Hotel Brand Proliferation Run Amok
By Lawrence Adams Principal, ForrestPerkins | March 31, 2019
Much has been written about brand proliferation in the hotel industry over the last several years, but the explosive increase of hotel brands in recent years has reached an astounding level. This staggering trend of exponential growth appears to have no end in sight.
STR, formerly Smith Travel Research, recently listed 1,073 brands globally and that number is certainly lower than the actual number. Of the major hotel companies, Marriott, following its merger with Starwood, has accumulated 30 brands; Hilton has 14 brands, AccorHotels has 34 and InterContinental Hotel Group (IHG) has 14. Radisson, in an attempt to only correlate new brands to distinct segments in their market has limited their brand count to 8. New independent brands continue to pop up at a rapid rate fueled in large part by the insatiable appetite of millennials for new and unique experiences in their lodging choices.
Gone are the days when a Hilton was just a Hilton, a Marriott was a Marriott and a Hyatt was a Hyatt. In this article we will explore the advantages and disadvantages of brand proliferation and look at some of the unique new brands in some detail to understand their appeal.
Advantages and Disadvantages
While many of the major hotel companies and their investors regard brand propagation as a positive growth vehicle, there remain a number of disadvantages, not the least is brand confusion. It is expensive and risky to launch a new brand so the rewards need to be worth it. Introducing a new brand within a family of existing brands runs the risk of weakening the image of the existing brands. The consumer might be led to believe that the new brand makes the older brands less desirable, tired or even obsolete.
For this reason it is highly important that there is a clear and genuine distinction between new and existing brands within a single hotel company. The new brand cannot be seen as a replacement for an existing brand…unless it is, but then that has its own set of problems that we will discuss below.