You may have seen the news in January that Ted Teng will soon be stepping down as President and CEO of Leading Hotels of the World and most of you share my high regard for Ted, who ran LHW for 10 years.

Interestingly, his departure was announced around six months after Filip Boyen left rival Small Luxury Hotels of the World; Boyen, in turn, was replaced by Jean-François Ferret, who came from Relais & Châteaux, yet another independent hotel collection.

All this executive shuffling got me thinking about the role these collections—which also include Preferred Hotels & Resorts—play in the luxury travel industry today. All of them were established in the pre-Internet era to provide marketing, sales, and distribution services for luxury hotels, both independents and chains. Mandarin Oriental, Peninsula, the former Savoy Group, and other five-star brands had their properties join.

Nowadays, though, the members are mostly independent hotels; the big names no longer need that kind of support. “Brands can stand on their own two feet now,” Boyen, who is currently running Forbes Travel Guide, the hotel rating service, told me. “They have powerful distribution systems and strong loyalty programs. They don’t need affiliations anymore.”

But to fly a brand flag, a hotel owner has to fork over a hefty share of revenues, follow stringent rules, and spend heavily on mandatory “property improvement plans” to comply with corporate standards. That makes Leading, Preferred, SLH, or Relais & Châteaux an attractive alternative.

Photo: Ted Tang, CEO & President of Leading Hotels of the World

In exchange for a monthly fee and a percentage of booked room revenue (but not all revenue, like the brands charge), they get prestige, global sales offices, and help with marketing and distribution.

“We give our members access, exposure, and best-in-class partnerships,” is how Lindsey Ueberroth, president of Preferred, explained its value proposition. “That includes a points-based loyalty program, a reservations platform, and ancillary services like a revenue account manager.”

Of course, collections aren’t the only ways independent hotels can fill rooms. So-called soft brands, like Marriott’s Autograph, Hilton’s Curio, and Best Western’s newly acquired WorldHotels, provide marketing and distribution services but with more flexibility (and lower costs) than a traditional “hard” brand.

Online booking sites like Tablet Hotels and Mr. and Mrs. Smith offer curated collections of largely independent properties. Many hotels also work with representation companies such as J. Mak or JG Black Book to reach travel advisors, or with other organizations to market to niche groups. And properties can talk to consumers directly via social media and a growing army of influencers and bloggers.

Even Airbnb is an option: It already sells independent hotel rooms on its platform, and I expect it will move aggressively to sell more as regulators put the squeeze on home-sharing. Look no further than the launch of Airbnb Plus—listings that have been verified for having “hotel-like” amenities—as well as the just-announced acquisition of HotelTonight.

Photo: Gleneagles, Forbes.com

I asked Peter Lederer CBE, the former chair and managing director of Gleneagles, about the appeal of joining collections nowadays. For many years, the Scottish resort was a member of LHW (where Peter was also on the board) but dropped out after an ownership change; it has since rejoined. He agreed that for non-branded properties, the collections need to be clearer about who they can help and how. “For example, there was no way for Gleneagles to afford to have someone in the Middle East selling for us. But with Leading having an office there, it worked.” Urban hotels, on the other hand, have a steady stream of demand. “And if you’re Claridge’s, you’ve got enough of a brand that you’re probably better off not being in Leading.”

In fact, he understands why some properties will simply go at it alone. “If I was starting a resort in the United States today, I would look at the cost of being in Leading or a traditional brand and wonder if I’m better off just finding the best general manager, the best revenue manager, the best social media person, and do it myself. Because the Internet can deliver all the ability and the systems you need.”

Michael Ball, principal at LTH Advisors in London, agrees. He should know a thing or two about this topic, having founded and run a number of global representation companies and private-label reservation systems. “The seismic change in the hotel consortia space is caused by a number of factors,” he told me. “Access to vast amounts of information and up-to-the-minute rates and availability; hugely powerful established OTAs and well-funded new ones; increasingly knowledgeable, demanding, and mobile consumers—the days when a hotel consortium could survive on a GDS-based transaction model are fast disappearing.” At the same time, he said, big corporate brands are rapidly and successfully diversifying into a plethora of lifestyle and design-led brands. “Those come with management or franchise or even association options. Hotel owners and consumers have so many more choices, and the consortia are being squeezed on both sides as a result.”

To get a consumer’s perspective, I talked to some friends who are luxury hotel aficionados. Most said they learned about properties through word of mouth. Some used the American Express Fine Hotels & Resorts program as guidance. But none of them said that they started their search with Leading or any other collection. They did say they were familiar with them, and saw membership—particularly in Relais & Châteaux—as a badge of high quality.

