Hotel Branding Strategies and Customer Satisfaction: A Study

Introduction and Background

Travel and tourism represent the largest industry in the world today, and it is not surprising that the hotel industry has experienced a concomitant increase in demand. Moreover, most authorities predict that these recent trends will continue well into the foreseeable future, making the need for timely and relevant studies of critical success factors an important enterprise today. Among those critical success factors that characterize the hotel industry is the need to promote hard-earned brands that can fuel repeat business and attract new guests based on their specific desirable attributes. These attributes span the entire range from the highly budget-minded traveler seeking two-star accommodations to more affluent clientele in the three-star range to the four- and five-star range where price is no object and luxury is the byword. By promoting brand awareness based on the targeted market's familiarity with the facilities, hotel chains can gain a competitive advantage over their counterparts that fail to achieve such a level of awareness.

In this regard, Alwitt and Mitchell report that brand familiarity exists along a continuum that includes the various levels of brand awareness that are typical among hotel guests and potential hotel guests. According to these authorities, "Brand familiarity is conceptualized as an index of differential brand awareness, reflecting degrees of experiences with the brand (ranging from weak, indirect experiences like past exposure to advertising, to strong and direct ones like current usage)" (Alwitt & Mitchell, 1995, p. 22).

According to Romaniuk, Sharp, Paech, and Driesener (2004), a number of different awareness measures are used to determine the level of brand awareness and as a gauge of the effectiveness of the marketing initiatives being used. According to these authorities, "Brand awareness is considered one of the key pillars of a brand's consumer-based brand equity. Building brand awareness is a way of ensuring potential customers know the categories in which the brand competes. While many authors support the association between brand awareness and buyer behaviour, they have disagreed over the specific measures that should be used" (Romaniuk et al., 2004, p. 37).

Currently, there are three widely used measures of brand awareness: top of mind, spontaneous, and aided, as set forth in Table 1 below.

Table 1: Three Widely Used Measures of Brand Awareness

Top of mind awareness: The top-of-mind response to the product category cue is one of the best predictors of future sales (Romaniuk et al., 2004). Top-of-mind awareness is strongly related to brand preference, with the strategic implication that a brand's advertising must be high impact — it must rise above the rest and capture top-of-mind unaided retrieval among a substantial share of customers when they are asked to mention ads that come to mind in the brand's product category (Woodside, 1996). Individual marketers must determine the optimal frequency needed to maintain top-of-mind awareness that will result in unaided store or brand awareness (White, 1993).

Spontaneous awareness: This is the unprompted recall of the brand name (Romaniuk et al., 2004). The level of spontaneous awareness is the brand's share of total awareness in the product category — in other words, memory relative to all other ads in the product category (Sutherland & Sylvester, 2000).

Aided awareness: This is the recognition of the brand name when prompted (Romaniuk et al., 2004). Not surprisingly, aided awareness is not widely considered to be a powerful indicator of future sales (Pallister & Isaacs, 1996).

Some researchers have argued that a particular measure is more appropriate at any given point in time and in different situations (Romaniuk et al., 2004). When alternatives are available at the time of the purchase decision, aided awareness is relevant; when they are not, spontaneous awareness should be used. Likewise, other authorities distinguish between memory-based, stimulus-based, and mixed situations in which the capacity to spontaneously recall or identify something carries different levels of importance (Romaniuk et al., 2004). According to Romaniuk and colleagues, "Top of mind awareness is more relevant when a choice between competing brands is made quickly, and this measure should be applied to low involvement impulse purchases such as most products in supermarket settings" (Romaniuk et al., 2004, p. 37).

Notwithstanding these controversial points concerning distinguishing between different levels of brand awareness, all three brand awareness measures appear to draw on the same fundamental construct: the level of salience involved (Romaniuk et al., 2004). With respect to brand awareness, salience is used to describe the likelihood that a brand will come to mind during purchase decision situations (Romaniuk et al., 2004). In sum, different brand awareness indicators are fundamentally interrelated and differ only with respect to the individual situation involved (Romaniuk et al., 2004). In this regard, Romaniuk and associates state: "If all three awareness measures tap into the same fundamental construct then building brand awareness is not a choice of spontaneous vs. aided recall, but requires an overall improvement in the brand's salience. All three measures will reflect increases in salience; with the changes in actual scores for each measure simply dependent on the relative difficulty of the measure used" (2004, p. 37).

