Featured case: City Lodge Hotel Group:
Redefining Segments and Brands

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The case

Who – the protagonist

City Lodge Hotel Group Chief Executive, Clifford Ross.

What?

When Hans’ Enderle founded the City Lodge Hotel Group his aim was to meet a gap in the market for three-star limited or select service hotels in South Africa. The idea quickly proved a success despite expectations in the hotel industry that it would fail.

Why?

Growing competition and increasing customisation within the hotel industry meant that in early November 2015 Clifford Ross, had concerns about the clarity of the group’s brand and whether it was losing its competitive edge.

When?

Hans EnderleIn 1985, the market regarded Hans Enderle as foolhardy when he resigned from the helm of one of South Africa’s leading hotel chains to launch a new concept in short-stay accommodation. However, by 1990, his City Lodge select service hotel concept had seven hotels, with a total of 1,000 rooms. By 2015, the hotel group’s portfolio had risen to 55 hotels and annual turnover had reached more than R1 billion.

Where?

The first hotel was opened in Randburg, South Africa. Four years later, the group had established a presence in the vicinity of the OR Tambo International Airport, and in Sandton, Durban, Port Elizabeth and Cape Town. In 1990, the group launched a second brand, Town Lodge, opening the first hotel in Bellville in the Western Cape.

Key quote

Clifford Ross

‘Projecting the right image in the right place is just as important as correctly pitched tariffs and although there are a variety of aspects to marketing the different hotel offerings, they all depend on one fundamental, which is good market intelligence. We must know what our guests want so that we can respond to those needs.’ – Clifford Ross

What next?

The clarity of the group’s segmentation and branding had not kept pace with growth and change, although swift steps, for example rebranding the hotels, had been taken to address the problem. The City Lodge brand had been in danger of losing its uniqueness and having to compete entirely on price. Has enough been done to differentiate the various offerings and to maintain the group’s competitive edge?

The authors

authors

Yvonne Saini and Amanda Bowen

Yvonne and Amanda discuss the case and the difficulty that entrepreneurs face in raising finance.

Attention to detail

The City Lodge Hotel Group displays huge attention to detail, from the size of rooms and the time it takes to clean them, to pricing policies and market research.

Such attention to detail is very important, and also played a big role in helping the group to make the correct human resource decisions, such as how many people they needed to employ at each hotel.

Raising financehotel room

Although Hans perhaps makes the process of raising R65 million sound quite straightforward, it’s important to note that he was speaking in retrospect.

Raising that amount of money is not easy for most entrepreneurs, and a large number of businesses in South Africa do fail as the result of financial problems.

Wider lessons

This case is about a very specific market sector but the lessons learned about the importance of segmentation, targeting and positioning can be very usefully applied to other sectors too.

About the authors

Yvonne Saini is a Marketing Lecturer at Wits Business School.
e yvonne.saini@wits.ac.za

Amanda Bowen is a Case Writer at Wits Business School and was the editor of the City Lodge Hotel Group case.
e amanda.bowen@wits.ac.za

 
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