Hotels use brand proliferation to blanket marketplace

Hilton’s Tempo will be the company’s 18th nameplate, and Everhome Suites will be Choice Hotels’ 12th. They aren’t the only lodging companies to take the more-is-better approach. Despite the crowded marketplace, hotel companies believe there is an opportunity and even an imperative to present an array of options.

A variety of accommodation types and prices lets hotel companies present themselves as a one-stop shop for the varying needs of customers. A solo business traveller to big cities may also take his/her family on a beach vacation, plan a multi-generational trip or book a romantic getaway. Hotels want to offer choices for each of those needs and more, “because if they don’t have it, the customer will spend their travel dollars elsewhere,” said Bonnie Knutson, professor at the School of Hospitality Business at Michigan State University.

Tying more brands with loyalty programmes helps the hotels lock in travellers. “The more opportunities a hotel company can offer to travellers to earn free stays, the harder it is to leave the brand,” Knutson said. Offering a complete portfolio within one hotel family website is a defensive move against Airbnb, Expedia and other online booking sites that offer hundreds or thousands of lodging choices.

Phil Cordell, the global head of new brand development at Hilton, said to create a new brand, a hotel needs to decide what it’s going to stand for, how it will be different from what’s already out there, and if there are enough customers who fit the target market.

Everhome Suites from Choice will offer apartment-style rooms that can be customised by the guest, with open shelving, large bathroom, and kitchen counters and a rolling workstation that can be raised to become a stand-up desk or lowered for dining. The idea is to let guests create a “me-space,” said Pat Pacious, the chief executive of Choice Hotels International. Pacious said 20% of all room nights sold in the US are for rooms booked for seven nights or more, but only 9% of rooms are designed for extended stays.

Hotel brand proliferation is made possible, at least in part, by the changing financial structure of the hotel industry. The largest lodging companies have moved to an “asset light” model over the past 10 to 15 years, meaning they don’t own many of the hotels that bear their names. Instead, they franchise them, offering owners the name, services and sometimes management. It takes significant investment to design, market and maintain each brand, but with less cash tied up in physical properties, the hotel firm can spread its investments and efforts across more brands.

But with brand proliferation comes the challenge of differentiating one brand from another. That hotel in Moses Lake, Washington, offering free breakfast, parking and WiFi and an indoor pool for around $100 a night — is it the Ramada by Wyndham or the Wingate by Wyndham? Brands within the same family can end up competing for the same customer, driving prices lower. There is “a bewildering array of choices,” Wheeler said.