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Sep 22, 2023

How Many Hotel Brands Is Enough?

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Despite the crowded marketplace, hotel companies say there is an opportunity, even an imperative, to present an array of options. But the challenge is differentiating one brand from another.

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By Julie Weed

How many hotel brands is enough? Hilton and Choice Hotels International are putting that question to the test, with two new lodging brands focused on helping travelers maintain their healthy eating, sleeping and fitness habits on the road. The new entries join already-robust portfolios — Hilton's Tempo will be the company's 18th nameplate and Everhome Suites will be Choice Hotels’ 13th.

They aren't the only lodging companies to take the more-is-better approach. Marriott manages 30 brands and Hyatt has 20. 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 traveler to big cities may also take her family on a beach vacation, plan a multigenerational 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, a professor in the School of Hospitality Business at Michigan State University.

Tying more brands together with loyalty programs also helps the hotels lock in travelers. "The more opportunities a hotel company can offer to travelers to earn free stays, the harder it is to leave the brand," Dr. Knutson said.

Additionally, 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. Sites like Expedia's have "blurred the distinction between brands and created price wars," according to Alina Wheeler, author of the comprehensive guide, Designing Brand Identity.

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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.

In a news release announcing Tempo, Hilton described it as "an approachable lifestyle brand curated to serve a growing segment of ‘modern achievers.’" Translation: It's aimed at shorter-stay travelers who want to maintain their food, fitness and emotional wellness routines while they are away from home, said Mr. Cordell. Forty percent of guest rooms’ square footage is devoted to a "get ready zone," apart from the sleeping area. Videos to help guests meditate, relax or fall asleep are available on the TV. "It's more than three pillow choices or a couple of healthy options on the menu," he said.

Everhome Suites from Choice, whose flagship brand Comfort Hotels has over 2,100 hotels worldwide, will offer apartment-style rooms that can be customized by the guest, with open shelving, large bathroom and kitchen counters and a rolling workstation that can be raised to become a standup 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. Mr. Pacious said that 20 percent of all room nights sold in the United States are rooms that are booked for seven nights or more, but only nine percent 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 last 10 to 15 years, meaning they don't own many of the hotels that bear their names. Instead, they franchise them, offering the 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 company 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, Wash., offering free breakfast, parking and WiFi, and an indoor pool, for around $100 per night — is it the Ramada by Wyndham or the Wingate by Wyndham? Brands within the same family can also end up competing for the same customer, driving prices lower.

There is a "a bewildering array of choices," said Ms. Wheeler.

In a crowded marketplace, companies have to look even harder for ways to make themselves memorable and connect with customers, said Ms. Wheeler. The best brands amplify their competitive differences, and seize every opportunity to assure customers they have made the right choice, she said.

Communicating those differences can be challenging. Hyatt groups some of its brands into a "timeless portfolio" of "classic brands" like Park Hyatt and Grand Hyatt, and a "boundless portfolio" of so-called "lifestyle brands" like Hyatt Centric and Andaz. Categories on Marriott's website include "Premium" hotels like Marriott and Sheraton that offer "sophisticated and thoughtful amenities and services," and "Select" hotels like Courtyard by Marriott and Aloft Hotels offering "smart and easy amenities and services."

Tempo properties will be located in and around cities, including New York, Dallas, Washington and Lexington, Ky. The first will open in mid 2021. The first Everhome Suites is expected to open in 2021 in Corona, Calif., with others to follow in the Los Angeles and Austin areas.

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An earlier version of this story misstated the number of brands in the portfolios of Hyatt and Choice Hotels. Hyatt has 20, not 14, and Choice Hotels has 13, not 12.

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