While the rules of the game are changing, the hospitality industry continues to operate in a hypercompetitive environment, where a partner one day can become a competitor the next. For years, the hotel industry has tried to create experiences for its guests—constantly reimaging the offer to maintain excitement, anticipation and aspiration. With the proliferation of brands and the drive towards mass customization the power of the brand is decreasing. We can see already the first indicators that too many brands kills the brands. In addition, today’s Generation Y consumers may have even less allegiance to any hotel brand, though many are fiercely loyal to their Apple IPhones and laptops. Since they consume less mainstream media (e.g. newspapers and TV) they are less likely to be influenced by conventional direct advertising.

In the future, we could see the emergence of a new breed of unbranded hotel group, offering ‘white label solutions’-including sophisticated marketing, very high standards of service and advanced technology support while allowing owners to develop their own brands. New owners in particular may seek to rent the capabilities but not the brand of experienced hotel groups. Typically, well-known brands provide a service for a third party under the latter’s identity. A paradox future will show us in the same time a new category of co-branded and co-designed ‘signature’ properties to emerge within hotel chain portfolios, providing differentiation and opening up ancillary revenue stream options and a decrease of interest in customer choice of the brand. This doesn’t mean that there won’t be massive value creation moving forward. The two spaces that escape and transcend commoditization are relationships and innovation. Hospitality will develop with on the one side commoditized products and services and on the other high-value offerings based on rich economic networks.

The hospitality industry is facing a dilemma. On the one hand, hotel companies spent millions to develop new brands and to influence customer behavior; on the other hand, they have to rely on individual franchisees to deliver the desired customer experience, which defines ‘brand equity.’ Furthermore, digital connectivity provides transparency and access to information in a fraction of a second. For developers and lenders, hotels attached to brands are much easier to secure financing for, because much of the risk inherent in generating demand has been mitigated. The opportunity for the investors will be to go with one of the big brand engines’ on the debt side or equity side. The most important consequences of the impact of the new technologies and hotel brands will be the change of the nature of the brand itself. Technologies bring the customer’s emotions more closely to the brands but technologies can also kill badly managed brands.

(This article is a plagiarism on Lausanne Report. If you do not like the plagiarism, go to our original text in http://info.ehl.edu/hospitality-industry-trends and stay in tune with the future of hospitality at the next think-tank “Window 2 the future”, April 2018 and take a look to www.lhcconsulting.com to see more about us.)

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Ray Inius Director Business Development at Lausanne Hospitality Consulting

Prof. Dr Ray F. Iunius is the author of various academic and professional articles published by journals in the management of services, technology, and innovation. He is also the author of a number of books such as « Industrie de l’accueil », « Hôtellerie de Luxe », « La gestion des spas », “Un Hôtel, un modèle ?” in de Boeck editions and co-author of the “Lausanne Report on the future of Hospitality Industry.”

He is the founder of the Ecole hôtelière de Lausanne Institute of Technology and Entrepreneurship (EHLITE), the Institute for Innovation and Entrepreneurship (INTEHL), the Students Business Projects (SBP), the EHLITE magazine, and the Chair of Innovation Paul Dubrule.

Ray earns a BSc, MS and PhD in Technical Sciences from the University of Transylvania Brasov and an MBA and PhD from the Faculty of Business and Economics (HEC) of the Lausanne University. He is currently Director of Business Development at Lausanne Hospitality Consulting, an Ecole hôtelière de Lausanne and Swiss Hotel Association company.