CHICAGO? Preferred Hotels & Resorts Worldwide has changed from a traditional referral/reservation organization into a branded distribution company to help it compete with flagged chain and franchise management companies. ?The representation firms and reservations companies have served the individual owner well,? Peter Cass, president/CEO of Preferred told HOTEL BUSINESS?, ?but we are now in a different marketplace because of technology and we need a new structure which is a branded distribution company,? he said, noting that Preferred will keep its focus on up-scale and luxury properties. In describing the new business model, Cass said that a branded distribution company is ?primarily market-focused; its full attention is on customer and travel influencer communication, relationship technology and revenue streams.? That?s as opposed to ?hard flags that focus primarily on hotel operations and asset management, and reservation affiliations that focus on professional networking and traditional distribution channels,? said Cass. The structure of a branded distribution company is that of a conventional for-profit stock corporation with ownership participation by theindividual hotel owners who have direct input into the corporation through an elected board of directors. As a result, the branded distribution company gives the owner/manager more control and independence, according to Cass. It also requires less upfront cash than do management companies, he noted, as well as lower overall costs as a percentage of contributed room night revenue. All told, the move means that Preferred is building a company ?that provides marketing expertise, multiple technologies, strong global brand management and a focused commitment on performance to independently owned and managed hotels and resorts and small owner-operated hotel companies,? said Cass, who has written a White Paper on ensuring the long-term viability of the independent hotel and resort. Realizing that Preferred, and other companies that service the independent hotel industry, will be facing tough competition from hotel mammoths like Marriott and Starwood who are putting millions into technology investments, is what spurred Cass into evolving Preferred to its present structure and to writing the White Paper. Cass also noted that in the coming weeks and months we may see moves from independent hotel companies in general joining forces through alliances to form a single base of operations that can compete with the major hotel corporations. ?Now the next step is consolidation,? said Cass. ?We want to set up a structure and look at growing a critical mass or scale of Marriott or Starwood.?
