Evolution of Multi-Branded Hotels
By Lawrence Adams Principal, ForrestPerkins | November 04, 2018
Not long ago I coauthored a book published in 2012 titled Hotel Design Planning and Development, Second Edition with Richard Penner and Stephani Robson in which I wrote a chapter on Multi-branded hotels. In that chapter I described one of the newest trends in hotel development, a unique new product, that has since evolved into a significant hotel type with unique characteristics, advantages and challenges. In this article we will look at this relatively new product, how it is being developed today and what the prospects are for future development.
Hotel developers are realizing financial, marketing and operational advantages of building more than one brand on a single site and in many cases sharing a single building. Multi-branded hotel developments usually share back-of-house operations, administration, staff, recreational facilities and meeting rooms, but in order to maintain brand recognition and foster brand loyalty, they most often have separate entrances, separate lobbies and individual architecture and decor corresponding to each one's particular brand standards.
Often driven by high land values and limited availability of suitable sites, multi-branded hotel projects obtain efficiencies in construction through shared facilities resulting in a lower cost per room saving as much as 30 percent on development costs. Operational costs are also reduced through centralized management, staff and services. Cross selling is another advantage for hotel companies as guests staying in one brand get meaningful exposure to an unfamiliar new brand. But there are challenges that must be overcome to realize these advantages as we will review in this article.
AccorHotels is credited with pioneering the first dual-branded hotel in 1984 in Paris with the Ibis/Novotel hotels in the La Defense business district by repositioning an underperforming 600-room hotel in order to target separate price points with two brand names. Marriott first introduced the concept in the United States with the 988-room Orlando JW Marriott collocated with a 584-room Ritz Carlton in 2003. It wasn't until 2007 that Hilton joined the fray with the Homewood Suites and Hilton Garden Inn hotels in Baltimore. Then Marriott followed AccorHotels' lead in Europe in 2011 with the Courtyard/Residence Inn in Munich.
Types of Multi-Branded Hotels
Multi-branded hotels come in a variety of configurations. Early examples of multi-branding involved two distinct buildings that were in close proximity or on the same lot, but were essentially two distinct hotel buildings that may have shared administration, staff facilities and some back of house functions. But by not being conjoined did not achieve the efficiencies afforded by ones physically connected.
The "linked" model is where two hotels from the same brand family are connected on a single site. This is most often two wings of a building connected to a podium of shared public space, administration offices, recreational facilities, meeting rooms and back of house. Each wing of the linked model has a distinct, brand driven, architectural identity and is accessed by its own entrance, front desk and lobby. Importance is given to the brand identity to promote loyalty, so features, decor and services of each hotel are distinct and identifiable to the customer they serve.
A variation of the linked model is where two brands are stacked on top of one another in a single tower such as the 67-story Residence Inn/Courtyard in Times Square, New York City. Another example of stacked brands is where owners of the underperforming 501-room Melia Hotel in midtown Atlanta reconfigured the building into a 360-room Crown Plaza over a 102-room Staybridge Suites.
An exceptional example of multi-branding is Marriott Place in Indianapolis, where four Marriott brands share a single block connected via sky-bridge to the Indianapolis Convention Center. Another Marriott brand, the older Marriott Downtown, is connected to the complex via a sky-bridge making it 5 brands interconnected. The JW Marriott is the largest hotel on the block and is essentially a stand-alone hotel, as is the Fairfield Inn, though they share back of house facilities and meeting spaces. The Courtyard and SpringHill Suites follow more closely the linked model sharing an L-shaped building but with separate entrance courts and lobbies.
Choice hotels with its Sleep Inn/Main Stay model invented an interesting twist to dual branding by cross pollinating two of its midscale brands and integrating each brand's features and services into a single hotel. Essentially they have produced a unique new "blended" brand in the process, the Sleep Inn/Main Stay brand. A guest will arrive at a single hotel entrance and approach a single front desk and will have reserved or will request a room that is designed for Sleep Inn that supports transient lodging or a Main Stay suite with accommodations for an extended stay. The idea was generated when developers saw a demand for a relatively small number of extended stay rooms in their transient oriented hotel and so began to fit out a number of rooms with kitchenettes, larger closets in suite configurations to accommodate the demand.
The blended model is being developed by other companies such as Marriott where the brands are morphed together seamlessly in the same building. But the formula only works with select service or non-lifestyle brands. Blended hotels may ultimately have the effect of reversing unbridled brand proliferation by transforming two brands into one, thereby reducing the number of brands. Blending could solve some of the redundancy problems Marriott faces following their merger with Starwood that has resulted in 30 individual brands.
One of the newest configurations of multi-branding is when two or more hotel brands from different hotel companies share a single site or building. In Chicago River North a triplex of hotels opened in 2013 that included the 272-room Aloft Chicago City Center, operated by Starwood Hotels & Resorts Worldwide, the 180-room Fairfield Inn & Suites Chicago Downtown/River North, run by Marriott International and the 212-room Hyatt Place Chicago/River North. Each hotel has separate facades, entrances and front desks and independent management staff and reservations systems, but they share meeting space, back of house and maintenance staff.
