By Combining Independents Into Five-Brand, 700-Hotel Conglomerate

Marketing, Sure -- But A Fierce Focus on Sales

Preferred Hotels & Resorts is a venerable name, frequently ranked as a marketer of upscale properties alongside players like Leading Hotels and Small Luxury Hotels. Since industry veteran John Ueberroth took control of the company in 2005, it has become a 700-hotel heavyweight conglomerate of brands - now including Preferred itself, Preferred Boutique, Summit Hotels & Resorts, Sterling Hotels, and Historic Hotels of America (see box for examples of member hotels; and www.preferredhotelgroup.com for descriptions of each brand.) PHG members are overwhelmingly independent, through chain properties are welcome. 

    We spoke with Lindsay Ueberroth, vice president-brand development (who started up Preferred Boutique); and Sarah Clark, vice president-marketing about why PHG is growing so quickly fast at this time (including the fastest-growing consumer loyalty program in the industry) - and why they are so serious about selling. Highlights of our discussion follow:

The Preferred Proposition

• PHG's business is 60% leisure, 40% business. Of all the company's revenues, 70-75% is considered luxury - mostly coming through the Preferred and Preferred Boutique brands.  And of that luxury piece, a whopping 90-95% comes from travel agents.
• Every hotel in every brand, whether luxury or value," says Ueberroth, "has to meet standards. Sometimes it's easier to market luxury but we're equally excited about the growth of Summit and Sterling (PHG's lower priced entries.). We take great pride in every brand because every hotel offers a unique experience and a sense of discovery. Sometimes a hotel will think they are right for one brand but we help them understand how another brand might be a better vehicle for them."

Sarah Clark

• With almost 700 hotels and a near-term goal of 800, PHG, a family-owned corporation, has the resources to build proprietary technology - such as shared leads for group meetings. Similar to its competitors, the PHG business model includes fixed annual fees for marketing and branding initiatives, as well as transaction fees. Stresses Clark, "We are progressive and flexible and are able to adjust how our transaction fees are handled."
• Why the emphasis on selling? Says Clark: "We've always considered ourselves a sales organization first - a marketing and distribution company next. We have 60 dedicated sales directors for travel industry sales alone. We have 28 sales offices all over the globe and we are adding those rapidly. We have a team dedicated to group sales. There is a lot of monthly contact, as well as 100 road shows annually in the form of trade show-type events or sales blitzes on local agencies."
• Why have hotels as well known as the Broadmoor and Montage Laguna Beach joined PHG?  Says Clark, "One of the biggest advantages for members is being part of a multiple brand group. There are many small hotel companies out there that have hotels in different categories; we can offer them home under different brands but allow them to share a seamless platform for purchasing, reservations and much more."

Lindsey Ueberroth

• PHG has a 15-member Travel Agency Advisory Group, which meets annually. The group will be broadened internationally this year.
• A growing segment for PHG from agents, says Ueberroth, is small groups and "specialized groups" - "and that is because of some of the tech solutions we have developed."
• All PHG brands recently expanded the agent portions of their Websites.  Four major agency groups - Virtuoso, Signature, Ensemble and American Express - enjoy access through the PHG site to special offers dedicated to their respective members. Says Ueberroth, "Our job is to align ourselves with the best partners in the world and we are constantly looking for more."
• A bi-monthly newsletter for agents called The Itinerary carries a variety of offers, discounts and commission override deals.
• Even when a traveler who has formerly booked through an agent books direct the agent will be paid a commission in the interest of maintaining relationships.

• "We liken ourselves to a Starwood,"" says Ueberroth; "we cover different market segments and we do a good job in defining each brand."
• While PHG's brands do not have the marketing budget of a Starwood, says Clark, "we launched our loyalty program, "I Prefer," just three years ago; we already have 200,000 members and we're aiming for half a million by year end." She attributes that growth to "the realization by consumers that this is the place to get the best deals and offers; for our members it means a very rich database of guests and potential guests."
• One important point of distinction: golf. Preferred Golf Club, created in conjunction with American Express for card members, offers priority access and complimentary golf at more than 60 top golf resorts; there is an annual fee of $295.

Coping With the Economy

• Our hotels are feeling, the crunch," says Ueberroth, "but we feel that our Summit and Sterling brands may be benefiting from the focus on saving. Also, we have seen our membership grow because hotels feel the need for partnerships."

"Now is the time," she says, "to work harder for our hotels. Every other month we have what we call TLC (tender loving care) calls with all our hotel members around the world. We compile the information that comes out of that - whether it be sales leads or best practices - and share it with everyone. Those calls serve as an information funnel."

(Next month, CEO John Ueberroth talks about where he's taking PHG from here.) .


Sampling PHG's Brands

Just to provide a flavor of the PHG family, following are three members of each brand:

• Preferred: Sandy Lane (Barbados), Hotel Bayerischer Hof (Munich) The Cloister at Sea island (Georgia)
• Preferred Boutique: St. James's Hotel & Club (London), Beaver Creek Lodge (Colorado), The Sherry Netherland (New York)
• Summit: Angkor Palace Resort & Spa (Cambodia), Westlake Village Inn, (California), Royal Garden (London)
• Sterling: Regal Kowloon (Hong Kong), The Lodge at Santa Fe, Hotel Jan III Sobieski (Warsaw)  
• Historic Hotels: Peabody Memphis, Grove Park Inn (North Carolina), Hotel del Coronado (San Diego)