Destination branding requires innovation and integration

About 300 kilometers south of Bangkok on the gulf of Thailand, lies Hua Hin once a quaint fishing village that was transformed in the reign of King Rama VI when it became a stop on the Southern Railroad route.

In the reign of King Rama VII a Summer Palace was constructed for the royal family. Despite the many political and social changes that Siam experienced during this period, the Palace gave the Royal Family and their friends an escape from court life and 100 years later, Hua Hin is still a popular destination for high-society and the Royal Family still resides at the Palace for part of the year.

Hua Hin is also a popular location with five star resort hotels, luxury boutique residences and private beach front homes offering unprecedented levels of luxury. In Hua Hin alone, there are roughly 200 hotels, including 30 five star hotels in an area no more than a few square miles. Hua Hin has struggled for years to attract tourists and fill rooms. Throw in a global economic meltdown, the on-going domestic political crisis and civil unrest and the business of building a hospitality brand gets rather complicated, even in a country with such a reputation for fun.

And with Asia’s hospitality business looking good in these troubled times – over US$1.3 billion was invested in hotels in Asia Pacific in the first six months of 2010 – destinations such as Hua Hin have to be innovative to compete. And to do this, the town and tourism related businesses must work together, not compete, to ride out the storm.

Intercontinental Hua Hin Resort has come up with one creative idea to differentiate itself by offering a private air service to shuttle guests from Bangkok’s Suvarnabhumi International Airport or Don Muang Airport to the beachside city. For anyone who has had the misfortune to experience the drive from Bangkok to Hua Hin, this is certainly an attractive offer! But it won’t be enough to raise Hua Hin’s profile, increase interest and ultimately drive traffic to the resorts that will allow room rates to rise and profits increase.

Intercontinental needs to work with other products within Hua Hin to offer a complete experience to guests taking advantage of this service. A personal discussion with those using the service will allow the hotel to get to know their interests and allow the sales person to offer suggestions, not from a worn brochure at the service desk in the lobby, but in the comfort of a pre flight lounge or even in flight.

Other hotels are offering free days or more traditional tactics such as large discounts. Whilst these may increase sales in the short term, they will do little to build profitable brands. These hotels need to innovate in the same way as the Intercon, to work with other destination stakeholders to ensure Hua doesn’t become a quaint fishing village for the next 100 years.

Malaysia getting ready to be major player in world’s largest service sector industry

One of the most interesting elements of the New Economic model (NEM) announced by the Malaysian Prime Minister, Datuk Seri Najib Razak was related to tourism.

I quote directly from his speech, “…the tourism sector has not been exploited to its potential. More can be done to attract new markets from Europe and the Americas to complement the markets from the United Kingdom and Asia.

We have some of the oldest forests in the world, rich with flora and fauna and diving experiences acclaimed to be unforgettable. Malaysia can lead in providing environmentally sustainable eco-tourism adventures that are much sought after by the advanced markets.

We should aim to provide services which will attract high-end tourists who seek exclusiveness and high value services. We must also be creative as we consider new areas of tourism. From medical tourism — a high-potential growth sector — to eco-tourism, luxury market tourism and visitors related to our growth as a regional education hub. Malaysia’s tourism future is bright if we have the vision and creativity to support its diverse growth potential.”

World’s largest service sector industry
As the PM said, Malaysia has long neglected the business of tourism, despite the fact that it is, according to the World Bank, the fastest developing industry in the world. Moreover, according to the World Tourism Organisation, 2006 (the last year before the sub prime crisis) was a record for world tourism with 842 million tourists visiting other countries, up 4.5% over the previous year. Tourism is now the World’s largest service sector industry.

Furthermore, according to the World Tourism And Travel Council (WTTC), 12% of exports, 9.3% of international investments, 8.3% of the world’s places of work and 3.6% of world internal gross product account for a share of tourism and its relevant sub industries.

Using the satellite accounting approach, which attempts to calculate the extent to which other economic sectors contribute to and benefit from tourism and passenger traffic, the WTTC also estimates that the travel and tourism industry in 2008 was valued at approximately US$5.9 trillion or 9.9% of global GDP.