In Washington DC, The Wharf, a large new waterfront mixed-use development overlooking the Washington Channel, includes dual-branded hotels with a 175-room Canopy, a lifestyle brand by Hilton, connected to a 238-room Hyatt House catering to extended stay guests. The two hotels share back of house, maintenance staff, meeting rooms and a number of amenities, including a large elevated courtyard overlooking the channel, an outdoor pool and a rooftop bar. The Andaz Shanghai Hotel by Hyatt and the Langham Xintiandi Hotel are physically connected by a sky bridge and share a synergistic relationship but are managed separately.
There are a number of advantages in developing multi-branded hotels. Construction cost per room is significantly reduced when public spaces, meeting rooms, recreation, administration offices and back of house are shared between two or more hotel brands. Cost of operations is also reduced when maintenance staff, back of house facilities and management functions are centralized.
A market that cannot support a single 300-room property, might support two 150-room smaller brands to make a project feasible. A single hotel market might not warrant a ballroom or a swimming pool, but two hotels could make building them feasible. Guests staying at a limited service brand that is collocated with a higher-end brand, may have access to facilities and amenities not otherwise offered by that brand. Guests staying at the Iberville Suites Hotel in New Orleans benefit from the hotel being collocated with the Ritz Carlton New Orleans and therefore have access to room service, meeting rooms, swimming pool, fitness center, restaurant and bar, and other amenities that would not normally be offered to this type of extended stay property.
Cross selling is another significant benefit to the hotel company when guests are exposed to a brand that they are unfamiliar with. Exposure to a new brand and its positive features increases the likelihood for guest to book that brand in the future.
Care must be taken to avoid brand confusion where guests cannot distinguish between standards and services designed for one bespoke market segment or the other. Everything from the arrival experience to the level of service must be carefully crafted to insure that loyalty to the particular brand is maintained.
While there are advantages for guest to avail themselves of higher-end facilities and services not normally offered by the brand where they are staying, unwanted cross over of amenities such as free breakfast, create problems for the operator. Typically extended stay guests are offered free breakfast and perhaps an evening social. How to prevent guests staying in one brand from infiltrating the free breakfast area without insulting them or making them feel second-class is a challenge. Some hotels are now putting the breakfast areas on different floors or sections of the hotel so they are out of sight from the transient guests who might not have a free breakfast option.
Shared staff can result in confusion. Staff must learn two different levels of service. Good communication and proper training is important to insure that services appropriate to each brand are not misapplied. Different brands may require periodic upgrades according to different maintenance schedules. This could result in conflicts in coordinating maintenance of shared areas such as meeting rooms and other shared amenities.
A study conducted by PKF Hospitality Research found that the efficiencies achieved by multi-branded hotels were not automatic and were limited by the quality of management and the optimization of shared resources. The study concluded that proper management and staff training is key to achieving efficiency goals of multi-branding.
Difficulties in mixing brand families like the Aloft/Fairfield/Hyatt Place in Chicago could be due to the creation of a competitive environment and confusion of brand identities. Reflagging one of the brands if market conditions shift could mean the developer will have limited options and be restricted to rebranding within the existing brand family.
Developers of multi-branded properties face difficult decisions if one of the brands is significantly underperforming the other brand. In two separate hotels it may be possible to sell off one of the brands, but may not be possible in a multi-branded property.
Differences in guest profiles of luxury brands and limited service brands with shared amenities risks degrading the perception of the luxury brand. A guest staying in a luxury brand seeing shared amenities with a less expensive brand might naturally feel downgraded.
To date the most common combination for multi-branded properties is the linkage of a limited or select service brand with an extended stay hotel, such as a Hilton Garden Inn with a Homewood Suites by Hilton or a Courtyard with a Residence Inn by Marriott. Less common are multi-brands linking a small luxury brand with a larger upper-upscale brand that caters to conferences and events, like the Ritz Carlton and JW Marriott at LA Live, Los Angeles. That property also includes Ritz Carlton Residences with luxury service from the hotel which adds another dimension to the multi-branded genre.
There are more adventurous multi-branded developments in the making. Developers of the AC Hotel and Moxy Hotel in Atlanta have linked Marriott's European hip and edgy brand with its new energetic millennial-centric bohemian-style product, merging two seemingly similar lifestyle brands, perhaps distinguishable only by AC's slightly more sophisticated persona and its higher price point.
Another interesting concoction that's brewing near Dallas Love Field is the Aloft Hotel and Element Hotel, Starwood Hotel and Resorts' mid-priced tech-forward design brand with its eco-focused brand that emphasizes sustainable facilities and operations.
In downtown Seattle InterContinental's wellness brand, an EVEN Hotel, is linked to IHG's conventional extended stay product, Staybridge Suites. And in Miami Wyndham Hotels' luxury brand Wyndham Grand is fused with its urban lifestyle child-friendly TRYP Hotel.
As new recipes, mixtures and blends emerge we expect there to be surprises as the melting pot of multi-branding brings us astonishing new combinations. And as brands continually evolve and new ones emerge we are sure to see new ideas for mixing together improbable bed-fellows to capture contrasting markets in single multi-branded developments.
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