Brand bonanza

26 Jan 2011 by AndrewGough

The number of brands operated by hotel groups is expanding at a dizzying rate, but do travellers really need them all, asks Sara Turner

W hat do Edition, Venu and Vivanta have in common? They are just a few examples of new brands launched in the past year by established hotel companies – Marriott, Jumeirah and Taj respectively. The number of hotel brands available around the world today is astonishing, and as the recent legal spat between Hilton and Starwood goes to show, the importance of branding should not be underestimated.

Late last year it emerged that Hilton Worldwide had accepted a ban on launching a new “lifestyle” brand after quietly agreeing a settlement with its rival, Starwood Hotels and Resorts, over claims of corporate espionage. Hilton had attempted to launch Denizen Hotels in March 2009, announcing that the name would be seen in key cities throughout the globe. The following month, Starwood launched a lawsuit, accusing Hilton of stealing documents relating to Starwood’s boutique brand, W – the two top executives behind the creation of “Denizen” had previously worked for Starwood on the development of W hotels. Denizen has now been scrapped.

If the hit US television series Mad Men has taught us anything, it’s that a brand is hot property. The top five hotel groups by room count, according to consultancy MKG Hospitality, are Intercontinental Hotels Group (IHG), Wyndham, Marriott, Hilton and Accor. They have more than 50 brands between them, many of which have only been launched in the past few years (see panel overleaf). Meanwhile, more established brands are now entering new markets.

Take French hotel group Accor and its budget All Seasons portfolio. First launched in France in 2007, there are now more than 80 All Seasons hotels in eight countries. The UK gained its second one in December, the All Seasons London Leyton, and another three are due to open within the M25 by the end of the year. Accor has 15 hotel brands, four of which – Pullman, MGallery, Adagio City Aparthotel and All Seasons – have been launched in the past five years.

Meanwhile, US-based Marriott launched its 12th brand, Edition, in Waikiki in October (see “First Edition”, businesstraveller.com/archive/2010/december-2010-january-2011). A second property is due to open in Istanbul this spring, and it is working on projects for a further 23 international gateway cities, including London, Mexico City and Bangkok. Edition represents Marriott’s first attempt at a global “lifestyle” brand – its own answer to W, if you like.

Hilton has nine brands in its portfolio. While its up-and-coming marque Doubletree has been around for some time – it first launched in the US in 1969 – it came to the UK only in 2008. Two years on, there are eight Doubletrees here and in the next three years Hilton aims to have another in the UK and ten more in Europe. At the same level of luxury as the classic Hilton brand, which are new-builds, Doubletree differs in that its buildings are either conversions or revamps of existing hotels.

IHG’s boutique Indigo brand continues to extend its reach. The portfolio includes properties of different shapes and sizes, designed to reflect local culture and architecture, with unique murals in each standing alongside other individual design features. After launching in the US in 2004, it came to the UK in 2009 with the Indigo London Paddington, followed by a Tower Hill property in July last year. Two further British hotels are under development in Glasgow and Liverpool (both to open this spring), with more likely – IHG plans to open 37 new hotels in the UK across its portfolio of seven brands over the next few years.

In the Middle East and Asia, a similar pace of development can be seen with Dubai’s Jumeirah and India’s Taj. Jumeirah was set to launch its new Venu brand in Shanghai on January 31, with a second property in Azerbaijan’s capital, Baku, by the summer. More art- and design-focused than the existing Jumeirah hotels, Venu will still be a five-star offering, one that the group claims will “express the local soul for those who seek a sophisticated immersion in the destination”.

Taj, meanwhile, launched its third brand, Vivanta by Taj, in Bengaluru in September, swiftly followed by the conversion of 18 of its existing properties to the new offering. An “upper upscale” brand, it is positioned alongside Hilton, Intercontinental and Marriott hotels, a notch above Taj’s second brand, Gateway.
The list of new brands seems to be never-ending, and the dividing lines between them confusing – so why do hotel companies do it? Other than appealing to the full range of customers in terms of budget and taste, it can be a necessity for groups that are growing fast.

Ajoy Misra, senior vice-president of sales and marketing for Taj, says: “We grew opportunistically as a company over the past few decades, and almost all hotels of varying sizes and quality became Taj something or other. In the process, the customer was not quite clear what Taj stood for.” Now that Taj is developing outside of India, Misra says it is important to “sharply define” the flagship brand and launch others to accommodate its portfolio better. Hotels have been retrospectively rebranded under the most appropriate name, whether Taj, Vivanta or Gateway, depending on the services and standard of the property.

That’s understandable for Taj, with three brands, or Jumeirah, with two – but what about Accor, with 15? Spanning everything from budget (Etap) to high-end luxury (Sofitel), the group’s portfolio allows it not only to capture the full range of guests but also to work with different types of buildings. According to Jean-Jacques Dessors, chief operating officer of Accor UK and Ireland, this means there is no need to “stretch the brand”.

