Dr. Ashraf Tag-Eldeen

Faculty of Tourism & Hotels, Alexandria University, Egypt.




Profitability of hotel food and beverage outlets remains a real challenge in today's hospitality market. There is no doubt that the most critical attribute for success is the ability to respond effectively to the dynamic changes of the market needs with an appropriate marketing strategy. A hotel operation partnering with a branded food and beverage operation creates considerable benefits for both parties.  In line with this approach, this paper investigates the predicament of co-branding in Egyptian hotel operations. It discusses the challenges and opportunities from financial, marketing and operational perspectives. It intends to explore the potential of implementing a co-branding marketing strategy in hospitality operations and develop a decision-making criterion for such a strategy. 

To achieve this aim, an empirical qualitative analysis of semi-structured interviews with a sample of ten marketing managers in Egyptian hotel operations was conducted. The sample combined an equal number of both four and five-star hotel operations. Additionally, a survey was distributed to an equal sample of five customers for each hotel operation within the selected sample. The findings have provided evidence of the importance of co-branding strategy from different perspectives. As for customers, the results of the customers' survey indicated favorable attitudes towards co-branding concept. Furthermore, the outcome confirmed that co-branding offers brands competitive advantages with a potential for greater profitability and higher turnover rate.

Key Words: Co-branding, branding strategy, marketing, Egyptian hotel operations,


1.     Introduction

     There is no doubt that marketing hospitality operations has become a very difficult task in a highly competitive environment. The challenges have emerged not only by developing the convenient marketing strategy but also by attracting new segments. Increasing profitability and profit centers is a further challenge. In line with this approach, marketers have been addressing strategies that would enhance the market's position of hotel operations. One of these strategies is 'co-branding' strategy, alternatively called 'composite branding' (Park, Jun and Shocker, 1996; Washburn, Till and Priluck, 2000), co-location (Khan, 2006), double branding (Helmig, Huber and Leeflang, 2008) or sub-branding (Keller, 2009). Some authors have even considered this strategy as an 'outsourcing relationship' (Hemmington, 2000).

     Providing a hospitality service with food and beverage facility is one of the most crucial functions in this industry. In general, food and beverage departments are normally ‘operating below potential' (Hemmington, 2000). The challenge then is to enhance this sales potential, profitability and to attract new segments to the premises of the hospitality operation. In this respect, several marketing tactics have been used for such a purpose. One of which is co-branding through which another brand is allying with another for a new product offer under the auspices of both brand names. It is pairing of two or more significant recognized brands within one space (Khan, 2006). In fact, this new brand may gain more customer awareness and attention than a single brand might do.

     The significance of branding and co-branding has been addressed by several authors and researchers like Keller (2009); Kim (2008); Park, MacInnis and  Eisingerich (2016) discussing the pros and cons of co-branding. Others dimensions has been also tackled to achieve the synergy effect between the composite brands (Kim, 2008; Washburn et al., 2000). Further issues were also discussed i.e. new operational image in relation to both quality standards and handling problems in addition to the profitability level. In fact, cobranding strategies may be effective in exploiting a product performance advantage or in introducing a new product with an unfamiliar brand name or image.

     Co-branding could be a win-win strategy to help drive sales, raise brand image and save marketing and advertising costs. Despite the increasing attention in co-branding, the relationship between co-branding, customers' satisfaction and brand loyalty remains largely unexplored (Kim, Lee and Lee, 2007).


2.     Literature Review

     Hotel restaurant co-branding is considered to have been started by Victor Bergen during the 1930s, who established fast food restaurants within motor-hotels on the highway targeting American families who were away from home. Since then, fast-food restaurants made a major impact on many hotel companies to consider co-branding alliance (Rutherford, 2002).

     Industry-wise, the original concept of branding as defined by the American Marketing Association deals with identification of a product/service that makes it unique and differentiates it from its competitors. However, a brand needs to offer a value for its customers in order to be attractive 'value generating' (Park et al., 2016)

     Co-branding has been considered for the purpose of improving the financial performance. It was considered as a thoughtful strategy.  As hotel operations lose profit over their food and beverage facilities, co-branding is considered a good opportunity to catch up with the changing standards, customers' needs and overcoming the loss of business without considerable investment or changing the image of the hotel brand. In fact, research in hotel operations reported a significant increase of sales between 15-20% during lunch business as a result of co-branding (Kim, 2008). Lastly, chain restaurants generate potential traffic and expand market channels which likely ‘offset’ the usual traditional F&B losses in hotels (Boone, 1997).

