Too many hotel brands for our guests?
 
Too many hotel brands for our guests?
06 SEPTEMBER 2017 7:38 AM

Hotel brand positionings are not as distinct as they once were, which begs the question: Why are there so many of them?

While it’s important to provide options for hotel guests who are choosing where to stay, too much of something may not be a good thing. The proliferation of brands in the hotel industry has culminated in a total of 270 brand trademarks worldwide—thus far.

Let’s stop for a second and think about the potential residual impact of all this.

Is the ongoing proliferation of new hotel trademarks truly providing customers with smarter and better hotel choices, or is the proliferation driven largely by pressure on brand sponsors—particularly public entities—to produce new incremental fee income?

“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.”

TR Engel Group shares Frommer’s view—albeit a judgement call on our part—that hotel customers are, in fact, having a tough time keeping track of brand proliferation and their claimed “unique competitive market positioning.”

Try this test and see how you make out: Name each of Marriott’s 30 brands … and then try defining the key point(s) of difference between each.

So, has this brand expansion negatively impacted the lodging industry? Our view is that travelers—in both corporate and leisure markets—have become increasingly indifferent to hotel brand selection.

The hotel industry’s market segmentation which emerged in the early-to-mid 1980s was built around very distinct “brand positionings” amongst the entrants (for example, Embassy Suites by Hilton, Residence Inn by Marriott, Crowne Plaza and Courtyard by Marriott). These new brands delivered distinct, highly identifiable points of difference.

Certainly, hotel customers have not totally abandoned “brand” as a basis for purchase. The great brands remain and retain strong franchises. Yet, who can deny in an internet-driven environment that hotel customers are increasingly migrating to the online travel agencies of the world—driven/influenced increasingly by price and booking traveler points, as opposed to experiencing unique, meaningful brand points of difference?

One thing we do know for sure: When a TRE debt and/or equity investor is investing in hotel space today, we are very, very cautious when evaluating hotel brand(s) for a project. Underwriting brand selection—evaluating productivity, sponsorship, what’s in distribution today and in the pipeline—is paramount.

Tom Engel is principal of Boston-based T.R. ENGEL Group (TRE), LLC, a hospitality management firm operating on a global basis. TRE specializes in advisory, project management, asset management and transaction services for hotels, convention centers and mixed-use commercial real estate. As investment advisors, TRE advises its clients on the acquisition, operations and sale of hotels in North America, Europe and the Middle East. Engel can be contacted at thomasengel@trengelgroup.com.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

No Comments

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.