With millions of marketing dollars available in the war chest of huge multi-brand hospitality companies, independent hotel brands typically face an impossible situation while trying to compete. Fighting in the latter’s corner is UAE-headquartered Global Hotel Alliance (GHA) which was founded back in 2004 with the aim of coalescing the independents and setting them up in a David vs Goliath scenario where they stand a fighting chance to come out on top.
Chris Hartley, a former head of sales and marketing at Kempinski Hotels which was one of the alliance’s founding members, explains GHA’s genesis. “Kempinski was a founding member of GHA and they are still one of the biggest brands and shareholders in the alliance today. The formation of GHA relates to airline alliances. Back then, Kempinski was owned by Lufthansa. However, Lufthansa had gone off to create Star Alliance and so we [at Kempinski] had lost the value of the Lufthansa ownership and the distribution and sales power that came with that. We thought we needed to do something similar [to Lufthansa creating the Star Alliance] to enable a small company like ours to compete globally. That was really the catalyst behind the creation of the GHA. Kempinski had maybe 25 hotels at that time. We brought a few other similar sized brands into the GHA. So we had about four brands with 100 hotels, trying to compete with big hotel companies that had about 500 hotels. That was the original concept, and it remains true today,” says Hartley.
With Kempinski, Omni, and Oracle becoming founding shareholders of GHA – with Hartley taking over as CEO of the alliance in 2006, which he remains today – the alliance has had a meteoric growth over the last 20 years. Comprising 40 brands and over 800 hotels spread across 100 countries, GHA says that it is now the world’s largest alliance of independent hotel brands. Its portfolio includes the likes of Corinthia Hotels, Parkroyal Hotels and Resorts, Nikki Beach Hotels and Resorts, and The Set Collection, among dozens more.
Last year, GHA’s growth received a major fillip when the NH Hotel Group joined the alliance and brought into the fold its 350-odd hotels across its three brands including NH Hotels, NH Collection and nhow. Interestingly, NH Hotel Group is majority owned by Minor Hotels, the latter of which has been a part of the GHA since 2007. “Minor joined us with five Anantara hotels in 2007. They were a small independent back then, but now they’ve grown – and the alliance has been a part of that growth. You can argue that the Minor Group today could run their own platform, but they instead bought into the alliance – they are our shareholders. We as a business double their reach, and we’re in markets that they couldn’t get on their own, and so it still works for Minor. As a shareholder in GHA, they’re happy to see the alliance grow,” says Hartley before turning to the aviation industry analogy. “Lufthansa is very big in its own right, and it also owns Austrian Airlines, SWISS, etc. Lufthansa doesn’t necessarily need Star Alliance. It could operate entirely independently. But they are instead part of a broader Star Alliance. I think that’s Minor’s view of being a part of the Global Hotel Alliance.”
There is no arguing the scale of GHA’s consumer reach. The alliance has 24 million people within its GHA Discovery loyalty programme. GHA’s total revenues across its hotels reached US$1.4 billion for 2022, a 60 per cent year-on-year increase over 2021. As Hartley reveals, that figure is expected to hit US$2 billion this year. But for Hartley, increased revenue isn’t the top priority – cultivating loyalty and encouraging customers to engage in cross-spending across GHA’s brands is the ultimate goal. “A large chunk of the annual revenue, maybe around 60 per cent of it, in any given year is one-off – those are customers that stay with us only once. Then you have around 30 per cent of that overall revenue from guests who come back to stay with us, but always at the same hotel – say the Kempinski Hotel Mall of the Emirates. We like those customers, but what we try and say to them is, ‘Why don’t you also try the other brands from the alliance?’ – and that’s what we call cross-brand revenue. So about 10 per cent of our annual revenue comes from cross-brand revenue, and that’s the holy grail for us.”
In 2022, GHA’s cross-brand revenue reached US$168 million, a 25 per cent increase over its pre-pandemic 2019 performance. Last year, Anantara, Kempinski and Pan Pacific Hotels Group were the most active in both receiving and sending cross-brand revenues to other GHA member hotels. NH Hotels, which joined in July 2022, contributed around US$14 million in revenue in stays to other brands by the close of last year.
Crucial to driving cross-brand revenue is its loyalty programme – GHA Discovery. Of its around 24 million members, 1.6 million joined last year. GHA, therefore, has a large captive audience, and its digital rewards currency programme – Discovery Dollars (D$) – allows its loyalty programme members to earn D$ throughout their stay at any property against room charges, dining, spa and other activities. The currency is credited at the time of check out, and it can in turn be used as a spend to offset the cost of a member’s next visit to any other GHA property worldwide.
Sustainability matters
Earlier this year, GHA rolled out its new Green Collection programme wherein individual hotels from its existing portfolio are labelled as a Green Collection property if they are deemed as being ahead of their peers with regards to their sustainability initiatives. At the time of rolling out the programme in March, 194 properties out of the total of 800 received the Green Collection tag. But rather than GHA itself assessing the sustainability measures of individual hotels, it relies instead on the certification afforded by 15 global environmental organisations such as EarthCheck, Green Key, Green Growth 2050 and Green Globe. Every Green Collection-certified property has at least one certification from the 15 entities that GHA recognises as a part of the programme.
