The Hospitality and Lodging Industry in the United States is booming with strong growth in overall revenues and average price per room. Notwithstanding external factors such as international terrorism and the rapid rise in fuel costs, most industry forecasts predict continued growth in revenue.

Recent studies show however, that the industry suffers from a considerable loss in revenue and profits because of ineffective differentiation of service offerings and branding. This trend is recent because historically hotel customers have demonstrated brand loyalty.

Private label drinking water has been proven to be a powerful, cost effective method of promoting quality brand images and differentiating service offerings.

Opportunity Lost

The Hospitality and Lodging Industry plays a major role in the U.S. economy with business travelers alone accounting for $40 to $50 billion in annual revenue. A recent study however, by a recognized research firm, concludes that up to $20 billion in additional revenue is lost because frequent travelers are not loyal to specific hotel brands.1

This revenue deficit represents an opportunity lost for profitability and continued cash flow for the industry.

Brand Loyalty Means Greater Profits

Most analysts and academics agree that loyal customers constitute the basis of a successful business because of new sales cost savings, the ability to sell additional higher margin features to loyal customers and word of mouth or informal referrals to new customers.2

The creation and maintenance of brand loyalty therefore is the strategic objective of many industries with no exception to the Hospitality and Lodging industry. As one study concluded “Loyal customers are logically at the heart of a company’s most valuable customer group.” 3 Therefore, the overall importance of customer loyalty could realistically benefit or impede the industry itself.

Without brand loyalty firms in the industry are forced to compete on the basis of price instead of quality; history has shown this to be a losing proposition.

The challenge to the individual manager is the best use of resources in order to create the highest level of customer loyalty. This applies to mid-market hotels as well as major chains and franchises.

Traditional Efforts Are No Longer Effective

Reward programs and superior customer service are no longer enough to establish brand loyalty. Studies have concluded that hotels are failing to increase brand loyalty due to a lack of differentiation and traditional efforts such as rewards and points programs have become commodities in the industry. Because they are offered by most firms in the industry, rewards programs have changed from service differentiators to service requirements and cost centers. As a result, some analysts have concluded that rewards systems and points programs have become no more than a cost of doing business.4

As a result, there is increased concern that customer loyalty programs are failing to achieve their objectives of increasing customer loyalty and profits.5

Customer service and satisfaction is less of a factor now in establishing and maintaining brand loyalty primarily because competition has created a culture of exceptional customer service. Studies have also concluded that high levels of customer satisfaction do not guarantee brand loyalty unless competitors fail to offer the same level of service.

Many hotels are seeking better ways to create customer loyalty and are exploring the inherent desires of individuals to be loyal to brands they are comfortable with. All industry participants, whether large high end hotels or mid-market firms, must develop more effective ways to develop and communicate their brand propositions.

Focus on Design, Services and Amenities to Help Build Brand and Loyalty

To create a memorable lodging experience and to better distinguish their brand proposition, many hotels and franchises are investing in redesigned facilities, new value added and telecommunications services and a broader array of amenities to create brand awareness and customer loyalty.

According to a recent analysis by PricewaterhouseCoopers, guests at hotels across the country are now greeted by a myriad of new amenities ranging from increased choices for checkout methods to high quality drinking water and in-room exercise equipment. Hotels are adding and improving amenities to achieve incremental revenues, respond to increased consumer expectations and create customer loyalty through quality branding.

In addition to investing in new services and amenities a unified and clear branding message must be developed and conveyed.

Design and the Brand Message

Developing an effective brand message is more than creating a brand statement. The brand message must appeal directly to the emotions of the customer in order to create enduring brand loyalty; and design is one of the most powerful tools for publicizing the brand. It is important to understand that quality of design will significantly improve the quality of the brand message and the resulting brand loyalty.

Therefore, extreme care must be exercised during the brand design and communication process to ensure that the brand message is not diminished.

Private Label Drinking Water

Private label drinking water is an ideal and powerful way to promote a quality brand. Essentially, private labeling allows businesses to design and develop a label with a custom message, which results in the creation and promotion of a brand with a clear, high quality message along with superior bottled water. Because of the immediate and permanent nature of the bottled water product, consumable advertising is created that leaves a lasting message in the mind of the consumer.

Some of the benefits of private label water include:

• A high-quality, custom message created that can be used or resold at a profit.
• Modifiable designs and messages to reflect events such as tournaments and promotions.
• Individual users who often carry the water with them, which extends the promotion of the product.
• Pure water that is popular and universally accepted as contributing to good health. The message of the private label effectively reaches more prospects as consumption increases and more hotels include high quality water in amenities packages.
• Effective cost that is low and results in a rapid response to the brand message.
• Consumable advertising, which creates a lasting message and impression that appeals to the consumer.

What to Look for in a Private Label Water Supplier

There are a number of private label water suppliers but they vary significantly in the quality of their product offerings. There are three areas to investigate when choosing a supplier, which include quality of water, quality of label design and production and quality of customer service. Each are expounded upon below:

Quality of Water

High-quality water in terms of health and taste is critical for the acceptance of the product and brand message. If the water is of low quality or tastes bad then the branding will fail. The best quality water on the market today is purified using a distillation, filtration and oxygenation process that removes all impurities including all toxins and bacteria, which ultimately results in a light, refreshing taste.

Quality of Label Design and Production

The label or message portion of the product is significant in the production process, whereas poor-quality labels send a poor-quality message and high-quality labels send a high-quality message. Production of a poor-quality message is a waste of money and adversely affects the brand image.

