Hotel companies continue to expand while busily launching new brands. But is this a good thing for guests, asks Tom Otley.

The big news in 2016 in the world of hotels was the merger of Marriott and Starwood to create a company with 30-plus hotel brands. Although there were many reasons for the merger, streamlining the number of hotel brands wasn’t one of them. Sheraton and Marriott, Four Points by Sheraton and Courtyard by Marriott, Luxury Collection with Autograph Collection all continue as before, with no amalgamation.

Roll on to 2018, and the number of brands increases weekly. It’s fair to say that no business traveller wakes up in the morning and says to themselves, “I really wish someone would invent a new hotel brand.” However, the hotel chains keep on creating them. At a recent Global CEO panel where the bosses of Wyndham Hotels Group, Intercontinental Hotels Group (IHG), Accorhotels, Hilton and Choice Hotels were represented, they alone had more than 90 hotel brands between them, and no one disagreed with the assertion that there would probably be 100 between them within the next year.

Sébastien Bazin, the forthright and sometimes outspoken chairman and CEO of Accorhotels, said that he had been “dead wrong” in believing brands would gradually become less important. In fact, he thought they were “more important than ever.”

The reason? “Brands are like a group of friends. For every occasion you can count on them for a different purpose, and that’s what people want. It’s a shortcut in a very crowded world. Brands matter.” Bazin added, “You talk to the Online Travel Agents (OTAs) and they will tell you that the conversion factor is twice as much for a branded hotel than a non-branded hotel, because it matters to customers. They recognise it, they feel more comfortable, they know what to expect. Whether you have too many brands isn’t the point, you just have to make sure you differentiate the experience, the promise between each of the brands, because they have to be different.”

This approach seems to be spreading. For many years, Intercontinental Hotel Group (IHG) had comparatively few brands – Holiday Inn and Holiday Inn Express, Crowne Plaza and Intercontinental being the best known. But IHG currently has 15 brands, having launched Avid last year in the US (75 newly built hotels have signed up to join), buying the Regent Hotels luxury brand in March 2018 and announcing plans for what hoteliers call a “conversion brand”.

Brand positioning

A conversion brand is typically a brand that can be used to “reflag” an existing hotel – Doubletree by Hilton would be an example. IHG has yet to announce the name of this new brand, but it is coming, and great things are predicted for it along with a “development pipeline” of lesser-known brands, such as Hualuxe (seven hotels opened so far, with 21 in that pipeline) and Even hotels (eight so far, 12 in development). Kenneth Macpherson, IHG’s chief executive officer of Europe, Middle East, Africa and Asia has nearly 1,000 hotels open in his region alone. He told me the expansion wasn’t just about new brands. It was also about “strengthening core brands” we know well, such as Crowne Plaza.

“We’ve been working very hard with leading designers such as Conran [Design Group] to create a Crowne Plaza to meet the needs of modern business and leisure travellers. When people travel, their down time is so important. They don’t want a stuffy hotel, they want it to be engaging, to allow them to live when travelling and to have a flexibility for when they want to work,” Macpherson says.

As far as the new brands are concerned, like the “old” ones, “They are all targeting different guests on different occasions. It’s not just about having lots of brands, it’s about having distinctively positioned brands that meet a set of needs for guests,” Macpherson says. Of course, this begs the question, “How many brands are too many?” The answer from the hotels is that the limit is less about what the customer can understand and more about the internal resources of the hotel chains.

“The brands are a promise to guests,” says Macpherson. “So you’ve got to have the resources to invest in those brands so they provide a return to investors – those people who put their capital into them – and to meet the needs of guests.”

If brands are a promise, why do we so often feel let down by that promise? According to the hoteliers, that’s more of a legacy issue, and one which brands are dealing with, firstly by expelling properties whose owners will not pay to keep up standards, and secondly by improving branding. The CEO of IHG, Keith Barr, says that the hotel industry has become better at branding than it was ten years ago, and that part of the reason is technology and the benefits it has brought consumers.

“We have had to get better because of the transparency brought on by social media, but also because if we introduce a new brand, we work with owners and developers to make sure we are offering something of interest to them. With Avid we had an advisory committee [helping establish] what are the core issues we are trying to solve [such as] how is the room going to be cleaned, how is it going to be maintained?” Barr says. IHG exited a number of contracts, with Barr saying the company had removed more hotels from its portfolio than some chains currently have in their entire portfolio.

Growth industry

For Carlson Rezidor, the importance of branding was demonstrated by renaming itself Radisson Hotels, and also adding consistency across its brands. Its luxury “Collection” brand, Quorvus, has now been renamed the Radisson Collection (with properties such as the Strand Stockholm in Sweden, the Royal Copenhagen in Denmark and the Royal Mile Edinburgh in Scotland). It also announced an intention to “rebrand or reposition” some 500 properties in the 1,400-strong group. Federico J González, president and CEO, told me that “over the next five years [we will increase] from 80,000 to 100,000 hotel rooms; a net gain of 20,000; but actually we will see more than 10,000 exit if they are not in good shape, or the owner has no plans [to invest].”

