Pan Pacific’s offerings do not appear adequately differentiated from other hotels' properties. Rather than investing resources in trying to outdo competitors' whose sensory experiences are better positioned, we recommend that Pan Pacific reposition its brand.

“ ”complete relaxation for all of the business traveler's senses

Recommendations CONSOLIDATED DIGITAL MARKETING: Consistent with this recommendation, we suggest that Pan Pacific focus on clarifying their brand's position in the market by sharpening their website's messaging/branding to clearly target business travelers. A brand's website is one of the core components of its image and therefore should be Pan Pacific’s primary area of concern near-term. All imagery and copy should convey the message that Pan Pacific is the place where business travelers can relax after a long day of work. Consistent with this effort to clarify the brand's messaging, Pan Pacific should make some changes on the Facebook platform, as well. More specifically, Pan Pacific presently has a main Facebook page, as well as site-specific pages. This multitude of pages and page-owners makes it difficult to convey a consistent unified message. Hence, we recommend that Pan Pacific eliminate the site pages, keep the main page, and clarify its Facebook messaging just as we proposed for the website. The same is true of Pan Pacific Twitter handles. Each hotel has a separate handle but there is no consolidated handle. It may be wise to maintain both individual handles and a consolidated one. The latter can serve to be a main point of communication and can route tweets to individual handles as necessary. Twitter should ultimately be used to engage users post-purchase and doing so from site-specific handles might make more sense in this case.Similarly, Pan Pacific Seattle has a YouTube channel, but other locations do not seem to have one. The brand needs a consolidated YouTube page. This speaks to the need for Pan Pacific to maintain a master-brand architecture, rather than trying to support site-specific sub-brands.

Recommendations OTHER DIGITAL MARKETING: Our final recommendation is for Pan Pacific to establish a master-brand presence on other social sites. To cater to the business market, Pan Pacific should post on LinkedIn by posting Pan Pacific articles about relaxation for the business traveler. If resources allow, it should consider generating this content itself, in order to stress the importance of sensory experiences and tightly control the message. Pinterest is another potential option for posting visuals around relaxation for the business travel and the sensory experience.

RecommendationsMany accounts and studies indicate the current trend for future growth in high-end markets is catering to Chinese consumers. In luxury and high-end fashion products, a large segment of mainland Chinese are voraciously consuming goods, and even traveling to Europe for shopping sprees to avoid value-added tax on imported goods in China. The CEO of Pan Pacific and the General Manager of Oriental Express Sydney have both indicated that In China is a hot market for tourism. Domestic tourism is an important source of consumer growth and tourism revenue has been growing for over a decade. According to the China National Tourism Administration, the number of domestic trips jumped 54 percent from 1996 to 2006. The government has helped to support this trend by easing travel restrictions, and increasing the number of mandatory public holidays in order to drive tourism demand. In particular Chinese workers now have two “golden weeks” as part of their mandatory national holidays; during one of these weeks in 2009, tourism generated nearly 7.7 billion renminbi in revenue. Chinese tourists spent $102 billion on foreign trips last year, 41 per cent more than

the year before. Thus there is a strong domestic and international market for Chinese travelers. As part of the Digital IQ methodology, Chinese-specific platforms should be factored in. Baidu is China's largest search engine and according to a 2012 study commanded 78.3% market share with Google only at 16.7% share. Luxury brands such as Prada, Burberry, Hermès, Chanel, Louis Vuitton, and Ermenegildo Zegna already appear to have banner ads when testing searches on Baidu.com. In contrast, when testing top 21 hotels from L2's report using Baidu, only Starwood Properties and Intercontinental showed up with banner ads. For any Starwood property, the ad that came up was not for the individual hotel (e.g., not for W Hotel, or Westin), but a generic Starwood Hotel banner ad. If the Chinese market is a growth area then part of a strong digital marketing strategy should include investment in paid search on Baidu (as well as Google China). The strategy should also include Chinese social network such as QZone, which has approximately 712 million users today.

China

Banner Ad for

StarwoodChinese Sharing Paid

Search Result

Recommendations

The CEO of Pan Pacific and the General Manager of Oriental Express Sydney have also both indicated that India is another market to watch.

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There may be an opportunity to purchase keywords relating to travel to India (however at the moment neither brands have locations in India). Furthermore, both brands can invest on keywords specifically in Google India as part of the pre-purchase cycle for Indian business and leisure travelers.

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India

PATRICK IMBARDELLI President and CEO

Pan Pacific Hotels Group

India seems to be getting popular among investors particularly, Indian nationals who are residing in the Europe or US and are returning to India to invest in their home countries.”

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Appendix A - Orient Express Members-Only Forum

Appendix B - Orient Express Untargeted Tweets

Appendix C - L2 Projections & Findings

Appendix D - Pan Pacific Homepage

Appendix E - SourcesWeb Siteshttp://dealbook.nytimes.com/2012/11/29/at-orient-express-the-board-holds-all-the-cards/ http://money.cnn.com/2012/02/13/technology/thebuzz/index.htm http://news.asiaone.com/News/Latest%2BNews/Relax/Story/A1Story20130406-414047.htmlhttp://www.nytimes.com/2010/02/02/business/global/02tourist.html?_r=0 http://www.orient-express.comhttp://www.panpacific.comhttp://www.techinasia.com/social-media-and-social-marketing-china-stats-2013/ http://www.l2thinktank.com/research/hotels-2013

Other ArticlesBISWorld Industry Report G4611-GL Global Hotels & Resorts, September 2012, Nima Samadi Hotel & Accommodation Management; Feb2011, Vol. 15 Issue 1, p70-70, 1p, 1 Color Photograph Hotel & Accommodation Management; Feb2012, Vol. 16 Issue 1, p38-38, 1p Orient-Express Hotels Ltd. 2011 Annual Report