Which future for the voluntary chain model?

 

The first Voluntary hotel chain was created in 1946, we are talking about Best Western, followed by others. Then, the 80’s saw a second major wave of voluntary chains, such as The Leading Hotels of the World, World Hotels, Logis, Inter-Hotel, Relais du Silence, Relais & Châteaux,  around a common project: gather hotels around values, a brand, but also to build a group to be stronger commercially, publish a paper guide, have a central reservation, provide a loyalty program. But with the arrival of the Internet, distribution strategies exploded and groups are progressively losing this distribution component.

 

What is now their added value?

 

Let’s talk briefly about independent hotel business and why Voluntary chains emerged.

 

The independent hotel business is this family hotel business, synonymous with human warmth, hospitality, authenticity and values. But these hoteliers were isolated, alone facing the challenges, alone facing the changes. This hotel business is often small, they have 26 rooms on average per establishment (figures Coach Omnium sept 2017). This makes the work of these hoteliers even more difficult, with few resources and little time to devote to anything other than delivering the service.

Independent hoteliers have therefore structured themselves and grouped together in associations: voluntary groups.

 

The idea was, and still is, to group together to benefit from synergies and mutualization while preserving the specificity of each. Their development in the 80s was mainly access to the marketing and  commercial effort.

 

And then the digital revolution arrived and it reworked the distribution maps, Best Western being the first voluntary chain to offer an internet access to its members as well as a Central Reservation System in December 1995. For the last 3-4 years, some hoteliers have been wondering if they should stay in their group, while Booking.com makes 30 to 40% of their turnover.

 

Some groups like World Hotels and Best Western then pro-actively chose to put their efforts on the Corporate segment, bringing to their participants a flow of Corporate reservations, but this segment is being also screwed up by the big OTAs, like Expedia with its Egencia corporate offer and by Booking.com which decided to embrace the Corporate business and is signing global contracts to act as The Corporate Travel Agency of big institutions. EPFL University in Switzerland for instance signed a Corporate contract with Booking.com. Some governments in South America decided to work exclusively with Booking.com to handle all travel bookings for their government. So the main added-value of the Voluntary chains is eroded by the main OTAs as the volume of bookings via these chains is shrinking.

 

So the two main reasons why Voluntary chains are losing members are the high operating costs for the members and the decreasing part of the Corporate sales in the total sales of their members.

 

The obvious answer anyone would give to both issues is: bring more valuefor the cost paid by your members, and bring value to your hotel members by bringing value to the final guests. In other words, be THE model for all independent hotels!

 

The point is HOW?

 

Bringing more value requires only to lean down and pick up a bunch of new solutions targeting guests expectations and simplifying the hoteliers’ lives.

 

The Travel Tech world is full of new solutions able now to boost the hotel sales while answering the needs of the guests: provide a mobile app for bookings, build loyalty programs, provide a flexible price bidding solution available for independent hotels and Voluntary chains (more information on privatedeal.com), put a Chabot on the hotel website to assist guests during their reservation, bring e-concierge services, upsell hotel rooms once the booking is done, manage guests feed-back and ratings after the stay… And many other ones, all performing, easy to implement and connectable.

 

The issue for independent hotels is to select the best tools for their needs, then to implement it and be able to easily change if something better comes up on the market.

 

Responsibility of a Voluntary chain management is to provide its members all services and support to succeed collectively as a brand and also individually.

 

I believe the 100% centralized model of service procurement is dead. In order to perform today, new models need to be thought and implemented, more flexible and more reactive ones. Just to illustrate my point, let’s take an example.  A bidding solution is identified by a Voluntary chain as an added-value to boost direct sales and bring a new booking experience to the guests.

 

How can they deal with such a project:

 

CASE 1.

The Voluntary chain could decide to integrate it to its brand website as a central bidding platform, to attract guests in direct. All hotel members would have their own login and could post their offers on the bidding platform whenever they wish. Guests would discover this new feature on the Brand’s website where they can bid their own price and would have no good reasons anymore to book on an OTA like Booking.com or Expedia. This strategy clearly would demonstrate a decision to renew and strengthen the Brand and differentiate it from its competitors.

 

CASE 2.

The Voluntary chain can also decide not to purchase and implement it centrally, but determines that it is better to let each hotel decide for itself, while providing him with a toolbox. Hence, each hotel could choose to implement on its own website the same bidding engine for its own property.

The same applies for many tech services linked to Revenue Management tools, CRS management, loyalty solutions etc.

 

In both cases, Voluntary chains would certainly need to build their own team of specialists- digital, marketing and IT- whose responsibility would be to chase the best solutions on the market and provide them to all hotel members. In CASE 1, the team would manage the project from A to Z, till its final central implementation. In CASE 2, the team would choose the best solution in each category (bidding, concierge, loyalty, etc) would have been previously identified, compared, rated by the Brand’s specialists, negotiated at group’s level, and then put at disposal on the brand web platform as a recommended service for the members.

 

And in case nothing is done by your Voluntary chain, I trust that hoteliers will go on their own way and go to exhibitions- don’t forget the Food Hotel Tech in Paris in June!- to pick their own solutions!

 

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