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Hotel Brands: Your Relationships With Owners Are at Risk

Hotel Brands: Your Relationships With Owners Are at Risk

by John Timmerman

Measuring the hotel customer experience has evolved since the days when guests scribbled anonymous complaints and suggestions on comment cards. With the emergence of electronic surveys, sentiment analysis and other data tools, the industry has become increasingly adept at listening and responding to feedback from guests.

But few hotel brands apply the same systematic rigor when it comes to heeding the opinions of their business-to-business customers -- particularly the owners of the properties that bear their brand's name. It may seem paradoxical, but the same brands that invest in third-party engagement surveys for guests rarely do the same for owners. This is true even though brands' ties with guests are relatively fleeting compared with their owner relationships, which span decades and net millions of dollars.

Hotel brands will argue that they do prioritize owner relations by providing dedicated owner support staff, training resources, advisory councils and recognition events. However, these are merely table stakes to enter the game -- they don't provide predictive analytics to determine if owners will like the hand of cards they're dealt by the brand.

Brands must be able to monitor the undercurrents of owner engagement to predict when these relationships might be at risk. Without evidence to the contrary, brands likely think they're doing a better job of engaging their owners than they actually are. And brands' internal reporting on owner engagement could bolster misconceptions, because these efforts lack an unbiased third-party perspective and might not account for differences in owner type, size and maturity.

Gallup has meticulously studied hundreds of business-to-business relationships between hotel brands and owners. We've identified key engagement and brand preference drivers for investors, franchisees and management companies. For example, we've learned that new franchisees value pre-opening support processes, while large management companies place more emphasis on the brand being a valued business partner.

We also have found that brands jeopardize owner engagement by overemphasizing brand standard compliance. These standards are meant to provide owners with clear specifications to consistently deliver quality and a differentiated brand experience. However, from an owner's perspective, it can seem like brands focus myopically on adding more standards and costs instead of helping owners in areas where they need it most -- for instance, in improving financial performance.

I once observed a brand leader spend an entire meeting futilely trying to convince an owner to invest in a new brand standard for technology. The owner didn't have a problem with the proposed technology, but he felt the brand leader was not addressing his specific sales concerns. As a result, the flashy presentation and business case for the new technology fell flat, because the owner perceived the brand leader wasn't tuned in to his needs and priorities.

The key drivers of owner engagement that Gallup has uncovered can help point the way in these potentially murky situations. Brand-owner relationships should be about how brands organize resources and support services to proactively identify owners' needs and focus their discussions on what is important to owners and the outcomes they need to achieve.

Hotel brands need healthy, successful partnerships with owners if they want to grow and expand the number of properties in their brand portfolio. When the health of these relationships deteriorates, the separation risk is high.

If a brand wants to continue winning new contracts with owners while renewing old ones, leaders must learn to listen to these customers as systematically as they do in their business-to-consumer channels. They must understand what drives engagement and business outcomes for these customers and make appropriate changes if they want to remain a brand of choice for owners.

Hotel brand leaders should assess their owner relationships for risk factors by doing the following:

1. Validating the perceived key drivers of owner engagement and brand preference

2. Understanding the economic premium of engaged owners -- and the economic discount of actively disengaged owners

3. Segmenting and measuring key engagement drivers across the different types of owners

4. Becoming more systematic in using owner engagement data to re-evaluate priorities and restructure resources

With hotel brands' growth strategies fueled by owner investments, their relationships with owners are increasingly vital to their long-term success. Hotel brands that measure and manage the key drivers of owner engagement will have a strong competitive edge.

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