The inaugural list of Green Collection hotels includes properties in 44 countries and 112 destinations. In the Middle East and North Africa, Green Collection properties account for half of the GHA Discovery’s portfolio, while in Africa and Asia, they account for 37 per and 36 per cent respectively. The highest density of Green Collection hotels are in the Netherlands with 31 properties (97 per cent of GHA hotels in that country), Thailand with 16 hotels (52 per cent), the UAE with 15 hotels (52 per cent), China with 13 hotels (31 per cent); and Belgium and Argentina with seven hotels (54 per cent and 50 per cent respectively).
Properties that have received the Green Collection tag include Parkroyal Collection Marina Bay, Singapore which champions the ‘garden-in-a-hotel concept’ with 2,400 trees, shrubs and groundcovers within it; the Avani Palm View Dubai Hotel and Suites which received the Green Growth 2050 Certification; the Anantara Dhigu Maldives Resort which has an extensive coral reef protection and regeneration programme; and 14 Kempinski hotels worldwide (Kempinski plans to measure 100 per cent of its energy emissions across all its hotels by the end of 2023).
“People who travel extensively are very aware of their carbon footprint. We’ve got a customer base of 24 million people, and we’re going to tell those customers which hotels are following sustainability best practices. Green Collection is our way of responding to what our customers are saying, acknowledging the efforts made on the sustainability front by our hotels and encouraging other hotels that aren’t part of the collection to make an effort and consider why they aren’t part of the collection.
“We don’t want to be the [sustainability] police. We see our role as provoking a discussion, rather than lecturing, because there’s a lot of greenwashing going on. I wouldn’t be surprised if within two-three years, we have over half of all our hotels in that Green Collection,” notes Hartley.
As GHA moves towards its US$2 billion revenue mark, the Middle East market is going to be vital to its growth. By the close of 2022, there were 28 GHA properties under nine brands in the UAE. New additions in the country to the GHA last year included the Palazzo Versace Dubai which joined the alliance in June and also the Anantara Downtown Dubai Hotel which opened in July. The alliance’s UAE hotels delivered US$32 million in room revenue in Q4 alone. “The UAE market, relative to its size, is the biggest market we have. We’ve got a greater number of hotels in China, but it’s a different scale. We’ve got four-five new openings in the UAE over the next 12 months. The UAE is going to be up there with the biggest performing markets in the world for the foreseeable future,” predicts Hartley, while going on to elaborate on the alliance’s prospects in other countries in the region. “In Qatar, we opened several hotels in the run-up to last year’s World Cup. We’ve got more hotels opening in Saudi too, some of them in these mega projects. Brands such as Kempinski have announced a huge explosion of hotels in that Saudi market over the next couple of years.”
In China, one of its biggest markets, GHA has over 50 member hotels. But there are other markets where it’s yet to establish a significant presence. “We could do with a much larger presence than the three hotels we’ve currently got in Japan – a market of 130 million people and, according to our customers, one of their preferred destinations to travel to. In South Korea, we’ve got pretty much nothing. The US is always dominated by the big players, but we’ve only got 20-30 hotels over there. India is a growing market, both for inbound and outbound travel. We’ve got Leela as a brand there, but they’ve got 10 hotels in a market that has 1.4 billion people,” observes Hartley.
GHA’s portfolio of hotels is expected to grow by another 100 properties by the end of this year. And as the pool increases, Hartley explains the typical conditions which need to be met for a hotel brand to enter the GHA fold. “We look for companies – not individual hotels – that have the infrastructure mix of technology and human resources to work with us, and have the scale to benefit from our infrastructure. Typically, we’re looking for brands that have maybe a minimum of 5-10 hotels,” says Hartley. He adds that hotels that have standard commoditized mass offerings aren’t typically the best fit for GHA. Instead, he says that experiential brands work best for the alliance, while citing the example of JA Resorts in Dubai which delivers on that front. JA Resorts is an entity that is widely known among UAE residents, but isn’t as popular in European or Asian markets and hence benefits from tying into the GHA ecosystem for added visibility.
While the big multi-brand hotel companies are obvious competition to GHA, Hartley says that he finds GHA actively competing against third-party sites such as Booking.com too. “Two-thirds of GHA hotels are either owned or leased by the companies we’re working with. The cost of third-party booking sites – around 20 per cent – is very high for hotels. Maybe you’d care less if you’re a franchise, but if you’re the owner of the asset, that 20 per cent is expensive and so the solution is to enable more direct booking,” states Hartley.
Hartley’s view of the evolving nature of hospitality franchise brands, especially the bigger ones that have several hundred hotels within their scope, is that they are becoming marketers and distributors, rather than operators. The independent brands that GHA works with are primarily owner-operators. “Over the last 20 years, the hospitality industry has massively consolidated – but it’s still only consolidated with around 50-60 per cent of hotels now belonging to one of the mega chains.
“However, there’s a whole swathe of maybe 30-40 per cent of hotel ownership that is fiercely independent. I think there are more brands that in the future would see remaining independent as a goal,” says Hartley. And it’s those brands that will likely find it the most advantageous to comfortably slot themselves into the alliance.