     Moreover, co-branding is considered an innovative way of thinking about brand architecture design.  It includes the aspects of promotion, technology development, and production, while maintaining their independence as a separate brand (Stewart, 1995). Co-branding is not a trouble-free model. It is complex and dynamic (Yip, 2005). Researchers like Boone (1997); Boad (1999); Washburn et al. (2000) investigated the pros and cons of hotels abandoning their own on-site restaurants and replacing them with chain-type brand-name operations. More specifically, a strategic question is also imminent whether this alliance suits the image, standard of the hotel operation along with those in the back of the customers' mind.

     The advantages of co-branding can be broadly categorized as financial, operational and marketing (Boone, 1997; Prince and Davies, 2002). More specifically it reduces investment costs as launching a new brand can be extremely costly, lowers risks, and provides faster paybacks (Blackett and Russell, 1999). Operational-wise, it includes greater assurance about product quality and should lead to higher product evaluations and premium prices (Erdem and Swait, 1998; Rao, Qu and Rueckert, 1999; Wernerfelt, 1988). As for marketing advantages, co-branding includes sharing customer’s information, expanding market channels and cross promoting each other's brands.

     As for the disadvantages, according to Boone (1997), some concerns were expressed in applying co-branding strategies with reference to ‘lack of flexibility and number of restrictions e.g. trade dress, access, and parking requirements. Moreover, the strategy may not always lead to a higher profit margin per customer (Lee, Kim and Kim, 2006). However, a hotel property that wants to improve its competitive position and boost overall revenues should consider some form of liaison with an established restaurant brand (Strate and Rappole, 1997). Additionally, inappropriate brand management strategy may lead to customers' confusion of brand identity, poor brand positioning and dilution of customers' evaluations of the core brands.

     One of the challenges for this approach is the constant involvement of new variables complicating the daily operations aspects. One of which is whether the co-brand complements the hotel’s facility in various aspects fulfilling the purpose of this alliance (Tasci and Guillet, 2011). Another challenge is the difficulty to find appropriate sites, which cover all requirements for the concept e.g. customer access, visibility, size of facility, and operating space that is separate from the hotel’s other food and beverage operations (Boone, 1997).

     Other issues may include monetary commitment and negotiations, including investment and meeting profitability targets. Additionally, the impact on reputation, maintenance of a clear image in consumer's mind or decrease of quality is of a great concern. As such the selection of the right co-brand is essential, and communication is the key to success to avoid consumers' confusion (Yip, 2005).

     Successful brands are built on a foundation of meaningful brand strategy. Further, that strategy provides the framework for what your brands mean and how they should be organized. There are various co-branding strategies e.g. vertical co-branding, often defined as ingredient branding (Desai and Keller, 2002), pertains to the vertical integration of products within one product by producers of different value chain steps. In contrast, horizontal co-branding is characterized by the production and distribution of multi-branded product by producers at the same step in the value chain. Within this form of co-branding, a co-branded product may appear in a product category in which both producers are already established (Chang, 2009). According to Boo and Mattila (2002), a co-branded facility relies on both value and quality perceptions in the consumer's mind.

     A good example of implementing the co-branding strategy is Marriott Hotel Company. It  is considered to be the first hotel chain to establish an internationally recognised restaurant brand within the hotel, linking to Pizza Hut in 1989 (Boone, 1997; Rutherford, 2002). The list also included other followers; inter alia, Carlson, Choice, Hilton, Holiday Inn and Sheraton.

     A more comprehensive investigation was done by Boo and Mattila (2002) by which a brand alliance model was proposed.  The authors discussed the antecedents of brand alliance versus the consequences. On one side the partner characteristics, consumer characteristics and the motivation for such a venue versus the psychological and behavioural consequences from the other side influenced by the perceptions of brand alliance or perceived fit of brands. The researcher used this model as a reference to guide the variables of this research paper.

