In a recent article featured on hopitality.net Leora Lanz, the Director of Marketing at HVS (an international hospitality services firm), points out the often overlooked, but relatively obvious: it’s becoming harder and harder (for independent hotels) to compete with branded properties that benefit from sales and marketing opportunities offered by franchises. The vacation rental industry can relate right?

After all, each property managerment company is given the task to provide a full service experience with a quarter of the staff and often times a tenth of the budget. It appears the independent hotels have experienced the same thing. So what can we learn?

1. Economies of Scale

For our first example let’s use Small Luxury Hotels of the World (SLH). They have “an unsurpassed collection of over 440 hotels spanning more than 70 countries, which together offer an infinite variety of experiences tailored especially to you.” By aggregating these hotels they have been able to partner with some very large distribution networks such as American Express travel, the Financial Times, not to mention they’ve received rewards from publications from like Travel + Leisure. These types of activities are very difficult to obtain as an independent. In fact, nearly impossible, but by participating under one brand it has brought global recognition to 100s of properties.

2. Differentiation

Now let’s look at a competitor of SLH, The Leading Hotels of the World (LHW). This group has successfully positioned themselves as the source for small luxury hotels and resorts. In doing so, they’ve been able to partner with several distribution networks that would not be possible for the independent operator. Most recently they’ve announced a joint venture with Quintess, the destination club.

Keys to success:
- Strong brand
- Extensive sales and promotional activities, advertising and public relations support
- Quality standards and processes
- Network of independent luxury hotels
- Special programs for hotels and their guests

It’s probably to no suprise that we study companies like SLH and LHW quite closely. The vacation rental industry is in dire need of this type of service. At The Society, we are committed to consolidating the luxury home market.

In future posts we’ll interview a few of the independent hotel operators to get a little more insight into their feelings of these luxury aggregators.