For example, All Seasons has been developed to go into existing properties – vital for cities such as London, where building space is at a premium – while fellow budget brand Ibis is better suited to new-build projects. Similarly, Novotel is a standardised brand in the mid-scale segment, meaning all rooms need to be the same size and shape, while Mercure, positioned at the same level, can go into an existing building so can offer a more unique experience.

“Today we have the brands needed to really cover the market,” Dessors says. That may be so, but do travellers really need them all? He maintains they are necessary so that guests will know exactly what they are getting if they stay at a particular chain anywhere in the world. In contrast, he says, with some other hotel companies “the guest doesn’t understand the difference between one brand and another because there has been the temptation to stretch the brand down or up”.

This blurring of boundaries is something travellers continue to struggle with, according to Margaret Bowler, director of global hotel relations at travel management company HRG. “A lot of the brands are now trying to catch up in terms of making sure there is a consistent level of service,” she says. The biggest problem is in how a brand varies between regions. “There are different requirements for the North America market than in Europe, for example. [And that is an] issue when you’ve got an international client thinking they’re going to get the same experience in Zurich as in Chicago, when often they won’t.”

Courtyard by Marriott has been cited as one example of this lack of consistency, with its European properties attaining higher standards than those in the US. Osama Hirzalla, Marriott International’s vice-president of brand marketing and e-commerce for Europe, admits: “We recognise that Courtyard in the US needs development in terms of the product.” But he points out that in the US, where the properties are much older, “some hotels I’ve been in are outstanding as they’ve just been renovated”.

IHG has spent US$1 billion to bring one of its classic brands, Holiday Inn, up to standard, a process that saw some 2,800 hotels get a refurbishment, while others were forced to leave the brand. “If you want to maintain consistency you need to monitor your brand standards,” says IHG’s vice-president of development, Andrew Gill. Hirzalla agrees: “Brands need to work harder on differentiating themselves. I think the real hard work that needs to be done is in making sure each is positioned correctly.”

But for Thomas Magnuson, chief executive of Magnuson Hotels, which provides marketing and distribution for independent hotels in the US and the UK, creating so many brands is unnecessary. “Brand is less relevant than ever in the hotel industry,” he says. He estimates that about half of hotels in the UK are independent, and that they are likely to stay that way.

“Travel is one of the least brand-loyal of any industries,” Magnuson says, adding that travellers simply use internet search engines to find properties with the right location, quality standard and price. Because of this, independent hotel owners are faring better today than in the past. “There are so many more ways to access customers,” he says.

That said, for the individual hotel owner, being part of a big name can provide invaluable recognition, which may help to explain why most global hotel groups, Accor included, are moving away from owning and operating properties towards management or franchise agreements. Marriott’s Hirzalla says: “I think there will be some consolidation going forward. Some of the smaller or more independent brands may find it difficult to survive on their own, as we have seen in the recession – they need to be attached to a more powerful name with a global network and distribution.”

Hence, Worldhotels, a collection of almost 450 independent four- and five-star properties and small hotel groups, is now inviting its members to rebrand under its name, with hotels in Hamburg and Munich the first to become Worldhotel-branded properties last month.

Whether necessary or not, if a group launches a new brand, it needs to go far beyond changing the sign on the door, says Pauline Houston, meeting, events and hotel programmes director for the UK and Ireland at travel management company Carlson Wagonlit Travel. “It has to mean something,” she says. “There has to be a degree of credibility around it. Consumers are far more educated on that now – they have a level of expectation around what a brand means.”

Fulfilling these expectations, then, is half the battle, along with informing travellers about what to expect in the first place – a hefty task with the ever-growing list of names entering the market.

Who operates what

Intercontinental Hotels Group

Intercontinental, Crowne Plaza, Hotel Indigo, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites

Wyndham Hotel Group

Days Inn, Ramada, Wyndham, Baymont Inn and Suites, Hawthorn Suites, Knights Inn, Microtel Inns and Suites, Super 8, Howard Johnson, Wingate by Wyndham, Travelodge (US/Canada)

Marriott International

Marriott, JW Marriott, Renaissance, Edition, Autograph Collection, Courtyard, Residence Inn, Fairfield Inn and Suites, Marriott Executive Apartments, Marriott Execustay, Towneplace Suites, Springhill Suites, Ritz-Carlton, Bulgari

Hilton Worldwide

Conrad, Waldorf Astoria, Hilton, Doubletree, Embassy Suites, Garden Inn, Hampton, Homewood Suites, Home2 Suites

Accor Group

Sofitel, Pullman, MGallery, Novotel, Suite Novotel, Mercure, Grand Mercure, Adagio, All Seasons, Ibis, Etap, Formule 1, Hotel F1, Motel 6, Studio 6

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