Scott Mayerowitz writes about the proliferation of brands across the lodging industry.
The world’s 10 largest hotel chains now offer a combined 113 brands at various price points, 31 of which didn’t exist a decade ago.
Lifestyle Brands are the Flavor of the Month
Hyatt launched its new lifestyle brand in January.
‘Hyatt Centric’ confused me at first — modern luxury is supposed to be Park Hyatt, while Andaz is more hip urban. So what space exactly does Hyatt occupy with their new brand? Apparently it’s like Andaz, with greater variation, but at a lower price point. The ‘variation’ lets it be a conversion brand. Like Doubletree, where about the only thing tying things together is that you get a cookie.
Lifestyle brands are all the rage, IHG had so far to date been unsuccessful in building one so they acquired Kimpton.
“The big hotel chains are in the business of pretending they aren’t big chains. They want you to think they are boutiques,” says Pauline Frommer, editorial director for Frommer’s, the travel guide company founded by her father, Arthur Frommer. “This dizzying array of brand names is a good way for them to hide. The vast majority of the public is not going to keep track.”
Hotels Add Brands in Order to Achieve Growth
Some of the brand proliferation may be driven by a desire for hotel chains for growth, to sign more operating agreements, rather than identifying unique customer segments — the Marriott name, for instance, is already saturated across New York so to add more properties into their portfolio they need to call themselves something else.
Starwood is in an interesting spot, they aren’t growing quickly in most of their brands — quickly enough to break out from being a ~ 1200 property chain into the ranks of Hilton, IHG, and Marriott — so they’ll either need a new driver of expansion in a big way or they’ll need to be acquired or make several acquisitions.
Does Brand Proliferation Undermine a Hotel Chain’s Core Business?
A brand can communicate quickly and efficiently a lot of information to consumers. You know that Westin gives you an upscale experience, relatively modern, with comfortable beds and curved shower rods in the bath. You know that Marriott stands for ‘consistent’.
A consumer might know a brand, like a brand, and choose hotels flying that flag because the brand tells them just what they’re going to get – that consistent experience they’re comfortable and familiar with and feel favorably towards.
But with too many brands, and brands that don’t clearly distinguish themselves, it’s hard for guests to ‘get’ the brand idea. With conversion brands, or brands whose story is that they’re unique to their locations, there’s not really even a clear brand idea to start with.
At that level, a new brand still:
- Allows a chain to grow without diluting the brands that are clear (you name hotels that don’t fit ‘something else’ so that those chains don’t undermine your existing brand)
- Can communicate consumers should choose a hotel chain because of its affiliated loyalty program (Hyatt Centric has Hyatt in the name)
But many of these brands don’t even communicate their affiliation to the other brands consumers know and are familiar with. Four Points “by Sheraton” tells you they have the same points program as Sheraton (Starwood Preferred Guest) and likely initially created a halo effect. But Four Points is hugely inconsistent, with its properties rarely the best mid-scale choice in a given market, and Sheraton itself has lost much of its meaning at least in the US domestic market — it’s not in any way a signal of quality although some hotels remain excellent (and the Sweet Sleeper bed is certainly excellent).
Does someone not paying close attention know that Springfield Suites, Fairfield, and Moxy are part of Marriott? Is it clear enough so that they might choose the property – as a Marriott Rewards member – when booking online with Expedia? (And do most consumers even know whether they will receive points from a given chain when booking with an online travel agency?)
Can you name all of your primary hotel program’s brands? Do you think all of your siblings and cousins can?