Tourism is also a popular industry with governments because it impacts every level of society from the sundry shop owner who sells a tourist a bottle of water and a map to the car hire company, locally owned hotel and airline.

With hundreds of miles of pristine coastline, breathtaking islands and the oldest rain forest in the world, Malaysia should have a better developed tourism industry and it will be interesting to see what incentives the government offers investors and developers to encourage them to invest in the infrastructure and products needed to move Malaysia up the value chain in this beneficial industry.

49 million visitors by 2020
I managed to get my eyes on a copy of a report preparred by a respected international consultancy and commissioned by the government to provide data for the NEM. Unfortunately one of the key recommendations was to increase the number of arrivals to Malaysia to 49 million by 2020.

It has been a common thread in announcements made in Malaysia that volume is key and we need to be attracting hordes of foreigners to Malaysia to consider our tourism business a success. But this advice is poorly thought out. One example, imagine the impact of 49 million tourists, many of them blue collar Europeans who consider it their God given right to walk around without a shirt on (men) or only in a bikini (women) and quite often with a beer in their hands, on a place like Kuala Terengganu or Kota Bahru.

What we need to do is move away from this volume is best approach and look more at a value is best strategy that aims to attract smaller numbers of higher value visitors. This will also help with the infrastructure and talent issue as we do not have the people available to staff the 500 or 600 room hotels required to support 49 million visitors.

Breathtakingly beautiful island
One of the best natural destinations in Malaysia is Redang Island in the South China Sea. This breathtakingly beautiful island has slowly had it’s natural attractions such as the coral destroyed by boats dragging anchors, careless swimmers and greedy fishermen.

But the concept of volume over value ruled and so little was done until recently when the Terengganu state government announced that it will no longer approve any applications for cheap Chalet style resorts as it wants to make Redang a destination for high net worth visitors. This is a a sensible move that will also help save the marine environment and attempt to prevent further environmental damage.

It is a sensible move that the state government, and hopefully the federal government will offer financial support, wants to upgrade this amazing destination. But the state government should also understand that it is not just about changing the names of the resorts, upgrading facilities, spending large sums on awareness advertising and increasing the rack rate by 300%. There will need to be a significant investment in the upgrading of the resorts and also supporting infrastructure.

Here are 5 other recommendations:

1) Carry out research with stakeholders, prospects, customers and others to determine the way forward.
2) Work with carriers and others to improve domestic and international connectivity.
3) Find the right partners. Malaysia doesn’t have a domestic 5 or 6 star hospitality company that is recognised globally. Work with a globally respected and recognised resort management company.
4) Redang is a small part of the potential of Terengganu. The state must develop and implement state destination brand masterplans. The brand masterplans must incorporate measureable and relevant promotional strategies that are not based on traditional marketing techniques but leverage the power of social media.
5) In line with federal initiatives, reduce costs of doing business and offer exciting incentives for investors, above and above usual free utilities for 5 years etc.

We’ve heard about incentives for the tourism industry before but the government has never really pushed them. I have a hunch that this new administration is different and that this is a small first step in a revolution that is long overdue.

Will poor execution of a great offer become a public relations nightmare for Hilton hotels?

This is an example of how the old world of ‘special offers’ with hidden strings attached clashes with the new world of social media where transparency, honesty and engagement rule. It also shows, once again that a one-size-fits-all brand strategy conceived by well meaning executives in one country can backfire on the brand in other locations.

Hilton January sale
At the beginning of January 2010, Hilton Worldwide announced “a global multi-brand wide January Sale. Guests who book hotel rooms in January can save 50 percent off weekend getaways throughout the year at participating hotels in Europe, Middle East, Africa and Asia Pacific.”

“To take advantage of the January Sale, guests can pre-purchase hotel rooms between January 1, 2010 and January 31, 2010 and receive the discounted rate for Friday, Saturday and Sunday night stays throughout 2010.”

Hilton Hotels is making a really big deal of this January sale And so it should, after all 50% off a Hilton room is a significant amount of money. Especially in a recession. But I suspect executives at the head office in Virginia didn’t think it through enough.

