Before the pandemic, hotel brands were at a crossroads with increasingly brand agnostic consumers and ever-expanding brand portfolios. But there is evidence that the pandemic may have led to consumers’ renewed appreciation for a well-recognized brand name that assures quality and instills trust. This change in consumer behavior will impact brand management strategies in several significant ways.
De-emphasizing brand-proliferation strategies
In 2010, room demand jumped 6.5% as the industry emerged from a recession. This marked the beginning of a decade-long, demand-fueled brand proliferation that now provides over 1,000 hotel brands for travelers according to STR. Underpinning the surge in brand options are segmentation and brand portfolio strategies. Segmentation allows hoteliers to take a diverse traveler population and organize it into homogeneous groups (e.g., business, staycation) (Kotler et al., 2017). Brand portfolio refers to a “house of brands” approach which incorporates the corporate brand and any number of secondary or subsidiary brands (Muzellec & Lambkin, 2009). Both strategies contributed to the proliferation of new brands that were largely targeting the millennial segment and catering to their desires for work-life balance, authenticity and technology.
When people are ready to travel again, their needs might become more homogeneous as their accommodation choices will mostly be based on cleanliness and safety. Moreover, the expectation of a slow recovery in economic activities coupled with a synchronized global recession suggest that rooms demand, which STR forecasts to drop by 51.2% this year, will not return to previous levels anytime soon, let alone grow. Taken together, segmentation to find new niche and a “house of brands” approach to capture excess demand will be less important in the hospitality brand management discussion.
Emphasizing brand authenticity
Since the pandemic disrupted current and future travel on an unprecedented scale, it may well have reminded consumers of the value of a brand. In fact, a recent IDC survey of over 1,500 U.S. consumers revealed that travelers will be more likely to seek out brand name and four-star or above hotels for assurance when they travel again. This represents an opportunity for hotel brands to reconnect with the public with better defined brand value that goes beyond the rooms and service offerings. One such strategy is authenticity branding.
Brand authenticity (i.e., the extent to which a brand is “faithful toward itself, true to its consumers, motivated by caring and responsibility, and able to support consumers in being true to themselves,” Morhart et al., 2014, p.8) has been shown to help luxury hotel brands generate brand love as well as improve business performance (Manthiou et al., 2018). It encompasses not only the traditional hospitality value to genuinely care for others but also modern relationship and cause marketing theories (e.g., corporate social responsibility) to foster meaningful engagement with consumers and various stakeholders. The new generation of hospitality leaders need to grasp the concept of brand authenticity to rise above the current crisis and take the industry to a more sustainable, brand-driven future.
Human-technology interaction theories to strengthen brand identity
Hoteliers had shown reluctance in adopting technology in the past, partly due to high costs, but mostly due to the lukewarm reception (e.g., low usage of loyalty app, perceived low performance of service robots) from consumers who demand a personal touch. But social distancing, online ordering, curbside pickup, and other measures implemented during the pandemic have accustomed consumers to contactless consumption.
Many hoteliers (e.g., Hilton) see contactless technology, such as mobile check-in and payment, as necessary standards post-pandemic (Wroten, 2020). Using AI and robotics to further reduce interpersonal contacts will likely be the next frontier to push to gain trust from the pandemic-stricken consumers and encourage them to travel again. The Westin Houston Medical Center hotel using robots in sanitizing and disinfecting its property is a case in point.
The challenge for hotel brands is to meaningfully fuse technology (AI and robotics) into a hotel brand’s identity rather than simply use them in operational procedures (e.g., cleaning) that are typically undifferentiated across properties and brands. Theories pertaining to usability, aesthetics, and emotions in human-technology interactions (Wu, Fan, & Mattila, 2015) and how these interactions transpire in favorable brand associations will shed light on this technology branding endeavour for burgeoning hospitality leaders.