Chris Hartley
Since its introduction five years ago, the Global Hotel Alliance created a single technology platform that includes a central reservations system and added new members. More recently, the alliance of 12 independent hotel brands--including Kempinski, Omni and Pan Pacific--signed a global agreement with Carlson Wagonlit Travel, launched a new loyalty program and began hiring local liaisons in each country to facilitate corporate contracts. The loyalty program provides all members with free Internet access and bottled water--"two things that annoy travel managers" when they aren't provided to travelers, according to GHA CEO Chris Hartley--and additional perks as members achieve higher status. Speaking recently with The Transnational, Hartley detailed these initiatives and outlined GHA's goal of becoming a more competitive player in a world dominated by large global hotel chains.
How will local representation in each region benefit travel managers and GHA?
We are creating our alliance representatives in each region to represent that relationship on behalf of the whole alliance, but ultimately the relationship goes considerably further. Overall, what we really looked at is how do we combine strategically our efforts so that we are all focused on the same goals as far as the customer is concerned? That has involved several years of looking at ourselves around the table, literally, to hammer out what we really consider to be a strategic direction we all feel comfortable buying into. That's enabled us to launch a loyalty program, which even for an individual company is a complex undertaking but for 12 companies to create one loyalty program is unheard of, even in the airline alliances.
What will be the local liaison's responsibilities as they relate to corporate travel buyers?
From a travel buyer perspective, we want to offer a doorway to all 12 brands through the alliance. For a lot of companies, it's added value to work with a bigger organization because with one contract they theoretically can get many hotel deals done. If you go to an individual hotel or a small brand, you may have to go to 100 of them to get enough coverage for what you need as a travel buyer. The alliance essentially offers more efficiency to the travel buyer by saying, "If you want to do business with our 250 hotels, we can offer you that facility by working with one person." The first thing is that we need to establish who and where that person should be in order to create that relationship with the buyer. Once we have created that relationship and there is a comfort level with the buyer, then the next question is: Where do we need to service that relationship? That's where we will have that point person who in each market would then become the account relationship [liaison]. Obviously, it is very difficult to operate a global relationship from New York if you need to have people in Singapore, India, London and South America. [GHA] will create a strong relationship on a local basis because that is where a lot of those buying decisions are made.
Following the creation of a single technology platform for GHA members, what are some other recent distribution developments?
In an ever globalizing economy, the need to be in front of every customer in the world every minute of the day--especially with the advent of the Internet and online bookings--meant that as a small brand it was becoming very expensive to compete with the likes of Hilton, Hyatt, Marriott and Starwood. The idea originally was: Let's get together a small brand that could be anything from 10 hotels to 50 hotels and see if our combined buying power and sales networks could be a bit more competitive with the big brands. There are two aspects to distribution that are critical: the technology itself and the channels by which you are buying. In both cases, 250 hotels have a lot more buying power than 10 hotels. [That] gives us greater leverage with our third parties, and that could be the global distribution systems, it could be third-party travel agents and it could be any of the channels that hotels use today. [One individual] hotel can hardly afford to go into a deal with Sabre; it would just pay whatever the rack rate price is for a GDS booking. But by working through the alliance, there's more room nights, more buying power and more transactions, and therefore we have been able to reduce the cost for the member hotels. As a small brand, it is difficult to put your product in front of all [CWT] agents around the world; they are used to the big brands being their preferred global partners. The global preferred relationship [with CWT] enables us to put our hotels up there with the big boys in front of agents to advertise, to market, to do awareness campaigns to that very person or group of buyers who also have relationships with the corporate accounts. It's been a win-win for both sides. It's given CWT a new partner as a global organization with a whole range of brands, and it's given us access to one of the biggest buying communities in the world.
How do GHA brands compete on a global level given the aggressive expansion efforts by the major hotel chains?
On the supply side, the big brands are getting stronger and stronger. Very smartly, the bigger brands are diversifying their own brand portfolios by creating new brands so the consumer's overall perception is that there is more choice out there. The reality is that it's the big brands that own that choice. If you look at it from that point of view, you could say that control of pricing, overall product quality and overall direction is moving more into the hands of the big brands. On the other hand, you are seeing this whole disintermediation process of distribution where you've got a multitude of players coming into the distribution and sales arena, and to a certain extent, taking all inventory on the market and selling it to end consumers at competitive rates or transparently competitive in the sense. We are in an industry where there is still a huge number of big brands; it's not like there are one or two and they are all going to compete heavily with each other on price, on quality and on distribution. If anything, regardless of whether good times are coming back, the hotel prices remain competitive globally.
What impact has the economy had on GHA brands?
We have been lucky; if anything the recession has helped. We have seen pickup in 2010--actually 2009 was one of our best years--and 2010 has been a positive year so far because as an alliance we are a young organization. In 2007, you just needed to own a hotel to be doing well because demand exceeded supply in almost every location globally, so those hotels felt comfortable in their own shoes and they didn't need to team up. Two years later, the picture is very different, so while an alliance may not have seemed particularly attractive because [hotels] thought they could operate on their own, suddenly it seemed like an attractive proposition. That's where we have been lucky, in that our business model was maturing just at a time when hotel companies were starting to ask questions about how they're going to get through the recession. I would imagine that we have now created such critical mass that if we can continue to deliver the products and services that we've created, they will continue to grow regardless if times remain tough. We as an entity are strong enough to ride through whatever hits us next.