Is The Hotel Brand Bubble Ever Going To Burst?

The proliferation of new hotel brands in recent years has been staggering. A Skift article recently noted that the world’s 10 largest hotel companies offer a combined 113 brands at varying price points, and that 31 of these brands didn’t exist a decade ago. 

Even for those of us working in the business it’s almost impossible to keep track, so how do you think the traveling public is dealing with it?

AC Hotels. Canopy. GL. EVEN. Centric. Moxy. RED. Vb.

How many of you can even identify the parent companies of these new brands? (Answers below.)

It’s interesting that this explosion of new brands comes during a time when many hotel asset managers are questioning the value of brands as user-generated reviews and online distribution are becoming more important than the flag on top of the building. Regardless of brand name, customers are now conditioned to validate their choices and decisions and can successfully weed out “the good ones, from the bad ones” in ways that brands often can’t seem to do for themselves.

All of these new brand entries claim to appeal to a very focused segment of the market who are clamoring for something that speaks to their distinct (and supposedly unmet) needs as travelers. Better design, larger public spaces, better use of technology, greater focus on all things local, a nod to sustainability and the environment, and more.

But are these things really differentiating platforms for a brand or are they increasingly just table stakes for any hotel looking to attract today’s traveler?

Are there really many travelers who don’t want something well designed? Are there really many travelers who are looking to stay in places where they can’t get fresh foods or sample local beers and beverages? Is there really a significant part of the traveling public that hasn’t embraced some degree of technology or isn’t looking for value — regardless of price point?

In fact, isn’t much of what masquerades as an appeal to the growing numbers of Millennial travelers, become what ALL travelers today ideally seek (or would want) in whatever hotel or accommodation they choose?

Take the new Canopy “lifestyle” brand from Hilton. They’re slated to open one in Washington, D.C., in the fall of 2017 and a recent trade article focused on the property’s appeal to both business and leisure travelers and how the brand was using locally inspired design and food and drink. They cited local dishes on the menu (soft-shell crabs anyone?) and a bar stocked with locally brewed beers. Nothing wrong with any of this, other than they would seem to be the calling card for virtually any brand that’s tracking traveler desires and embracing modern consumer trends.

“We’ve launched a brand that is all about the mindset of today’s traveler and creating a positive stay,” said John T.A. Vanderslice, global head, luxury & lifestyle brands, Hilton Worldwide. “Canopy is the energizing new hotel in the neighborhood offering simple, guest-directed service.”

It all sounds great, but what does it say about the other brands in the Hilton portfolio? Are they not appealing to “the mindset” of today’s traveler? Are Hilton’s other brands less intent on creating “a positive stay?” 

Indeed, the challenge with so many of these new brands is carving out a distinct place not only within the marketplace overall, but within the parent company’s own product portfolio. Creating some clear differentiation in the minds of a consumer is even more important when you consider that most of the major hotel companies have consolidated reservations, sales and marketing for all of their brands within one team. 

There is no doubt many factors are driving this brand explosion. An abundance of capital is driving significant new hotel development, and many brands have franchise and management agreements in place that limit their ability to add the same brand within a certain geographic radius. Adding new brands can fuel growth and is an easy solution to this development dilemma. 

I also think some hotel companies are simply using the introductions of these new brands as a way to position themselves as innovators and forward-thinkers in a marketplace that is quickly evolving. While it plays well to investors and current owners, I wonder in some ways if all the buzz associated with these new brands doesn’t make some of the older, legacy brands seem even more dated and less ideal for today’s customer? 

I admit that much of the “noise” is perhaps being heard loudest by those of us in the industry who have these new brands on our radar in ways most travelers probably never will. And then there’s the reality that a lot of these “new” brands have so few (or in some cases zero) properties yet in operation — that there aren’t many chances for travelers to weigh in with their business or indifference. 

It takes a lot to establish and grow a brand. Just saying you’re launching one doesn’t make it a success and time will ultimately tell how many of these will ever grow beyond a handful of properties.

I’m not saying that there’s no room for new brands, or that companies can’t carefully construct a portfolio that is differentiated and clearly rationalized for consumers, but the brand race that’s going on now seems out of control. 

It just feels like we’re reaching a point where the new brand bubble is ready to burst. 

(Answers: AC Hotels – Marriott; Canopy – Hilton; GL – Best Western; EVEN – IHG; Centric – Hyatt; Moxy – Marriott; RED – Radisson; Vb – Best Western)

2 comments about "Is The Hotel Brand Bubble Ever Going To Burst?".
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  1. Ronald Kurtz from American Affluence Research Center, May 23, 2016 at 2:02 p.m.

    Good article. You identified what is probably the main reason for brand proliferation. It gives companies a way to grow while avoiding the development dilemma of existing restrictive development and franchise agreements.  

  2. Paula Lynn from Who Else Unlimited, June 12, 2016 at 10:44 p.m.

    Bet it has some kind of tax reconfiguration in its midst and someone found a loophole and the rest followed. Nobody looked.

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