Midsize Hotels Join Forces
Four midsize upscale and upper upscale hotel companies—Wyndham Hotels & Resorts, Kempinski Hotels, Pan Pacific Hotels and Rydges Hotels—this month joined forces to co-market their properties to buyers, working together to appropriately respond to electronic requests for proposals.
The alliance follows a similar announcement in February, when five other midsize, upscale hotel companies—Affinia Hospitality, Thistle Hotels, NH Hotels Group, First Hotels and Meritus Hotels & Resorts—partnered to market their hotels to buyers.
As they do when dealing with such large global companies as Marriott International, Hilton Hotels Corp., Accor Hotels or Sol Melia Hotels & Resorts, the hotels eventually intend to offer buyers with global programs a single RFP for all of the suppliers' inventory, regardless of individual market.
In each agreement, participating hotel companies are strong in a different global region. In the first case, Wyndham is prominent in North America, Kempinski in Europe, Pan Pacific in Asia and Rydges in Australia. The partnership, which is called the Global Hotel Alliance, takes effect in April.
In the second instance, Affinia is strong in New York, Thistle in the United Kingdom, NH in Europe, First in Scandinavia and Meritus in Asia.
Since there is little overlap in the portfolios of either set of players, participating hotels do not consider each other to be competitors.
"As smaller and midsize hotel brands continue to compete in a crowded hotel market against the mega brands, it makes sense to align with like-minded brands," said Rydges managing director Paul Lonergan. "We can realize sales and distribution synergies, while each company retains its own brand identity."
The midsize hoteliers are reacting to the expansion of such mega-brands as Marriott, which, for example, expects to add about 25,000 rooms in 2004. While U.S. supply growth is projected to decline, international markets remain the prime growth target.
According to chairman and CEO J.W. Marriott Jr., such worldwide distribution is important to drive brand value overall. Marriott cited a new Ritz-Carlton in Tokyo and core Marriott in London as examples of the development he envisions. At year-end 2003, Marriott had in excess of 2,700 hotels across its system.
Internationally based hotel companies often are at a disadvantage in working with U.S.-based buyers because they lack sufficient local representation. As part of their arrangement, Affinia and Thistle each have a sales rep based in the other's main sales office.
"Since Affinia is so strongly identified with the New York market, it made sense to base that person in their office," said Tracy Halliwell, Thistle director of global sales. "This way, our sales rep can benefit from the regular contact with their corporate customers." Halliwell compared the agreement to the alliances that have become standard in the airline industry.
Internationally based hotel companies also tend to be less comfortable in responding to buyers' electronic requests for proposals, so U.S. partners can be of assistance.
"Alliance members certainly want to sell to travel managers the way they want to buy. Increasingly that means through electronic RFPs," said Rose Genovese, Affinia vice president of sales and marketing. "Unfortunately, data frequently are entered differently in international markets, so we can be of help in ensuring that the bid they submit is consistent and complete."