In other words, when confronted with a purchase decision for a given product, consumers will likely think of the brand that is most well-known to them by virtue of exposure to repeated marketing messages, through personal use, or through testimonials from friends, family members, and acquaintances. As Wells phrases it, "More simply put, when a consumer thinks of a dependable washing machine, the first brand that most likely comes to mind is Maytag. Based on years of long-term, consistent advertising, Maytag has dominated the claim of dependability and generated widespread brand awareness that is congruent with the desired brand image, despite the fact that Maytag's advertising budget is typically well below that of its major competitors" (1997, p. 177). This example suggests that long-term, consistent advertising messages can create an image that keeps the brand in the consumer's mind. Wells further reports that, "If a company strongly associates itself with a particular attribute or image, it can afford to reduce its advertising budget or even stop advertising for brief periods of time without significantly hurting its sales. This tangible economic benefit must be considered in assessing advertising effectiveness" (1997, p. 8). The effectiveness of brand promotion initiatives relates, therefore, to both the frequency of the advertising message needed to build a desired level of brand awareness and the content of those messages. With respect to hotel chains, the same factors raise the question: "What types of strategies are being used to promote brand awareness in the hotel industry?" — a question that also forms the focus of this study.

Background

This study was guided by the following research questions:

1. What current branding strategies are being used by hotel chains, and how effective are these methods in contributing to their customer loyalty and profitability?

2. What specific factors must be taken into account in formulating hotel chain branding strategies?

3. What effect, if any, does a hotel chain's brand have on customer satisfaction?

4. How can hotel chains use information technology to develop improved brand awareness and satisfaction with existing and potential customers?

Focus

The aim of the proposed study was to identify opportunities for improving brand awareness and customer satisfaction in the hotel industry. In support of this overarching aim, the following objectives were also established:

1. To deliver a comprehensive and critical review of the relevant literature concerning the relevant issues.

2. To administer a custom survey to various luxury hotel managers concerning their current branding strategies in order to identify commonalities and significant differences.

3. To provide a synthesis of the secondary and primary research that can be used as a set of best industry practices for promoting brand awareness and customer satisfaction in the hotel industry today.

Statement of Study Problem

A wide range of factors have been cited in the literature for the growth of branding within the hotel industry, with virtually all authorities agreeing that the basic motive for such initiatives is increased profitability and a sustainable competitive advantage. In this regard, Allen (2007) reports that, "What has recently come to distinguish the concept of branding is the need to provide clear product differentiation in an increasingly competitive, globalizing marketplace that rests on memorability and emotional connection with consumers, delivered through all points of contact in the product/service value chain" (p. 61). One of the more salient factors associated with this increasingly competitive marketplace has been the concomitant growth in a "McDonaldization," or heightened uniformity among destinations, that makes differentiation all the more important — but also all the more challenging. In this regard, Allen adds that, "Destination marketers are confronted by increasing product parity, substitutability, and competition. Today most destinations have superb five-star resorts, hotels and attractions, every country claims a unique culture and heritage, each place describes itself as having the friendliest people and the most customer-focused tourism industry and service, and facilities are no longer differentiators" (p. 61). Consequently, there is a compelling need to carefully examine the role played by branding in the hotel industry today. As Allen points out, "Branding, therefore, now has a role as a strategic lens, a decision-making tool, and as shorthand for the personality of place in the place environment that broadens the traditional role of marketing beyond communicating features and benefits to one of deepening relationships with customers" (p. 61).

