New Hotel Brands: Are There Just Too Many?

By Court Williams Chief Executive Officer, HVS Executive Research | March 03, 2019

No-one can accuse the hotel industry of not listening to its guests. But is there such a thing as listening too well, when you have so many people who all want different things? The multitude of new hotel brands launched over the past 5 years, particularly in the select service and lifestyle sectors, offers such a wide range of experiences that one can't help but wonder whether there are enough guests to match the number of available accommodations.

This raises several questions, including: Why is there such a proliferation of brands suddenly, is it justified, and what are the big brand strategies that are driving the trend?

Brands Breaking Boundaries

At the time of writing, Marriott International is almost certainly the world's largest hotel company, with more than 6,700 properties in 129 countries. These include 30 leading hotel brands offering more than 1.3 million rooms. Other large hospitality groups like Hilton and Wyndham aren't far behind, with a total tally of hotel brands at around 1,000 according to STR statistics.

It's not just about buying out existing brands, however. Many hotel groups are actually breaking ground with new brands, such as the new Hyatt Centric brand whose properties' claim to fame is that they are situated in downtown areas in the centers of all the action. These are mostly not new hotels, but existing properties reconfigured to the new brand.

Marriott-Starwood, InterContinental Hotel Group (IHG) and Hilton have all developed new brands, too. In 2014, Marriott launched its new Moxy brand, a boutique-hotel concept fueled by technology and aimed at the next-Gen traveler. Properties have 24-hour bar services, community spaces for meeting people safely (a nod to the online dating trend?) and other, hostel-inspired attributes.

Hilton, meanwhile, launched Tru, a brand boasting stylish yet affordable rooms with impressive in-room amenities, and contemporary lobbies that double as coworking and gaming spaces. Best Western joins the pack with the launching of its two new boutique brands, the midscale Aiden and upscale Sadie.

In August 2018, IHG announced the Oklahoma City opening of the first of its new midscale brand of avid hotels, billed as "A New Kind of Hotel – No-One's Done It Like This Before." The brand targets travelers who want the basics done well, at a price slightly lower than the group's Holiday Inn Express brand.

Recognizing the Rationale

So, what's the rationale behind all these new brands? For one thing, they seem to be aimed mostly at the less affluent demographic. It's long been known that Millennials and the upcoming Generation Z value experiences over material possessions, and travel is considered one of the ultimate ways of having those experiences. With lower income levels and less financial stability than their Boomer parents, this demographic is shying away from luxury accommodations in favor of lower cost. They still want all the mod cons, however, especially technology, but are less concerned with spacious rooms and fine dining than their predecessors.

This begs the question: Why aren't hotel companies simply updating their existing brands to cater to this new target market? Because the Boomers still hold the record of being the most active travelers, that's why. Retired, healthier and wealthier than ever before, key findings from AARP show the majority of 55 to 73 year-olds plan to take 4 to 5 leisure trips in 2019. This demographic not only enjoys higher levels of luxury than younger travelers, but they are also less comfortable with a huge range of new brands to choose from. More risk-averse than their younger counterparts, they tend to stick with what they know and love. This means hotels simply can't discount them as a major source of revenue. At the same time, Millennials are the most adventurous and the most likely to mix business travel with pleasure, with 53% doing so in the past and 46% planning to do so in future.

A careful analysis of these factors highlights the enormous differences between the wants and needs of the two generation groups that constitute the most active travelers. I believe this is the reasoning behind much of the new explosion, especially in midscale brands.

Understanding the Upside

As with everything, there's an upside and a downside to the rise of all these new hotel brands. On the surface, it appears everybody scores.

Hotel guests win by having a much wider range of options to choose from. There's a price range that matches practically every budget, an accommodation quality to fit every level of comfort, and amenities that cater for almost every possible activity. Competition has always been of benefit to the consumer, and, in the highly populated world of hospitality, it makes sense to have variety.

Hospitality owners also win by increasing their investment in real estate and having an offering for each targeted audience segment. Creating internal competition also potentially helps to allay the effects of external competition, since having a range of brands can keep consumers in their stable instead of losing them to other groups. Having a diverse collection of brands is viewed by many as an insurance against failure-if one brand becomes toxic, others can carry it while it's either rejuvenated or divested. The practice constitutes sensible portfolio management and avoids the risk of having "too many eggs in too few baskets."