Similarly, the luxury travel advisors I spoke with said the greatest value of an affiliation is that it assures certain standards, for both their clients and themselves. “If I know nothing about a property but I know they’re in Leading, that gives me the confidence to book it anyway,” was how Erina Pindar Chamberlin, managing director of SmartFlyer, put it. “If something goes wrong, even though I don't have a direct relationship with the property, I can always call my contact at Leading to make it right.”

Photo: Gracebayresorts.com

Nikheel Advani, COO and Principal of Grace Bay Resorts, echoed that sentiment. “There’s been such a plethora of luxury hotels over the past 15 years, that stamp of approval has become the most important thing” that membership in a collection provides. His properties all belong to different programs: Grace Bay Club is a member of Leading; West Bay Club is in Preferred; Point Grace is part of Small Luxury Hotels of the World. He said each has its strong points, but he uses all for their sales forces in various markets, as well as data insights, leadership training programs, and other benefits. “An independent hotel needs all guns firing,” he said. “Overall, the advantage is that they give little guys like us big-guy muscle.”

So how should Ted Teng’s successor position Leading Hotels of the World for success in this environment? How do collections overall stay competitive and relevant? I have a few thoughts:

• Lean into independence. Build a brand identity around not being one of the big brands—perhaps excluding them entirely. “People are tired of the predictability of big brands,” said Boyen. “Luxury today is about authenticity, not frills.” Ueberroth is positioning Preferred in that direction, creating different sub-brands (Legend, Lifestyle, etc.) to appeal to different markets—especially millennials, who are resistant to big brands. “If you’re an independent-minded person, you should stay at independent hotels,” she said.

• Improve the loyalty offering. None of the collections have membership programs robust enough to compete with Hilton Honors, Marriott Bonvoy and the like. Small Luxury Hotels’ new partnership with World of Hyatt, whose members can now earn and redeem points at select SLH properties, comes closest. The other groups should look for similar partnerships that will expose them to new markets and give points-obsessed travelers a reason to book. Many loyalty programs now offer special amenities or experiences in addition to just points. What’s the next version of that trend?

• Enlist the travel advisor community. Agents can be a powerful force for selling luxury hotels to discerning travelers, but they told me some collections do outreach better than others. Independent contractors, in particular, are rarely in the office for sales team visits and need to be educated online. And don’t neglect younger agents. “I haven’t heard anyone mention Leading or Small Luxury Hotels in a really long time,” said Barkley Hickox, cofounder of Local Foreigner, which launched in 2015 and whose clientele skews younger. “They’re not doing a great job reaching agents with a younger, hipper perspective.”

• Use your data wisely. Collections have access to huge amounts of data from their members. But are they doing everything they can with it? With artificial intelligence, big data can become intuitive and predictive, anticipating that if a guest shows certain food or room preferences at one hotel, they’re likely to behave the same at the next hotel. That can also lead to personalized offers that are likelier to convert. An independent can never afford to take on such a tech-heavy project on its own, but a collection could—and the brands (like IHG, with its Concerto system) already are.

• Differentiate on quality. Google Hotels is shaping up to be a major disruptor, giving consumers powerful tools to help them book rooms themselves. The opportunity for collections? Stand out by emphasizing curation and a high level of service. The qualitative filters you’ve already applied are more appealing to luxury customers than an ad-driven marketplace like Google. That said, the standards need to be ironclad. All collections inspect their properties, but do they really represent the best of the best? “In cities like New York or London, are the Leading Hotels of the World members really the leading hotels there?” one prominent player asked me rhetorically.

• Include non-hotel accommodations. It’s not just millennials who like Airbnb. The older travelers I spoke with were all willing to try rentals, if they weren’t already converts. What’s holding them back? Fear of inconsistent quality—exactly what the collections are positioned to address. If vetting and listing villas and luxury apartments is too heavy a lift, they could try partnering with a company that’s already doing it— onefinestay, Sonder, even Airbnb Plus.

“These are certainly challenging times for hotel collections,” Ball told me. “But the future is very bright for collections that can unify, harness, and effectively promote the appeal of distinctive independent hotels. Companies that can adapt and strive to increase their value to both the hoteliers and their customers will prosper.”

I’d love to hear what you all think, whether you’re an independent hotelier, a marketer for a big brand, or a luxury travel advisor. Let’s keep the conversation going!

Peter J. Bates, President Strategic Vision
pbates@strategicvision.org

660 White Plains Road, Suite 535
Tarrytown, NY 10591
(914) 881-9050 / www.strategicvision.org