It is very important to acknowledge that the vast majority of the private label opportunities in the United States come from water resellers (not bottlers) with desktop-model “thermal” (or “thermal wax”) printing devices. These “thermal” devices have a quality level that cannot compare to even consumer-grade inkjet printers, which are very cheap in both quality and cost, typically ranging from $10-$20 thousand depending on configuration. Although the quality is decreased many companies use these printers because of the low cost, which will ultimately produce poor-quality labels.

In sharp contrast, a quality label, i.e., one that looks like a top-shelf brand that you might find in your local gourmet grocery store, needs to be produced with professional-quality equipment using professional-grade printing equipment. There are three types of printing equipment that can produce a high-quality label. These three types are as follows:

1. Rotary offset lithography
2. Flexography
3. High-quality digital presses

For the majority of smaller runs (approximately 10,000 units), digital equipment offered by Heidelberg or HP is the most cost effective solution, but instead of $10-$20 thousand, the minimum equipment costs for these professional solutions range from $750 thousand to $1.25 million per station.

These facts are very important to understand when choosing a private label bottler. Those who sell low-quality labels will have you believe that nothing better is available because of the short runs required by private label customers. However, nothing could be further from the truth.

In order to succeed, your label must be professionally designed and produced with high-quality materials using a printing process that renders a high-quality result. Waterproof lamination is also required for long-lasting labels. This is easily achieved for an affordable unit cost using the right equipment for the job.

Quality of Customer Service

The design and production of private label drinking water is complex and requires intense interaction between the customer and supplier. Communication and a culture of customer service excellence is a prerequisite to the creation of an effective brand message and a successful product. Without a significant commitment by the supplier to customer service, the branding exercise will fail.

Choose a quality supplier to help develop your quality brand offering and realize greater revenue and profits.

Keyword terms to this post:

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A direct public offering is when a company raises capital by selling its shares directly to what is refer to as affinity groups, unlike an IPO which are sold by a broker dealer to its customers and the general public through other broker dealers who have customers interested in buying shares in the company.

In IPO’s you have a firm commitment underwriting, where the underwriters promise to purchase the securities for their own account if they can not sell them to customers.

Best-effort underwriting: The underwriters do not guarantee any specific number of shares to be sold, they merely act as brokers.

In an IPO the lead underwriter is refer to as the syndicate manager, he keeps the book and invites other broker dealers to join the syndicate. In an firm commitment underwriting, an eastern underwriters agreement makes members liable for any unsold securities, regardless of how much of their allotment they sold. The eastern underwriting agreements have joint and several liability.

A western underwriting a agreement: In a firm commitment underwriting, it makes underwriters liable severally but not jointly. If one syndicate member can not sell its entire allotment, only he must buy the unsold securities.

In a direct public offering the company sells the shares to affinity groups, who fall in this category? Customers, suppliers, distributors, friends, employees and other members the community.

In a direct public offering the company place its shares in the hand of those people who are familiar with the company and know the company’s product and management, and are most likely to hold the shares longer because they feel comfortable with the company’s prospects for the future.

Direct public offerings are considerably less expensive than IPO’s and most effective for smaller offerings, for large offerings the sales staff and customer base of a broker dealer are usually necessary.

Since the affinity group is already familiar with the company and its practices it doesn’t put pressure on the company to change the way it does business, and will remain loyal to the company because of it’s presence in the community.

DPO’s are preferable to venture capital financing because it allows the present management to execute its business plan without outside interference. When a small company turns to a single large investor they tend to surrender the freedom to make all the decisions.

In a DPO like other method of going public today audited financial statements are required, unlike a reverse merger you choose your shareholders and you don’t have to deal with shady, unscrupulous shell owners.

Shell owners usually keep between 5-15% of the shares outstanding and are quick to liquidate, and besides they do not have an interest in the well being of the company’s share price. Even if you insert a stipulation in the contract that they can not sell for a year they will find a way of shorting the stock and destroying the share price.

This make DPO a preferable option even for companies that don’t need financing but would like to go public. If you are in the kind of business that keep records of your customer in order to bill them or for follow ups you already have a head start.

You must be able to contact those affinity group in order to market the shares to them, a popular business that has a lot of client but does not have the contact information is at disadvantage because it’s unable to contact its customer.

There are other ways to market the company’s stock for example a medical supply company might try contacting doctor in the area or by purchasing a mailing list.

But the best way is when you have an established relationship with your affinity group and are in constant contact with them, by mail, newsletter, or email.

Sometime a supplier or distributor may want to purchase an interest in the company in order retain the business and keep competitors from stealing the client.

A DPO does not always require audited financials but if you plan on going public you will need them. So you must hire an auditing firm. A foreign company must use a Certified International Accounting Firm.

A good Attorney that has experience with Direct Public Offerings, one that is familiar with the process and does not have to waste time researching and learning.

You must prepare sales material that provides a good deal of information about the company, you want investors feel that your company has a future.

You should always have a business plan, it will show investor that you have strategy for making the company succeed and doing it one step at a time.

By setting dates for the implementation of each step in your plan it shows investors that you have things well under control, but allow some time in case you must make adjustments.

If you wish to take your company public then you must file a form SB with the Securities and Exchange Commission and a form 15c211 must be filed with the NASD.

A DPO is an alternative to an IPO or Reverse Merger for a company wishing to go public or obtain financing, it allows the company owner(s) to call the shots instead of an underwriter or a shell owner.

Keyword terms to this post:

affinity ipo, direct public offering process, is a private offering and DPO the same?