After all, whilst January and February may be slow months in the USA and other western countries, it is the busiest time of the year in countries like China, Malaysia, Thailand, Vietnam as families get ready for the lunar New Year. In other words, peak time and not really the right time to give away hotel rooms at half price!

But anyway, despite my ‘reservations’, and (plot spoiler) they were the only ones I was going to make, when I read the other benefits

– Lazy breakfast until 11am
– Late checkout until 6pm
– Kids stay and eat for free (Terms & conditions apply)

I knew this would be a great offer for me to take advantage of personally. My family had been suggesting a trip to Singapore but I had managed to put them off the idea because of the costs etc. But with rooms at half price, kids eating for free and the late checkout, even I saw this as an excellent opportunity.

3 hour cocktail hour with free flow
Especially as the Hilton, with its great location and attentive and tolerent staff (very important with my family), is our 2nd favourite hotel in Singapore. Did I mention that the cocktail hour on the executive floor lasts for 3 hours of free flow everything?! Well that helps as well.

So, excitedly I called my wife, to see if we had anything on that weekend. Conincidentally, she was going to be in Singapore earlier that week hosting clients at the Singapore air show and could stay on for the weekend. I thought it odd that Hilton would have such an attractive offer at such a peak period but told her I would drive the kids down to Singapore and meet her at the Hilton for the weekend. She was understandably excited. I also sent a text to my teenage daughter who called back immediately and asked excitedly if we could go shopping!

So the family is pumped, now all I have to do is take advantage of the fantastic Hilton offer. For our preferred weekend of 5th – 8th Feb the offer is not available. Hhhmn, OK, never mind, these things happen, especially with the Singapore air show ending on the Thursday.

So I call my wife and teenage daughter again to check availability for weekend of 12th – 15th Feb. Great, they are both free. Unfortunately the special offer isn’t available that weekend either. Now I’m starting to get irritated because this is taking more time than it should but worse, I’m going to get the cold shoulder at home for 2 weeks. I better check availability for other weekends before calling my family. So I check the weekend of 19th – 22nd Feb. Not available. What about the weekend of 29th Jan – 1st Feb? Nope.

As disappointment sets in and I realise the dream of a very affordable weekend at the Singapore Hilton was just that, a dream, I choose some random dates to see if the offer is available at other times. 5th – 8th March, unavailable. 16th – 19th April, unavailable. One last try, 23rd – 26th July, oops, a 404! This is ridiculous, I can’t spend any more time on this.

Social media
At Hilton facebook page, there is more information on the Hilton sale. But further inspection of the dialogue shows that a vast majority of the comments posted by consumers, both existing customers and new prospects, is related to their frustrations and disappointments because they can’t book on the weekends they want! So I’m not the only one!

It is great to see Hilton using social media, not only to announce such initiatives, but also to engage prospects and customers in real time. But the unfortunate Hilton representative responded to 15 or so complaints, all related to lack of availability and then appears to have given up!

Here are 5 things the Hilton should have done to get the most out of this campaign.

1) Understand that we don’t all march to the beat of the US drum. This is not a political statement, but common sense. Chinese New Year is a very busy time of the year for approximately 1.5 billion people in North and South East Asia. Flights and hotels are full.
2) Check local calendars in the countries you offer special offers. The Singapore Air Show sees hotel rack rates as much as double.
3) If you must black out peak dates, do it in a transparent manner, so that prospects and customers are aware at the outset of restrictions and will not be disappointed. Hiding them in T&C doesn’t count.
4) It is no longer enough to announce a great offer and then assume everone will listen, praise the announcer based on the content of the offer only. As Peter Drucker said, “Communication only works from one member of ‘us’ to another.” If the offer doesn’t stack up, consumers will let others know about it and any good can be undone very quickly.
5) Your existing customers are the key to profitability. Make such offers available to them before new customers.

What started as a great offer from a truly global brand soon became a public relations nightmare and the Hilton credibility has suffered as a result.

What do you think?