Do brands really add value to real estate developments and travel destinations? ( and III)

by Alvaro HIDALGO

Following our last blog http://bit.ly/n8XRj2 we stirred up quite interesting conversation threads in different LinkedIn forums, and we believe it may be worthy to close the series gathering some of the points raised.  (Quotes are numbered and authors are referred below)

The most expected question “Isn’t it there something to be said about overextending a brand's horizontal expansion? While ultra luxury brands understand quality and value, I hesitate to agree it translates to the hospitality sector” (1) was very clearly answered within the discussions: “if the ‘brand promises’ of the development and the luxury brand complement each other it works….. In the luxury sphere clients are used to getting the best and thus having a famous luxury brand involved in a project is a natural extension of the developments' positioning in the market” (2).

A brand can be regarded  as “a comprehensive set of values that enable the asset to articulate its benefits concisely to its target market”(3) but, instead of being understood as a  whole ,  this very precise definition gets frequently  distorted and is applied only to the short term capacity to attract its target market and make the sale.

Indeed, this short term approach is followed by “many property firms for which branding is little more than project marketing using individual, short-lived marketing and PR measures. But because property branding must be seen in the long term,” “targeted brand positioning, differentiation, authentication, and cultivation should create a lasting genius for your project”(4).

Thus, branding must not be applied to “just a surface-level activity, but the architecture and master-planning should be an integrated part of the brand and the delivery of the community & the facilities management to ensure that the brand promise is delivered on a day-to-day basis to end users.” (5)

It is clear that real estate product identification should always be understood in the long term.

A good example of the importance of the name can be seen in the gated communities & condominiums. Their name becomes an established brand in time and this is only achieved by proving to be capable of maintaining certain standards during a number of years. “Brands may 'tag' products but ultimately it is the individual experience with an induced value that creates that brand” (6).

Branded developments fill this short term - long term gap. By showcasing the brand from the very early stages of development, established brands commit not only to bring in their set of values, but also to maintain them for the long term.

Indeed, top brands' reputation is based in their capacity to produce top-of- the-range products and services and to make them evolve to adapt to -and in many cases to shape- new trends and ways of life.

Bringing these levels of design, quality and service to a final product is something that many try to achieve and very few succeed in the long term –some have been succeeding for almost a century…..    Here lies the brands’ strength and power.

Finally, applying brand standards to the very immaterial sales process does also make the difference.

“If you want to reach the buyers who buy ultra-luxury branded real estate, you need to reach the same kind of buyers who buy the ultra-luxury brands” “It requires an understanding of how to market branded luxury to the elite, creating an exclusive invitation only type offering and keeping the brand integrity of the project sound to maintain value for the project and for the buyers.  It requires managing the inventory so the initial buyers enjoy greater benefits then the buyers who come in last and the exclusivity of the offering builds a backlog of those that wish they could have bought. With the development phase really hitting the market at just the right time in Asia, understanding how to pre-sell your ultra-luxury branded residences & hotel residences into these markets can really minimize the risk and increase the ROI to the developers and the ownership to the buyers” (7).

So, bringing in luxury brands avoids the pitfalls in this final leg and their expertise adds value by setting standards and requiring that the process is handled by professionals.  They do know how to successfully manage the distribution and the retail chain to enhance both the product and the brand itself…. few sectors can surpass established luxury brands in the mastering of this process.

Hence, by incorporating their expertise to the branded destination concept, brands do play in their home court. They are just extending their capacity to provide lifestyle to other niches and by this they create value and maintain it in the long term.  And the implications of this provide a major benefit to all parties involved: brand, developer, funders, lenders &  investors, sales force and clients/owners.

Branding complements and fulfils all parties’ aims and needs…... they come at a price but they generate the returns.

Of course, under the brand umbrella there are many different standards.....And none can compare with the reputed “Coolest brand”: http://bit.ly/mdMAmz

For more information please contact FIRSTLOGIC Consulting
http://www.first-logic.com

Quoted Contributors:

(1)    Kyle Thieme, Social Media Coord at Madplum Creative 

         http://madplumcreative.com/

(2)    Jp Fourie, CEO  Admakers

         http://www.admakers.com
(3)    Jason Barret,Commercial Property Manager with a twist
         Jason Barret's LinkedIn profile
(4)    Lee Valentine, Brand Strategist at Team scope design
         http://www.teamscope.com.au
(5)    Lisa Knight, Founder & Creative Director at The Brand Foundation
         http://www.thebrandfoundation.net
(6)    Jessica Osborne, Project Consultant
        Jessica Osborne LinkedIn profile
(7)    Robert Rann, President & CEO Refined Resort Residences
         http://www.refinedresortresidences.com/
         http://blog.refinedresortresidences.com/

Many thanks to all LinkedIn discussion contributors for all your valuable entries, quoted or not.

Interior garden picture courtesy of  John Glover, leading specialist garden photographer http://www.johnglover.co.uk