Marketing Management

In hotel management, there's a delicate balance in being all things to all owners and promoting your services to help rise to the top of the crop.

by Dan Marcec

More often than not – in fact, almost all the time – when we talk about branding and marketing in these [web] pages we’re focusing on the newest, flashiest way to get out in front of your guests. But what about those folks behind the scenes? You know, the ones that run your hotels on a daily basis? That’s right, I’m talking about the management companies.

Once they’re on property, it’s easy to tell the difference between an engaged management company and one that’s just in it for the paycheck. Unfortunately, like in any other buyer and supplier relationship, there’s no way to tell how a product will suit you until you try it out. And with something as personal as undertaking daily operations for your hotel, it’s challenging for an owner to cut through the clutter of myriad management groups to find the right one.

On the other side, understanding the current marketplace for management services is crucial for this very reason. Just like when you see seven different kinds of shampoo on the shelf at the supermarket, many management companies by their very nature offer the same basic services. It’s how they position themselves to stand apart that will help you decide which one to choose for your property’s needs.

Hospitality Ventures Management Group, for example, recently updated its name, logo and website to more accurately reflect its services. During that process, the company interviewed GMs, brand partners, investors, and asked them all to share how they compared to the competition, in order to capitalize on their strengths and develop a forward-looking strategic plan.

“When we reevaluated our position in the marketplace, one of our investors mentioned to us that we’re in the top 10 in a sea of 300 management companies, but we aren’t that visible in the industry,” says Sue Sanders, vice president of strategic planning and HR for Hospitality Ventures Management Group.
“With that in mind, we’ve made a deliberate attempt to add a brand architecture. You have to have a name, a product and messaging that stands out that distinguishes who you are from everyone else.”

In HVMG’s research, Sanders says the team picked out more than a dozen other competitors, looked at their collateral and went on their websites, and they were all the same.

“It’s one big melting pot,” she says. “Companies get in trouble when they drink their own bathwater and only say what makes them better than other companies. If they don’t ask their clients, they don’t get the right point of view.”

With that said, being straightforward and up front about what you have to offer is crucial to a branding message, and it doesn’t necessarily mean that you’re only in it for yourself. When the stakes are high, you have to be clear on your differentiators when competing for business.

“Our core is what we call the ‘Driftwood Difference,’ which is centered on flexibility, diversity, integrity, accessibility and originality,” says Brian Quinn, executive vice president/principal of Driftwood Hospitality Management. “For example, we’re flexible because we’ll take a 60-room hotel or a 600-room hotel, and we’re not shy about it. And we have integrity about our fees. There can be tension around that if it’s not spelled out clearly, so we elect to jump out in front of it; you can count on the contract and know there’s no nickel and diming after it’s in place.”

But there’s also a third way, which takes into account both these perspectives, but isn’t so explicit. Mike Marshall, President & CEO of Marshall Management, takes exception to the idea that a management company can effectively “brand,” concerned that it dilutes the services rendered.

“If you’re only focused on a certain hotel class or certain set of franchises, maybe you can be branded, but if you’re truly global management company, then you have to know what’s best from every aspect,” he says. “We manage everywhere from St. Thomas to Connecticut, in major cities and airport markets, and you have to look at everyone differently. Your brand is your name, but I truly believe that you can’t go into every situation doing the exact same thing.”

Marshall proposes simply keeping your nose to the ground and hammering out contracts, rather than spending too much time on crafting marketing materials.

“I’ve found that landing contracts is more about timing than anything,” he says. “There comes a time when a hotel needs a change, and you have to keep yourself in the forefront. You have to be nimble enough and have past experience knowing every hotel is different. Not just properties, but market, brand and customer base. I recently closed a deal for five hotels that had been in the works for 6 years.”

In other words, it’s about persistence and patience. Shopping for a new management team for an owner is never easy, because every single one – or at least every good one – knows that their job is to be everything and all to an owner in order to grow that asset’s value. That said, there are a lot of different avenues like sales & marketing, operations, accounting and revenue management where a company can specialize.

“Our clients have told us we’re hands-on, and we’re turnaround and operations experts,” says Mary Beth Cutshall, vice president of acquisitions and business development for HVMG. “So we have to understand how they see us and what we do best, and then package it to align with our perceptions and goals as well. It’s a delicate balance.”

So though new construction on the short end of the stick today, properties are going to change hands at quick clip this year, perhaps even faster than last year as values will rise – prompting sellers to switch their “hold” strategy and buyers to buy before prices go too high – and banks begin to let go of their REO assets.

“It definitely continues to be an interesting time; demand is up for hotel rooms, and supply is down, so that creates the opportunity to grow occupancy and now rate,” says Quinn. “And though there isn’t much new construction, where projects are opening, it’s best to have a management company in place early and often to get the best terms for debt, get started on pre-sales, and negotiate with franchisors.”

In addition, the revived renovation cycle is going to lead to re-flaggings both owner and brand driven, which can create opportunities to revise, renew or write new management contracts. If you’re not ready to meet the marketplace with a unique identity and punctuated points of services, you’re going to sit on the shelf along with the other brand “X” companies that all look the same.

“The business is not unlike apartments, retail, or office properties, where the basic goal of someone who buys or builds a hotel is to grow asset value, which is what we all do,” says Marshall. “So I struggle with this all the time when clients ask what’s the value add? I say listen, I have more than 300 years of combined experience in my executive staff, and you can’t get that with one GM. If you’ve never been in the business, it’s not rocket science, but there are so many moving parts and you need that combined experience.”