     Further in a more objective contemplate; Chang (2009) and Zickermann (2014) explored the critical factors for successful co-branding strategy. They identified five main factors (5C) including cost, capital, core, consumer and culture. The authors stressed that these factors need to be thoroughly investigated to guarantee effective and fruitful results of the co-branded facility.


3.     Statement of the Problem

     A hotel property that wants to improve its competitive position and boost overall revenues should consider some form of liaison with an established restaurant brand (Strate and Rappole, 1997). Apparently, this strategy will need to be properly selected and implemented. Within this context, the co-branded approach will provide such a privilege to hotel food and beverage facilities. The researcher has conducted an observational survey to find out whether this strategy is in practice in the Egyptian hotel operations. Unfortunately, there was no single operation adopting this marketing approach apart from a couple of leasing brand cafes. However, the absence of the phenomenon did not impede the researcher to investigate the potential of adopting the co-branding strategy. Therefore the research question could be phrased as "what is the potential of adopting a co-branding strategy in the Egyptian hospitality market?"


4.     Objectives of the Study

     Although the phenomenon under investigation was not apparent within the Egyptian hospitality market, the researcher was keen to investigate the co-branding approach amongst hotel operations. Therefore, the objectives of this empirical research are:

1-    To appraise how hotel customers perceive the co-branded product/service as it relates to product quality, brand image, innovative product and customer satisfaction.  

2-    To assess the customers' intention to purchase as regard co-branded food and beverage facilities within the hotel premises.

3-    To explore the potential of adopting co-branding marketing strategy between Egyptian hotel operations and branded food and beverage outlets.


5.     Methodology

     In determining the soundest research strategy (quantitative vs. qualitative), different authors, e.g. Creswell (1994), Silverman (2000), and Yin (2003), argued the significance of selecting the appropriate research strategy. They emphasised the basis on which the selection should be established. While Yin (2003) proposed three queries relevant to the research question - the nature of the phenomenon and its attributes, contemporary, or historical. Creswell (1994) and Silverman (2000) pointed out that the implications of how the researcher views reality would influence the selected approach and the instruments for data collection and analysis. In the same context, Patton (2002) discussed a pragmatic approach, indicating that some questions lend themselves to numerical answers while others do not, thereby influencing the research design and methods for data collection.

     Within the hospitality industry context, Chacko and Nebel (1990) advocate that qualitative research is a more appropriate methodology for hospitality researchers to use, particularly when the subject of the study is concerned with leadership, managerial and behavioural issues and processes.                  

     A three-tier methodology approach was implemented. The field work for this research took place in October 2017. The first stage employed observational research as the researcher surveyed the availability of co-branding tactic in the Egyptian hotel operations as there was no record available. The objective of this stage was to develop the appropriate research design. The second stage implemented semi-structured interviews with a purposeful sample of ten marketing managers of four- and five-star hotels operations. The third stage used a questionnaire addressing hotel guests within the selected sample. The questionnaire was distributed by Guest Relation Officers to an equal random sample of guests from the selected ten hotel brands (five guests from each hotel operation).

     The questionnaire consisted of two parts. Part one was directed to identify the profile of the respondents being investigated. Part two of the questionnaire consisted of eight relevant questions meant to gather information from the customers' perspective. It contained questions to identify how the respondents perceive the product/service of “co-branding”. It also addressed issues as regards customers' expectations on issues like product quality, product consistency, purchasing perceived risk and intention to purchase and how important each of those elements was. A three-point Likert-scale was used to indicate agreement, disagreement or neutral status.

     As for the third stage, the rationale for conducting semi-structured interviews has been discussed by Bryman (2001), Giorgi (1975) and Kvale (1996). They all confirmed that qualitative research interviews attempt to understand the world from the subjects’ points of view, to unfold the meaning of peoples’ experiences, and to uncover their lived world prior to scientific explanations. From a methodological perspective, Kvale (1996) confirmed that interviews are basically used to obtain necessary background knowledge from their informants.  

