Why Aren’t Any Travel Brands Considered Among the Best on Earth?

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One thing we here at Skift often say is that travel is one of the world’s largest industries, and that it truly has a global impact: it’s the “global crucible for everything.”

According to the World Travel & Tourism Council, travel and tourism’s contribution to the world GDP (gross domestic product) grew for the sixth consecutive year in 2015, to 9.8 percent of world GDP, which equates to about $7.2 trillion. Travel and tourism also employs 284 million people — one in 11 jobs on the planet.

But when it comes to global brand value rankings, the travel brands we are most familiar with — brands such as Marriott, Hilton,Delta Air Lines, Carnival Cruises, and Expedia — are noticeably absent for top 10, 50, or even 100 lists.

Just take a look at this year’s Interbrand annual list of the Best Global Brands or Millward Brown and WPP’s BrandZ list of the top 100 global brands, and you will find that there aren’t any travel companies on the list.

Now, it should be noted some brands on these lists do dabble in travel, such as Google or Disney, or Allianz, which sells travel insurance plans, but they aren’t purely travel brands. There are no airlines or hotel brands on these lists.

The last time a hotel brand made it onto Interbrand’s list of Best Global Brands, for example, was Marriott in 2008. Prior to that, Hilton made the list in 1999, 2000, and 2001, and Marriott in 1999.

THE PROBLEM

Skift spoke to Paola Norambuena, chief content officer of Interbrand, and Mario Simon, chairman of Kantar Vermeer, to find out why. Kantar Vermeer’s market research originates from Millward Brown, and the company is part of the WPP family. Both lists have different methodologies for compiling their lists, but both take financial performance into account and list only brands from publicly traded companies.

Travel companies tend to have very fragmented business models. “One of the things that both hotels and airline companies have is that they tend to be a little fragmented,” Norambuena said. “Not all of their brands qualify as what we define as a global brand. When we say ‘Coca-Cola’ on the list, it’s the brand itself, not the family of brands.”

Financial performance might not be strong enough. Brand value on both lists takes financial performance into account. “It’s not enough to just have a strong brand,” Norambuena said. “It’s about financial performance and they need to show profit consecutively.”

“Typically,” Simon added, “travel brands have not had the size of other companies that have made it to the Brand Z list of 100.”

The lowest ranking brand on Interbrand’s list, newcomer Tesla, raked in a little over $4 billion in revenue in 2015; the highest, Apple, had a brand valuation of more than $178 billion. According to the Brand Z Report, No. 100, Adobe had a brand valuation of $10.4 billion, while No. 1 Google had a valuation of $229.2 billion in 2015.

By comparison, in 2015, American Airlines saw a $7.6 billion profit and Hilton Worldwide generated $11.3 billion in revenue. However, because these lists look just at the individual brand (not necessarily the parent company brand) those profits would arguably be smaller.

“Airlines tend to not have enough economic profit to qualify on that side,” Norambuena said. “Many airlines are great in their local markets but have very little presence globally.”

They’re just not quite as global as we think they are. For Interbrand’s list, each brand has to have at least 30 percent of its business in foreign markets and while many travel brands are global, the percentage of their business outside of the U.S. may not necessarily qualify them for these lists.

“When we think about global companies, we look at their spread throughout different regions, especially in emerging markets,” Norambuena said. “That’s a top line explanation for why hospitality, in particular, doesn’t make it here.”

There might just be too many brands. Many of Proctor & Gamble’s brands grace both lists, for example, but not all of their brands do, and some industries just have a lot more brands out there than others do. Hospitality, said Norambuena, is a prime example.

“It’s a very crowded space,” she said. “They should be thinking about how they are differentiating.”

That’s something especially weighing on the mind of Marriott International, which, now that its acquisition of Starwood Hotels is complete, could very well be considered the Proctor & Gamble of hotels, with 30 brands in its family. Even Expedia, with its VRBO, HomeAway, Trivago, and other brands is spread too thin for this type of recognition.

Kantar Vermeer’s Simon thinks that even if an industry is inundated with lots of brands, as long as there is “good management and good brand stewardship” there is “no limit to how many brands you can have, as long as each one is purposeful and serving very specific target segments.”

Our interactions with travel brands don’t always take place on a day-to-day basis. Travel does encompass a big part of people’s lives, especially when it comes to milestone moments. And for road warriors, travel has become a daily routine: boarding a plane or train to travel long distances, or checking into a hotel is a part of their everyday lives.

But for the large majority of people, travel isn’t something they necessarily engage with on a daily basis, day in and day out. Travel may have an indirect impact on their lives in some ways, but they aren’t necessarily staying in a hotel or jet setting on a regular basis.

“The role of brands is a bit harder to quantify, but it’s really critical; financial performance can only be sustained if people continue to choose that brand time over time,” said Norambuena. “It’s awareness. It’s preference. That part of it is critical to this [Interbrand] study, which makes it different from other studies that are solely based on finance. It’s the strength of the brand, coming back to a brand again and again, knowing it’ll be as good or better as the last time.”

WHAT TRAVEL BRANDS SHOULD START THINKING ABOUT

So, what should travel brands be doing if they want to be recognized as one of the best 100 global brands? Focusing on the customer experience is a start, Kantar Vermeer’s Simon said.

“Service orientation is a big piece of brand valuation or travel brands,” said Simon. “There are multiple points of convenience and points of entry across the consumer journey and marketing funnel; there’s a big opportunity for hospitality and travel brands that have these guest service components to really utilize those experiential factors to expand their brands.” He added, “The way for them to increase business value would be to move into adjacency businesses and use their expertise in customer/client experience to dominate their categories.”

One brand that seems to be doing just that, and dominating the homesharing market, is Airbnb. Interbrand’s Norambuena said her firm is keeping a close eye on Airbnb, especially now that its latest valuation is an estimated $30 billion, which amounts to the market capitals of both Hilton and Hyatt combined.

“Given their valuation, and the fact they may do an IPO (initial public offering) in the future, that might be one to watch and to see how they end up on our lists if they do,” Norambuena said.

Simon added, “Airbnb is a very good example of how new business models and connecting with consumers can be very purposeful and personalized. It can have a fundamental disruption effect in an industry that has enjoyed a traditional business model for a very long time. It’s an example for brands to think of technology, platforms, and purpose; what’s the higher order of service? It could really shape whole industries.”

This article first appeared in www.skift.com

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About Author

Deanna Ting

Writer who likes to eat--a lot. Associate Editor @skift covering #travel, #hotels, and more.

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