Strength in numbers

	Being in a consortium means you can get access to lots of potential guests. Most hoteliers would find it difficult to get the same benefits if they handled all their own marketing

Marketing consortia of one form or another have long been a fixture in the hotels industry. They offer independent operators access to a wider audience through global booking and distribution systems. But in recent years the space has been a hotbed of activity, with a spate of strategic alliances, consolidation and new entrants cropping up to satisfy niche markets. Meanwhile, the rise of the internet has prompted some hotel operators to take their marketing function back in house and go it alone. So does joining a marketing consortium still add up?

According to Pamela Carvell, independent hotel marketing consultant and chairman of the Hotel Marketing Association (HMA), the simple answer is yes. "I don't think a lot of small, independent operators in the UK could survive without being a member of a marketing consortium as it's very difficult for them to drive business on their own," she says.

Another advocate of the model is Stephen Broome, assistant director of hospitality and leisure at consultancy PricewaterhouseCoopers. There are "huge benefits" in being a member of a marketing consortium and there's a "definite" return on investment angle, he says. "But to maximise those benefits you have to work at it."

There is a wide range of marketing consortia, from those that offer little more than brand association to others, such as Best Western, that offer a comprehensive service including access to a technology platform and booking facilities as well as global marketing. The key to maximising returns is to shop around and find the one that's best for you.

Having the right attitude is also crucial. Broome believes a lot of independent hotel operators that join consortia are too introspective and fearful of losing control, which limits the returns they can expect to. Others have unrealistic expectations or make the mistake of sitting back, thinking they have outsourced their marketing function and no longer have to think about it. "If you do that, expect a visit from the Grim Reaper," says Broome, adding that if there's no demand for your particular product then joining a marketing consortium alone is not going to change that.

"It's a hackneyed phrase but the more you put into it the more you get out of it," says Peter Hancock, chief executive of Pride of Britain Hotels. "We present our members with a lot of opportunities but they still have to do things themselves and be proactive." But in recent years the rise of the internet has enabled operators to take the proactive approach to the extreme by cutting the consortia out of the loop and adopting the DIY approach.

Back in the mid-1990s there wasn't a lot of choice for independents if they wanted to get access to GDS booking systems - "Certainly not a choice that was affordable," says Broome - and the cost of entering a consortium was often met by the available purchasing discounts alone, making the decision a no-brainer. But things have moved on, and it's now perfectly possible for independents to access the same distribution channels themselves. "Hotels certainly don't need marketing consortia like they did 10 years ago," Carvell says.

However, both Broome and Carvell are quick to add that very few independent hotels manage to market themselves as well as a consortium can for the same money. And to be fair, most of the consortia have acknowledged that the internet has changed the market and have embraced the new technology in order to provide members with more valued-added services. For example, IndeCorp, parent company of the Preferred, Summit and Sterling consortia brands, provides its members with a performance index to show the return on investment they're getting.

"You can do it yourself online but you don't get access to customers," says Michelle Woodley, vice-president of marketing and distribution services at IndeCorp. "What you really miss are the opportunities and the access. We have relationships with the likes of American Express where we are a preferred partner, and that gives members 'the in' to do a sales call. Otherwise they'd be shut out."

But some commentators believe the online DIY approach will become more of an option. "I can't see any more growth in the marketing consortia space because I think the web will take its place," Carvell says, "and I'm not sure there are many more niches left."

The trend may have already begun. While consortium membership normally goes up when hotel demand weakens, in the most recent downturn it actually went down. "That would suggest to me that some members have decided that they can do it for themselves," says Broome, who also believes that the rigorous controls some consortia place on membership could be a factor in the decline.

Relais & Chƒteaux, for example, expelled more than 20 members last year for failing to meet its strict standards, and two UK members were put on probation following a change of ownership. Members are also barred from joining other consortia. However, while Malcolm Lewis, chairman of Relais & Chƒteaux UK, admits it is a cruel process at times, he explains that the approach is part of "a four-year shake-up" aimed at strengthening the brand. "Our reputation was in jeopardy," he says. "Relais & Chƒteaux had become like an old boys' club".

Another problem is "lock in". Broome says it usually takes at least a year to see the full benefits of joining a consortium, and if you decide to leave you will generally have to give a year's notice. "You've probably got 18 months to two years of business disruption," Broome says.

