Brand Management in the Hotel Industry and its Potential for Achieving Customer Loyalty

Brands are a phenomenon that has been in existence already for centuries. From its original purpose of marking livestock, the concept was later adopted by manufacturers for their products and further developed and adapted to changes in business environments. The original idea of using marks to indicate ownership and origin, however, can be traced back even for millennia to ancient Greek and Rome and early Chinese dynasties.

These days, the number of brands is greater than ever. More and more businesses have come to realize the power of brands, and the concept of brand management has consequently gained considerable interest in recent years. Every year the number of new brands registered increases. Fortune magazine suggests that "In the 21st century, branding ultimately will be the only unique differentiator between companies."

Initially, the use of brands, or marks respectively, was limited to physical products only. Service brands are comparatively new in the long history of branding. The hotel industry – along with many other services – is lagging behind manufactured goods by decades. For this reason, research on brand management mainly concentrates on this type of products. Literature on service brands is comparatively scarce. Nonetheless, there are great potentials for brand management in the service industry in general and the hotel industry in particular.

Hotel services differ from physical goods in many ways. For this reason, research findings and approaches to building and managing brands cannot simply be transferred. The major goal of this work is therefore to examine the concept of brand management, to adapt and apply it to hotel services.

In today’s ultra-competitive business environment, customer loyalty is a hot topic. The hotel industry has turned into a buyer’s market. Competition keeps intensifying at steady pace, resulting in a surplus of capacities. As a consequence, the importance of making guests return becomes a critical issue. It is said that brands provide the opportunity to encourage the creation of loyalty among consumers. In comparison to generic products, they are believed to have an advantage in achieving this goal. A second objective of this work is to determine the connection between these two concepts and to investigate the beneficial effects of branding hotel services for the process of establishing loyalty.