How Does the Proliferation of Brands Impact Guests and Revenue Management?

By Tom Engel Principal, T.R. ENGEL Group | July 23, 2017

Co-authored by Elizabeth Karakachian, Marketing Co-ordinator, LHL Communications

The hospitality industry is abundant with more than 270 hotel brands globally. Nevertheless, this whopping number is not stopping Marriott, Hyatt, IHG, and Hilton from expanding their portfolios with even more new brands. Theoretically, broadening the supply of brands is favorable for generating revenues from various distribution networks, loyalty programs and supply channels. But just how useful, helpful or even good is all this for the customer? Has the hotel industry gone mad by over-saturating the market with brands that are not all that different from each other?

Emergence of Brand Segmentation

Some of today's biggest hotel brands started off as family run businesses with a single location. It took a bit of time, hard work and some luck for these companies to expand into the global enterprises they are today.

Hilton, for example, started with a 40-room hotel in Cisco, Texas and quickly grew through acquisitions. Marriott, started with a Motor Hotel in Virginia in 1957, and then 40 years later purchased its initial interest in The Ritz-Carlton Hotel Company LLC (in 1995). Obtaining established hotel brands allowed companies to instantaneously widen their portfolio without having to embark on new construction or the creation of a new brand. INSTANT GROWTH.

Ultimately, lodging companies focused on growth within every supply and target market. As a matter of fact, the moment a new target market was introduced, companies, without any apprehension, created new concepts to distinguish itself. In 1998, Starwood Hotels & Resorts launched its edgy, high-end boutique hotel W New York. According to JetSetter, many critics believed this was a terrible business decision, stating that customers wanted familiarity and predictability over uniqueness, and a property which had no name recognition would be detrimental. In fact, W Hotels became one of the most successful brands in the industry and now operates 46 hotels in 24 countries. This opened the doors for many hotel chains to introduce their own boutique collections in the following years. Today, creating new lifestyle brands are still a focal point for our industry.

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Mobile Technology: The Future is Now

Mobile Technology continues to advance at a relentless pace and the hotel industry continues to adapt. Hotel guests have shown a strong preference for mobile self-service - from checking-in/out at a hotel kiosk, to ordering room service, making dinner reservations, booking spa treatments, and managing laundry/dry cleaning services. And they also enjoy the convenience of paying for these services with smart phone mobile payments. In addition, some hotels have adopted a “concierge in your pocket” concept. Through a proprietary hotel app, guests can access useful information such as local entertainment venues, tourist attractions, event calendars, and medical facilities and services. In-room entertainment continues to be a key factor, as guests insist on the capacity to plug in their own mobile devices to customize their entertainment choices. Mobile technology also allows for greater marketing opportunities. For example, many hotels have adopted the use of “push notifications” - sending promotions, discounts and special event messages to guests based on their property location, purchase history, profiles, etc. Near field communication (NFC) technology is also being utilized to support applications such as opening room doors, earning loyalty points, renting a bike, accessing a rental car, and more. Finally, some hotels have adopted more futuristic technology. Robots are in use that have the ability to move between floors to deliver room service requests for all kinds of items - food, beverages, towels, toothbrushes, chargers and snacks. And infrared scanners are being used by housekeeping staff that can detect body heat within a room, alerting staff that the room is occupied and they should come back at a later time. The January Hotel Business Review will report on what some hotels are doing to maximize their opportunities in this exciting mobile technology space.