     The list of questions of the semi-structured interviews and the survey were developed by the researcher based on the review of related literature. Additionally, the questions were also piloted by two marketing managers to ensure clarity and consistency and provide suggestions to improve wording, sequence and structure of the questions and organization of the survey.


6.     Analysis and Results

     As previously mentioned, the observational survey showed the absence of a co-branding alliance in the Egyptian hospitality market. Therefore, the researcher approach was to find out whether this tactic is viable from two perspectives; customers and management as there is no real-life example to examine.

     As regards the customers' survey, table 1 provides demographic information reflecting on gender, age, nationality, frequency of outdoor dining and dining preferences of the participants.

Table 1 Customers' Profile

The result of the customers' survey indicated favorable attitudes towards co-branding concept.

Those positive attitudes are reflected in the frequency of responses presented in Table 2.    


Table 2 Customers' Opinions

     The highest frequency of the survey was relevant to the purchasing perceived risk with 84% with a frequency of 42. The next highest frequencies were for variables related to the influence of co-branding on customer's satisfaction, intention to purchase and introduction of innovative product. Respondents were in agreement with 80% and a frequency of 40 for influencing customers' satisfaction, and 76% in agreement with a frequency of 38 respectively for the other two variables.  

     As for the lowest frequencies, the impact for product quality and impact on brand loyalty indicated that 60% of respondents are in agreement with a frequency of 30 for each factor.   Therefore, offering a co-branded facility would impact positively on product quality and brand loyalty.

     Due to the specific nature and objectives of the research topic and design as being exploratory, a qualitative content analysis was applied. Identification of main themes, common patterns to develop consistency as well as differences to develop an overall picture of the topic were exploited. Respondents' replies were grouped in categories as they relate to the questions raised.

     A key issue about co-branding was the marketing perspective of the concept. The challenge is whether you will be able to attract the existing customers and attract new segment at the same time. Adopting a co-branded marketing strategy would also require unconventional marketing approach. Furthermore, developing the appropriate marketing mix and the right fit for the co-branded facility is a further challenge.

"With co-branding, you attract two segments; those of the hotel and those of the partnering

restaurant. That is more traffic in the operation."


Marketing Manager (1)

"It is important to balance the standards of both partners; upgrade to equalize and in the

meantime to complement each other to get an exceptional product."


Marketing Manager (2)

     The cultural issue appeared to be significant within the respondents' content as well. It relates directly to the organizational culture and the style of management. However, respondents were also concerned about the cultural characteristics of their customers. Therefore, a considerable market research should be conducted to assess the potential of customers' acceptance for a co-branded facility. These characteristics may extend to some demographic data, for instance, age, gender, educational level, etc.

"With a co-branded facility, customers' expectations are very high. They expect an

outstanding quality and in return you can charge premium prices and still there is a

good value for money."

                                                Marketing Manager (3)

     All marketing managers indicated that there should be a criterion to measure the potential for success. They elaborated that some key elements should be included e.g. food quality, food cost level, profitability level, increased customers' satisfaction. They also elaborated that this criterion should include a high degree of fit, similarities and complementariness of the constituent brands. 

"There should be an agreed criterion to measure success for a co-branding facility."


Marketing Manager (4)

"Before deciding on a co-branded facility, you need to identify whether there is a fit and

acceptance of having a joint product." 


Marketing Manager (5)

     From an operational perspective, respondents implied that a great deal of organization should be established in terms of management policies and procedures, reconceptualization and design. It has also to include offering a new concept, new menu choices and innovative products.

"What is interesting about co-branding is that you come up with an innovative product and a

unique concept. You should offer your new segment a unique product and a special experience." 


Marketing Manager (6)

     Seven out of the ten participating marketing managers elaborated on some main operational issues as organizational structure, processes and reporting systems. They stressed that the two brands have to come to a compromise that suits both brands as an image and a management system.

"When it comes to co-branding, coherence is significant to avoid counter-productivity, staff

motivation of both brands should be imminent and supporting."


                                                                                                Marketing Manager (7)  

     Further and complementary to the process of co-branding was the development of a system for performance appraisal and feedback. This system has to relate primarily with the mission and objectives set earlier by both brands and verified periodically with the performance criteria. This process has also to consider some qualitative issues with reference to improvement in quality standard and customers' brand perceptions.  


