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Skift Global Forum: FutureBrand Chairman on Where Travel Falls Behind In Branding

@denschaal

Jul 17, 2014 7:30 am

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Branding has to be about substance, not just spin, and that’s a lesson many companies still need to learn.

— Dennis Schaal

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FutureBrand

Chris Nurko, the chairman of FutureBrand Worldwide, believes the travel industry often falls behind on branding and vision. FutureBrand


By age 14, Chris Nurko had traveled to four continents with his dad and maintained separate piggy banks for U.S. dollars, British pounds, French francs and Japanese yen, as well as “one old coffee can for the odd zloty, drachma, shekel and peseta.”

The global chairman of FutureBrand Worldwide, Nurko says he’s always explored destinations by seeking out the simple things, such as browsing bookstores and record shops, “trying to figure out what the covers said, or what ‘locals’ listened to, always seeking an insight that would unlock the understanding of whatever destination I happened to be in.”

Nurko, who has spent his career coaxing simple and impactful meaning out of everything from aircraft tails to product packaging, will speak October 9 about the rise of smart design in travel at the Skift Global Forum on The Future of Travel. Skift caught up with Nurko for a discussion on the branding and design in the travel and hospitality industry.

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Skift: I noticed that in your FutureBrand Index 2014 there were so few travel companies on the list? Was that a function of their market cap?

Chris Nurko: First of all, as far as market cap goes (and it is PWC Global’s top 100 companies by market cap, not ours), there is something to be said about owning assets, either physical or intangible (e.g. patents) as it is a guarantor of future income/value-worth. The strongest have global scale and relevance, and they actively leverage profits and income mostly on open stock markets.

All of the above key points often do NOT apply to travel firms. They don’t own but lease their physical assets, or are dependent upon a ‘franchise or partner-capital approach. Very few are truly global and those that are play at the premium end so they are yet to get scale. And volatility in the aviation sector due to oil prices, regulatory controls, the safety/terrorism impact on travel trends etc. all mean it is a high-risk business.

One that also is proven to ‘win’ or ‘lose’ everyday when the assets and touch-points are experienced by millions of different customers, all of whom have the ability to transparently have an ‘opinion’ — a very difficult mix to manage!

So, it is a function of market cap to make the list (e.g. PWC’s list). However, when compared to our rankings of what makes a strong brand, many of the underlying attributes and elements make it a high bar to reach for travel/airlines.

The attributes that were identified as contributing to strength were as follows:
convenience, simplicity, relevance, innovation, resourcefulness, thought leadership, inspiration, purposeful, consistent, respected, people-oriented, strong storytellers and had a sense of well-being about them. And, the sectors that stood out as winners were consumer goods/retail, technology and entertainment. No surprises there.

Travel/hospitality/aviation are hard-pressed to deliver on many of the above attributes consistently in a volatile marketplace for assets and income management. Bottom-line growth and margins dominate the industry more than the top line. Hence, a focus on cost management, which usually comes at the expense of customer-centricity or pleasure/convenience/respect/well-being.

Skift: Can you point to sectors of the travel industry or individual companies that are doing the best or worst in branding and why? I would guess that hotels as a whole are doing better than airlines. How can airlines build an invigorated brand perception when they are cramming in additional seats and charging fees for everything not nailed down?

Nurko: Hotel/hospitality is overall doing it better. All of the major hotel operators have made great strides via innovative business models, leveraging capital and resources, fixed and flexible assets, and brand management.

As regards brands — it is all about relevance and affinity. IHG and Starwood are the big boys, but you see new entrants and brands across the price/value spectrum that combine both operational efficiency and customer-centricity in unique and differentiated manners.

Interestingly, the aviation sector has recently been more about flying planes more efficiently than flying people. Hence that’s why the consumer satisfaction/respect/affinity scores and attributes have fallen. Plus, let’s face it: Who really enjoys flying today? The end-to-end process is not pleasant, over-crowded and filled with uncertainty and lack of passenger control. The ‘brands therefore can make all the promises they want. But, the experience they control is limited, and it is often to just make it bearable more than enjoyable.

The sector could look to the consumer goods and services (retail) sector for learnings. The impact of how technology and innovation has transformed retailers, and changed consumer behavior is similar. And, airlines can learn more from retailers than any other sector. But, that is the topic of my Skift speech, so you will have to wait.

One insight however, the use of Big Data is only of value if you can understand how to link the operational efficiency with meeting changing consumer needs/wants/trends. Fixed resources need to be more flexible and adaptable, and service needs to be finely tuned and focused on where in the journey the value-add delivers what is important to the customer, and profitable to the retailer. Marketing is less about the advertising and more about the overall experience. And, without a core vision, set of values and aligned supply/ops chain, the brand is just a paint job.

Skift: What’s the chief thing that companies do wrong when setting out to remake their brands?

Nurko: That’s it, they consider branding a paint job or sugar coating or marketing-only campaign. They don’t align it to their business or commercial plan, nor integrate it as an operational plan. They forget that the brand is as important internally as it is externally, and it isn’t about words and pictures, but rather it is about ideas, experiences, affinity and actions (behaviours). If they align them all, then it becomes about results.

A look at the Airline Strategy Awards recently held in London and you can see who is winning. In aviation it is Alaska Airlines (environment/employee engagement); Hawaiian, turn around and business focus; British Airways, marketing; Turkish, leadership and alignment in operations; Air Arabia, operations, and SAS, finance. And note, It isn’t just about Premium. But, if you want to look at Premium, then Etihad, Emirates and Qatar is where the investments that are being made in infrastructure, technology and comfort/pleasure for passengers are paying off.

Interstingly, in the PWC list, Boeing appears at number 12. Thus, hardware and ‘infrastructure  still are important for the sector. And, technology is not just silicon chips, you still need planes.

Skift: I saw in your FutureBrand Indexs that Disney rose rapidly in the rankings compared with 2013. What did Disney do right to make the leap?

Nurko: Disney is a real future brand as it combines perfectly a portfolio of brands/companies that mix both experience of product/service with purpose and vision to make people happy. How? By creating and imagining products/services/companies and ideas that entertain and educate. They have been consistent for over 75 years and they have a very strong culture (The Disney Way) that is rigorously adhered to.

However, Disney is also very adaptive and innovative, constantly pushing the boundaries and expanding. They don’t rest on laurels, and combine an attention to detail in everything they do with a higher calling to preserve and protect (the environment, respect for people, culture, history, etc.

So, Disney is a story anchored in films and theme parks, but goes well beyond that today. Because of this, and because of their appeal across generations and cultures, they have a positive future bias to growth. Their challenge is to constantly maintain and renew via content, innovation and relevance. Because of this they attract investment and yield higher returns which means both consumers and investors like Disney and see a future.

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