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.

Retention branding in the hospitality industry

Advertising, direct mail, marketing collateral, public relations and other acquisition efforts tend to get the bulk of a company’s branding budget. The belief being that it is easier to acquire a customer who is presumably using a competitor product than it is to hang on to a customer you’ve already acquired.

Retention branding, the efforts implemented to hold onto those customers who have been acquired at enormous cost, gets very little attention at all. Some firms don’t even know if a customer has bought before and many don’t even know when was the last time a customer bought something.

And yet a brand is not built on acquiring customers, it is built on retaining them. This is especially true in the hospitality industry. Which is why I was surprised to learn that Hilton is imposing a 25% increase on the number of reward points required to qualify for free rooms under its loyalty programme.

The global recession has hit the hospitality industry harder than many other industries. Occupancy and rack rates have tumbled. To combat this, many of Hilton’s competitors have bent over backwards to work with existing customers and are investing heavily in retention branding. Starwood Hotels recently launched a special offer for members of its loyalty programme, Starwood Preferred Guest (SPG) that offers between double and quadruple points for each stay.

Starwood, which includes the Westin and Sheraton brands offers guests who stay two nights double points, those who stay three nights triple points and quadruple points for those who stay four nights.

Last year, at the height of the economic crisis, Marriott offered members of its loyalty programme a fifth night free when four nights were booked using reward points. One of the most frustrating issues for loyalty programme members are ‘blackout dates’. These are normally busy periods when the hotel can sell rooms at rack rates. Aware of the negative impact this had on loyal customers, Marriott scrapped the unpopular policy.

Last December, in the US, InterContinental Hotels Group (IHG) ran a tactical campaign via twitter offering loyalty card holders points for staying in its hotels. IHG also has no plans to increase reward rates.

Other hotels that have not announced specific initiatives have however ended many of the restrictions related to when points can be redeemed.

So most of the Hilton’s competitors appear to be investing in retention campaigns to hold onto their existing customers. As customers leave Hilton, as they inevitably will, the competition will be happy to acquire them and but if they continue to invest in retention campaigns, will make it very hard for Hilton to win them back.

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?