From the consumers' perspective, some of the primary benefits of heightened brand awareness include the attenuation of perceived risks and the costs involved in locating a product (Sangster et al., 2001). In terms of brand owners, the main arguments advanced concern (a) the ability to charge a price premium above what rival hotel chains and independent hotels charge, (b) the ability to gain market share against these rivals, and (c) the ability to retain customers by building brand loyalty, which in turn can reduce marketing costs (Sangster et al., 2001). Indeed, brand loyalty has enormous implications for the hotel industry, with some chains electing to pursue a low-cost leadership role through price discounts while others seek to develop customer loyalty through the provision of unique amenities for their guests (Kandampully & Suhartanto, 2000). According to Bowen and Chen (2001), "It is commonly known that there is a positive relationship between customer loyalty and profitability. When a company retains just 5% more of its customers, profits increase by 25% to 125%" (p. 213). Likewise, O'Neill and Mattila (2004) indicate that brands with higher guest satisfaction levels seem to achieve not only greater revenues per guest room but also higher growth rates in room revenues than brands with lower satisfaction. Despite these interests, the existing literature on brand equity within the hotel industry is still sparse. At present, there is a gap in brand equity literature as to what is meant by hotel brand equity, what perspective it should be viewed from, and how it should be operationalized (Kayaman & Arasli, 2007). These gaps are therefore worthy of further investigation.

Rationale

Studies have shown time and again that, all else being equal, companies that enjoy brand recognition attract repeat customers at higher rates than those that do not (Zingale & Arndt, 2001). Studies have also confirmed that it is far cheaper for companies to keep existing customers than to attract new ones (Hung, 2008). According to Prasad and Dev, "The chief reason for building brand equity as the cornerstone for business success is that it helps offset competition by differentiating the product, allowing brand owners to charge a premium, and fostering customer loyalty" (2000, p. 23). Therefore, improving brand awareness can yield a wide range of benefits, including increased market share, the ability to charge higher prices compared to competitors, reduced marketing costs, attraction of new customers, and higher profits (Hung, 2008).

Assumptions

The main assumption used in this study related to the identity of the respondents who completed the online survey, who were assumed to be the intended individuals recruited for this purpose.

Limitations

The primary limitation of the study related to the relatively small number of respondents (n = 32) who completed and returned the custom survey used to collect primary data.

Working Definitions

Brand equity: The broad meaning attached to the term "brand equity" in branding literature is similar to the definition provided by Farquhar (1989) as the value endowed by the brand to the product. Aaker (1991) defines brand equity as "a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firm's customers" (p. 15). Brand awareness, brand associations, perceived quality, brand loyalty, and other proprietary assets were the five assets of brand equity he proposed. Keller (1993) referred to brand equity as "the differential effect of brand knowledge on the consumer response to the marketing of the brand" (p. 8).

Brand knowledge: Keller defines brand knowledge in terms of two core components: brand awareness and brand image. The importance of understanding brand equity from the customer's point of view is explained by Keller (1993) as follows: "Perhaps a firm's most valuable asset for improving marketing productivity is the knowledge that has been created about the brand in consumers' minds from the firm's investments in previous marketing programs" (p. 2).

Hotel brand: This term is defined by O'Neill and Mattila (2004) as any affiliated hotels of the same name, whether franchised or not (i.e., corporate managed). As they add, "the major hotel companies (e.g., Marriott International) are composed of a number of brands (e.g., Marriott, Renaissance, Ritz-Carlton, Residence Inn, Courtyard, Fairfield)" (2004, p. 3).

Hotel brand equity: Prasad and Dev (2000) define hotel brand equity as the favorable or unfavorable attitudes and perceptions that are formed and that influence a customer to book at a hotel brand, representing the brand equity (pp. 23–24).

Framework for Study

Despite the availability of numerous definitions for brand equity in the literature, there is no common consensus about what brand equity means or how a firm can measure the value of its brand (Bailey & Ball, 2006; Park & Srinivasan, 1994). Though several dimensions of brand equity are identified in the literature, the interrelations among the various dimensions remain better described than understood. In this study, the customer-based brand equity concept is measured by breaking it down into sub-components and testing the relations between these sub-components so that the end results can identify new opportunities for managers to develop detailed brand equity strategies.