7.     Discussion and Conclusion

    The findings of the study gave rise to a number of themes which matches the literature review as regards the pros and cons of the co-branding marketing strategy (Boone, 1997; Prince and Davies, 2002; Strate and Rappole, 1997). The outcome also highlights the potential of this particular strategy and its impact from various perspectives. The results concluded with a cultural barrier from the management perspective as it relates to acceptance of both brands to cooperate and integrate with potential drawbacks of quality, customers' satisfaction, customers' evaluation, and finally intention to purchase. The conclusion also implies that a co-branded facility relies on both value and quality perceptions in the consumer's mind according to Boo and Mattila (2002). Moreover, both benefits and drawbacks should be carefully considered if a decision of a co-branded facility is to be taken.                

     The outcome of this research confirmed that co-branding offers the two brands competitive advantages arising from a shared asset and data base, added value with potentially greater profitability and increased brand equity. This potential is justified by the ability to achieve an excellent fit and synergy between the allied brands (Chang, 2009; Zickermann, 2014). The elements for this fit should include a brand fit, a product fit and a target group fit leading to a proper product positioning. Figure 1 summarizes a model of successful co-branding strategy developed by the researcher. The model is comprised of three stages. The first stage is mainly concerned with market research; identifying the barriers, risks, problems and the potential. The second stage is dealing with the partner selection process handling brand fit, product fit and the target group fit. The outcome stage develops a competitive edge, added-value for the customers and the profitability.

     In other words, the first stage is concerned with external environmental scanning, the second stage is related to mainly marketing mix aspects i.e. internal scanning for both allied parties and finally the third stage is the potential outcome if the previous steps were successfully managed and implemented.

     The development of feedback and reporting system to monitor the success of the co-branded facility emerged as a must. Mentoring may include analysis of sales figures and other related business traffic. The evaluation should have terms of reference as well. That is relating to both quantitative-economic and in the meantime qualitative-brand related measures.          

     Brand-relation appeared to be a significant matter. It reflects on performance in many aspects; organisational, interpersonal relations, corporate culture and management philosophy. The deal should be clear enough to identify which partner has the upper hand and final decision. Definitely, this aspect has to be well-sought of and decided earlier to avoid any potential conflict. 

Figure (1) A Model of Successful Co-branding Strategy

     What has emerged as well is the apparent lack of appropriate support and enthusiasm for                    a co-branding culture within the sample interviewed in the Egyptian hospitality market. Associated with this theme is the issue of uncertainty about potential profitability and poor acceptance on the part of the customers for this brand integration within the hotel premises. No matter what a co-branded facility may stand for, it remains a potential and promising marketing strategy and a venue for competitive advantage, a unique selling proposition, added- value and profitability.

     In the final analysis, co-branding is a very complicated process. It is not just a mere alliance with a partner within the same industry. It is a process that requires a dedicated work, tough and objective negotiations.


8.     Limitations and Further Research

     There are several limitations that may influence the generalizability of the outcome; the small number of marketing managers' interviewees and guest respondents.  The reasons may relate to the access barriers and the willingness to participate. Another limitation is the absence of a live model to enable the participating customers and marketing managers to respond featuring a real-live example.

     As for future research, the potential research domain may consider the investigation of how hotel customers evaluate hotel-restaurant co-branding; evaluate perceived fit (image) of hotel-restaurant co-branding and perceived risk and how this leads to intention to purchase.  Second, further market research would be required to develop a detailed understanding of fit dimensions for selection and success criteria. Other issues could be also considered as for the impact of co-branding product/service on customers' brand loyalty. Third, the research model can be applied to a larger sample and other segments, for example, three-star hotel operations.  

     Another area for further research would look into how to develop appropriate strategies from the part of the management to handle the different elements of product/service marketing mix and how to integrate the co-branding products/services. It is also important to investigate the impact of this integration on brand identity. Furthermore, the study should be conducted to a variety of lodging segments, for example, mid-priced or upscale in diversified locations.

     Finally, future research may also investigate the constituents of demographic data and how it relates to customers' perception/decision of patronizing a co-branded food and beverage facility within hotel premises.




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