Burning questions: Too many brands? Too much tech?
Burning questions: Too many brands? Too much tech?
12 JUNE 2019 8:17 AM

Hotel brand CEOs and executives at the recent NYU hospitality conference laid out a broad agenda for the future of the industry, on topics from tech integration to brand proliferation.

NEW YORK—Hotel leaders speaking on three general session panels at the recent NYU International Hospitality Industry Investment Conference mostly were harmonious in identifying the topics, and answering the questions, permeating and shaping the hotel industry today.

On brand proliferation
On the question perhaps most asked at the conference—are there too many brands?—it seemed to depend on who’s asked, and when.

Accor Chairman and CEO Sébastien Bazin, whose company currently has a portfolio of 38 brands, said it’s completely plausible that the industry will see the total number of brands double within a few years.

“Brands have meaning—something sexy, fresh, modern,” he said.

The important part for a hotel company is to unify those brands on a single platform, he added. “We have 38 brands; we don’t have 38 websites,” he said. “It doesn’t cost one penny more to have 50 brands on one portal.”

Marriott International President and CEO Arne Sorenson noted that while his company’s brand portfolio numbers 30, “we really have one brand, one umbrella brand,” which is the loyalty program, Marriott Bonvoy.

The key is “providing choice broad enough to keep them (guests) with us,” he said, “as opposed to going to an (online travel agency), Google and being an intermediary customer.”

Because not everyone’s travel purpose is the same, “to have one brand is not nearly enough choice,” Sorenson said.

Keith Barr, CEO of InterContinental Hotels Group, said having a “world-class loyalty program” is just smart business. “If you don’t have the product customers want, you’re effectively saying ‘go stay with my competitor,’” he said.

Elie Maalouf, CEO, Americas, at IHG, which has a portfolio of 16 brands, said “it’s not about reaching a certain number of brands; it’s about keeping your strategy consistent.”

But Ken Greene, president, Americas, of Radisson Hotel Group, said there can be too many brands, if the old brands don’t go away.

“As the industry continues to become more successful, more players came in. Consumer choice is really important, and brand innovation always has to be happening,” he said.

“But as (Trump Hotels CEO) Eric Danziger said, the problem isn’t the new brands coming in, but that some of the older brands need to go, and they just don’t. It’s tough to walk away from older brands though because brands are fee-for-service. But as you start to see more and more brands under the same rewards program, it’s tough because you can be competing against your own family,” he said, noting that Radisson has seven brands—“one for each segment” of guests, which is ideal.

A recent report by The Wall Street Journal, referenced on stage at the conference, quoted hotel owners holding assets, including Mike Marshall, president and CEO of Marshall Hotels & Resorts Inc., as saying brand proliferation can lead to oversaturation in a market and loss of business.

But Sean Dell’Orto, EVP, CFO and treasurer of real estate investment trust Park Hotels & Resorts, said as an owner looking for assets to invest in, brand families that offer more choice get preference.

“At Park, we’re very focused. Given that we’re focused on a lot of group business … as we think about assets we invest in, being a large REIT with growth prospects, we’re looking at large brand families that have upper-upscale and luxury profiles to drive the returns,” he said.

“We’ve been focused on Marriott, Hilton and Hyatt families—they fit that profile for us. … We’re not afraid of independents, but we think soft brands can bring more value.”

He agreed, however, that as “brands continue to grow … (and) new ones introduced … the older brands need to find a way to leave the system as well.”

The brand outlook is a little different outside of the U.S., according to Puneet Chhatwal, CEO and managing director of The Indian Hotels Company, which has four brands, including Taj Hotels.

“It’s a very geography-driven question. … If a brand is relevant in the regional market, don’t try to make something different of it,” he said.

“The U.S. is very segmented, so there’s a place for many brands. We are very proud. Taj is (about 116) years old, and there will always be space for brands like this, which stand for quality, for differentiation, for a special experience.

“There are other brands only relevant for the Indian subcontinent. And they would not fare well and compete with well-established brands. The relevance of the market is very important. Regional relevance was, is and will start dominating the market more and more. China and India account for 50% of the world population. The brands coming out of these regions will start playing a very significant role. … The global companies have done a good job creating new brands; the specialists, like us, will stand for a very different hospitality experience.”

At right, Ken Greene, president, Americas, of Radisson Hotel Group, speaks on a general session panel at the NYU hospitality conference which also included Sean Dell’Orto, CFO of Park Hotels & Resorts. (Photo: Robert McCune)

On balancing tech and hospitality
While leaders on the NYU panel stage acknowledged technology’s important role in shaping the future of the hotel industry, they cautioned that it can’t detract or be used to minimize hospitality’s most important asset: its people.

Tech “is critical to our business,” Radisson’s Greene said. “We could probably operate a hotel today with very little human activity, but that’s not the experience you want. You want to make your team on property more efficient so they can engage with the guest.”

He added that technology is particularly additive in the realm of loyalty.

“From a consumer experience overall, tech is playing a critical role in loyalty programs—to transfer data from New York to Shanghai instantaneously, to communicate guest preferences live, so the property can act on it,” he said.

The challenge can be integrating and adapting tech and systems, particularly as companies merge with and acquire others, he said.

From an owner’s perspective, Park’s Dell’Orto said brands provide a lot of leverage and direction with technology.

“You’re focused on the relevancy of that brand, so you’re supportive of them continuing their development (of new tech),” he said. “It all draws to the power of the brands, which is size, which gives them the money from program fees, that gives them capital to allocate to invest in these things.”

As an owner, “you’re looking for the (return on investment), trying to understand the long-term and the short-term relevance.”

In a downturn, he said, “tech can easily be a victim” of cutbacks. “But you can’t get too far behind. Now we’re investing in infrastructure, but if you’re underserved in WiFi in your building, someone will go down the street for a better experience. IT is becoming a bigger part of our CapEx budget moving forward.”

On home sharing
Marriott’s recent launch of a home-sharing platform, Homes & Villas, was another topic of conversation on panels at the conference, as hotel company executives expressed more openness to the concept as a niche to be explored, rather than a disruptor to combat.

“As we’ve watched the home-sharing industry evolve, we’ve made two fundamental observations,” Marriott’s Sorenson said. The first is that much of it has been illegal, or unregulated, he said. Second, “there’s no branding … and no promise of a quality experience.”

“There is this notion to outsource the quality to the consumer and host to decide if the experience is good or not. If it’s bad, you blame each other. If we did that (in the hotel industry), we would be crucified,” Sorenson said.

Marriott decided it could enter this space to help level the playing field, selecting units that the brand can stand behind, and offering housekeeping and design services, as well as staff standing by to address issues on property, he said.

He acknowledged that Homes & Villas is “tiny compared to our other platforms,” but said it is also “tiny compared to where we think it can go.” He added: “We’re early in this.”

Pat Pacious, president and CEO of Choice Hotels International, said his company has been in the villa and condo rental game “for three years,” and noted a similar model to Marriott’s, which includes a “professionally managed operation … (with) someone who can stand behind it from a quality perspective.”

As a niche in the hotel industry, Pacious said he thinks home rentals “can be quite sizable, with the power of a loyalty program” as long as hoteliers “make sure it doesn’t compete with hotel product.”

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.