What the future holds for the hotel marketing consortium model is anyone's guess, but Broome, for one, is not placing bets. "The interesting thing will be just how easy it becomes over time for the independents to manage the e-commerce side of things," he says. "But like with anything, the good consortia will evolve and the poor ones will die."


Case Study

The Best Western Lime Trees hotel in Northampton
Bob Elkin, who runs the three-star Lime Trees hotel in Northampton with his business partner and former wife, Val, says the hotel couldn't survive without being a member of a marketing consortium.

The hotel joined Best Western about five years ago, having taken care of its own marketing for some years. Elkin says a key factor was that booking agents were increasingly working with "preferred" partners, and the agents would cancel bookings with them if it later turned out that a preferred hotel could handle the business. The budget hotels were also moving in, making the market more competitive.

"We decided we needed to get into bed with the booking agents as we were being denied access to certain things," he says. "And I thought that if someone were to jump in before us then that would cut us out."

Joining Best Western didn't just give the Lime Trees an international presence, it provided access to the consortium's technology platform, enabling the hotel to improve its yield management and market its best rates in real time. "It gave us an entry into the modern marketplace", Elkin says.

But success did not come overnight. Elkin says it took about two years for the hotel to get into the consortium's brochures, get fully integrated into its systems and start seeing results. It then took another two years for the hotel to adapt itself fully to the model. "Best Western is very strict [in its membership criteria] and rightly so," Elkin says. "You have to toe the line but that's the way it should be."

Although the return on the investment in membership fees is difficult to quantify, Elkin says he sees it more as an insurance to maintain occupancy rather than a cold-blooded return on capital.

"We achieve 72% occupancy and had we not done this we would have undoubtedly had reduced occupancy," he says. "I'd have to say we're very, very pleased."


What to look for
It pays to spend time looking for a consortium that suits your needs and budget. Pamela Carvell, independent hotel marketing consultant and chairman of the Hotel Marketing Association (HMA), recommends looking at at least three before deciding. Find out what other members they have in your area, as if there are lots of local members you may wish to try another. And ask them for details of members with similar profiles to your own so you can ask them how it's going, she says.

Stephen Broome, assistant director of hospitality and leisure at consultancy PricewaterhouseCoopers, says the bottom line is that "you get what you pay for". He adds that the consortium will tell you up front what level of business they can deliver and this can form the basis of a cost benefit analysis.

The chances are that you won't need all the services on offer, so finding a consortium with a flexible approach is a good idea. Some, like the recently launched Special Hotels of the World, offer members the chance to build their own programme using an "… la carte" menu that contains elements such as trade shows, e-marketing and a private-label global distribution system (GDS).

Potential members should also consider whether they want to be part of a truly international consortium or if their needs would be best served by a national organisation with international connections, such as Pride of Britain, which also limits membership to a maximum of 50.


What they charge
Consortia usually charge members a percentage of their annual revenue, or charge according to criteria such as number of bedrooms and location. Carvell says they typically charge £5,000 to £10,000 a year and adds: "It's very difficult to join a consortium for less than £5,000 a year."

Members of Pride of Britain Hotels pay between £9,500 and £13,500, which gets them included in the consortium's pocket directory (70,000 copies are printed); a twice-yearly magazine (25,000 copies); and its website. Pride of Britain also has a full-time public relations person in the UK, conducts media promotions and generates referral business from other members.

Upmarket hotel and restaurant consortium Relais & Chƒteaux offers its members a full page in its international guide (with more than one million copies printed in four languages); space on its website; access to its NetRez reservation system; and the chance to take part in marketing initiatives such as trade shows and press events.

Consortia such as Relais & Chƒteaux also claim they offer hotels added credibility through brand association.

Michelle Woodley, vice-president of marketing and distribution services at IndeCorp, claims that a member who pays $10,000 (£5,570) for inclusion in one of its "segment" programmes, aimed at specific markets such as business travellers or resort leisure, will get about $500,000-worth (£278,650) of print advertising in return across the year.


Links
www.bestwestern.com 
www.hotelmarketingassociation.com
www.indecorp.net 
www.limetreeshotel.co.uk 
www.relaischateaux.com 
www.prideofbritainhotels.com