Managing Hotel Brand Equity

Summary:

This research article examines what constitutes brand equity in the hotel industry and demonstrates a method for how that brand equity can be measured. It first states that 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. The brand embodies all that the business stands for. A brand’s strength develops over a long period of time, and a strong brand is expensive to create. Managing brand equity is made increasingly difficult by the rapid proliferation
of new brands, dramatic increases in media costs, the more extensive and aggressive use of promotions by established firms, and the cost and difficulty of obtaining distribution.

Brands are a quick way for hotels and hotel chains to identify and differentiate themselves in the minds of the customers. The favorable or unfavorable attitudes and perceptions that are formed and influence a customer to book at a hotel brand represent the brand equity. A guest’s good experience with a hotel brand builds brand equity, while a bad experience erodes that brand equity. A person does not need first-hand experience with the brand to form an impression of a brand, though, for brand equity is formed among non-users by exposure to media messages or by word-of-mouth. Brand equity is a measure derived from a range of customer-satisfaction criteria. A hotel will have a strong brand equity when a large number of customers have a favorable perception of and attitude toward the hotel brand. High equity is associated with high customer satisfaction, brand preference, and loyalty; high guest retention; high market share;
a price premium; high profits; and, finally, good shareholder value.

The authors measure a hotel brand’s equity