Developing new hotel brands also offers a viable way for hotel companies to build scale while simultaneously satisfying today's guests, who increasingly demand convenient new tech features such as:

  • self-serve or mobile check-in
  • free, fast and reliable Wi-Fi
  • mobile access to IoT-connected devices that manage and control property security, mechanical and lighting equipment, in-room and food and beverage appliances
  • the use of cloud services
  • edgy designs and stylish lobbies and rooms

The working public scores with all the extra jobs created wherever the new brands set up hotels. With many new brands continuing to be developed every year under the big brands, as well as within smaller boutique companies, the industry is steadily creating new opportunities for hospitality careers, as well as new options for travelers.

Hotel executives are divided on whether it's a good thing or not, though. Some, like Marriott's Tina Edmundson, global brand officer and luxury portfolio leader, and AccorHotels CEO Sebastien Bazin believe there's no such thing as "too many" brands. They believe the more brands and hotels a company owns, the more highly competitive it's possible to be. The range of brands available helps consumers to make choices, depending on whether their need at the time is for leisure, work, relaxation, sightseeing or cuisine.

Having a portfolio of different brands, each with its own unique personality and point of view carefully articulated for the consumer, is therefore seen as a big plus for many hotel companies that want to extend their appeal to the widest possible audience. It's all about satisfying needs that current brands don't appeal to, as well as attracting new guests with the same viewpoint.

Determining the Downside

Not every hotel executive agrees with this thinking, however. Others, including Lightstone president Mitchell Hochberg and Ken Greene, president of the Americas for Radisson Hotel Group, feel that the rapid increase in brands poses a major challenge. They believe that while consolidation is good for providing leverage to larger entities, there's a limit to how far you can go. Just as voting strategically in an election can prevent diluting the result, so limiting the number of brands competing with each other can avoid diluting the value of the reservations.

In addition, having more brands in a company's portfolio makes it more difficult to engage with your consumers and to build individual brand loyalty-a fact confirmed by the big groups' focus on building loyalty to the umbrella brand, rather than individual ones.

Another downside is that when hotel companies launch-and focus on-the development of a new brand, they could end up pulling guests out of their own existing brands. This devalues the current brand, reduces the overall return on investment in the new brand, and can leave travelers with the impression that the older brands are no longer a drawcard. Given that many of the existing brands are being retained specifically to appeal to the older Boomer demographic, this can be detrimental to the bottom line.

Many of the new supposedly less expensive midscale hotel brands have a hidden angle, however. To achieve the lower rates demanded by their audience segment while still remaining viable, they impose new "resort fees" such as Hilton's US$25 a night New York City Urban Destination fee. Previously, everything was included in the room rate, but now these optional extras enable guests to choose whether they want the services covered or not.

The Take-Away

In the ever-changing world of hospitality, the welcome these new brands have received by the marketplace and the fact that they continue to be developed indicates they are both wanted by today's travelers and good for the industry. After all, the U.S. hotel industry enjoyed an occupancy increase from 0.5 percent to 66.2 percent in 2018, according to data from STR. ADR rose by 2.4% to $129.83, meanwhile, and RevPAR increased by 2.9% to $85.96.

A critical factor in this equation, however, is for new brands to differentiate themselves substantively from others-both in the same category as well as in the same corporate group. Given that the whole purpose of developing new brands is to satisfy needs that current brands aren't fulfilling, it's vital that hotel groups make the distinctions between their brands very clear, or they will all begin to look and feel alike.

Mr. Williams Court Williams is CEO of HVS Executive Search. Mr. Williams has over 27 years of retained Hospitality Executive Search experience. He began his career in the restaurant industry after graduating from Cornell's Hotel School gaining operational experience prior to launching a career track in Human Resources with an international restaurant company. Having experience in executive recruitment from the brand side, he decided to work on the hospitality side. This led him to a career in retained executive search. Mr. Williams has expertise in leading senior hospitality executive searches across all functional areas including Board Director, CEO, Operations, Human Resources, Marketing, Finance, Development, Culinary and Supply Chain. Court Williams can be contacted at 516-248-8828 x220 or Please visit for more information. Extended Biography retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by

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