Is Technology Leveling the Playing Field for Independent Hotels

Despite their lack of branding power, independent hotels are very much in the game these days, the credit goes to technology and social media services that level the playing field.

Recent data from STR, the hospitality industry statisticians, reveals that in the upper-upscale category — brands just below luxury, on par with Marriott, Hilton and Westin — independent hotels command a significant premium when it comes to average daily rate (ADR).

In terms of occupancy, independents did trail brands in the upper-upscale category by 6 to 7 percentage points, but as STR Senior Vice President Jan Freitag pointed out, “Any hotelier would prefer to see that rate premium, because it is ADR that makes hotels more profitable. There are expenses associated with higher occupancy as far as labour and other factors.”

Fascinatingly, the STR research also disclosed that independents’ rates had recuperated fully to prerecession levels, while brands’ rates had not. Many analysts agree that there is strength in the independent segment.

“With search optimization in the hands of every property (and many consulting firms who serve independents), the Web is, more than ever, the great leveller,” said Donna Quadri-Felitti, associate professor at New York University’s Tisch Center for Hospitality, Tourism and Sports Management. “Reservations systems have been the powerhouse engine of brand conversions in the past, but today there are so many more options for the independent operator.
It is evident that Independent and boutique hotels are gaining prominence in many cities around Europe, yet their unique advantages and operation are often ignored in today’s brand-dominated hospitality industry.

A big plus for independents is that franchise, marketing and other fees make it too expensive in many cases to take on a brand affiliation. If an independent hotel can drive financial results similar to those of a brand hotel, they find themselves ahead of the game.

Technology is the game changer
The two major factors for which the Independent hotels are continuously gaining on the Branded ones is primarily the fact that internet review sites have garnered a massive following within the traveling consumer market. Secondly it’s because hotels are displayed on online travel agencies (OTA) in “agnostic” fashion, enabling consumers to compare branded and non-branded hotels on the same page. This basically means that the online traveling agencies not have favouritism towards both types of hotels.

Thomas Goodwin, senior vice president for Fillmore Hospitality, a portfolio containing multiple branded and independent hotels, said, “The big challenge for independents has been building credibility and consumer confidence. As hotel reviews have become transparent, that whole world has changed. The democratization of reviews is the best thing that has ever happened to great hotel operators.” This factor has changed the very nature of coming with hotel advertisements.

“It’s so much easier to show up through search engines and through hotel reviews, and you can really communicate what your value proposition is and give people the confidence to pay for that,” said Goodwin. “It changes the way you operate a hotel. We have realized that the most effective marketing expenditures come not necessarily from advertising but from giving a great experience. Reviews drive a lot of demand.”
For these reasons it is vital for any independent hotel to have an online presence, from social media sites all the way to online travel agencies, if they have any chance of challenging the bigger and more equipped branded hotels.

Gianluaca Fino is a Business Development Executive at Alert eBusiness.
www.alert.com.mt