Radisson is the 11th largest hotel group in the world and has eight hotel brands, with more than 1,400 hotels in operation or under development. In the next five years, the group says it will expand “only organically”, meaning not by acquiring other hotel companies; but that then creates a suspicion that it will in turn be acquired. The prospect doesn’t seem to worry Gonzales.

“It’s very good in life to be a moving target. We need to play with certainties. We have a huge business potential, we can grow significantly, and, in parallel, we will have time to see if someone wants to buy us, but I can’t worry about it. With the five-year plan we have got at the moment there is so much to get on with. I think the shareholders will say ‘Show us what you can do’,” Gonzales says.

For all the talk of having brands for different “guest occasions”, they also help power the growth of the hotel companies themselves. That’s important, according to Geoff Ballotti, CEO of Wyndham, the world’s largest hotel company with 8,400 hotels across 20 brands, including Ramada and Days Inn.

“The cost of keeping up with technology, or cyber security – the money you have to spend to make sure you have the best system, that’s why platform matters and size matters,” Ballotti says. “Size and scale helps in terms of how much leverage you have when you are negotiating contracts, and your loyalty programme helps drive savings for everyone. The ultimate measure is your share of occupancy that is coming through the loyalty platform. It lowers the cost of acquiring the guest for owners because it’s not coming with a 10 or 20 per cent commission, and so you want the best technology platform available.”

Fewer but better

However, not everyone believes a proliferation of brands is best. Scandic Hotels has only two brands – Scandic and Downtown Camper by Scandic – yet it is the largest operator of hotels in the Scandinavian and Nordic region with 280 hotels (55,000 rooms) in six countries. CEO and president Even Frydenberg, who previously worked at Starwood Hotels and Resorts, knows all about the power of brands; yet while toying with the idea of a further brand, he certainly doesn’t plan to head for double figures. Why should he? “We are very big in one region, but that region is made up of several countries with different economic drivers. It gives us a better base to stand on. Our success is being concentrated on certain markets, so we can quickly get the benefits of scale.” Instead Scandic is continuing successful expansion in Germany and Poland using the Scandic brand, though even here Frydenberg doesn’t rule out introducing a new brand.

It’s also true for other global brands that biggest isn’t always best. Peter Norman, Hyatt’s senior vice president of acquisitions & development, admits that Hyatt “is never going to be the size of the others, and that’s not our strategy.” Instead, Hyatt concentrates on “growing responsibly and sustainably,” an approach that has seen it reach 700 properties in more than 50 countries across six continents, yet it is still only one-tenth the size of Marriott.

“We can show that our hotels outperform the competition in many of the markets, and that’s because guests love the hotels,” says Norman. Hyatt’s growth is coming through existing and new-ish brands such as the Hyatt Regency in Dusseldorf, the Hyatt Centric Gran Via in Madrid, the Hyatt Place at Frankfurt Airport and Andaz (a Munich property will open at the end of 2018). It also has the inevitable collection brand (called the Unbound Collection) with famous properties such as the Martinez in Cannes joining it (see Upfront, page 16) and, at the end of 2018, a new central London property in the former home of the Metropolitan police called (in full) The Unbound Collection by Hyatt, Great Scotland Yard Hotel, London.

It’s not just large hotel companies creating (or acquiring) new brands. There are smaller companies creating innovative chains, with Citizen M being one that many admire. Nevertheless, Sébastien Bazin makes a point about these smaller brands: “These interesting funky trendy brands, they are sexy from year one to year five, and they maybe grow to 25 properties, and then they aren’t as trendy as they once were. They don’t have the loyalty from customers, they don’t have the bookings, so they pay big percentages to the OTAs [online travel agents], and they are not happy about it, and then they start to look for an umbrella and they come to talk to the big operators.”

Better Technology

The other big push by hotels is in technology, though unlike the consensus on brands, here opinions differ. Hotels have become far more sophisticated at capturing our custom directly rather than through third parties (such as the OTAs) by using hotel loyalty programmes to offer benefits such as points and free wifi. Once they have our personal data through the programme, it allows them to market directly to us and also to “personalise” our experience, something of a buzzword in recent years.

You will also see better technology in the rooms, though it’s certainly taken them long enough. Most business travellers of a certain age will remember how hotel rooms only offered a couple of wall sockets for power, just above the skirting board, and often with a lamp already plugged into one of them. This even applied to luxury hotels. On one occasion in New York I was met by liveried doorman, had my bags whisked up to the room and was offered a welcome drink, yet a few moments later, wanting to work, I was under the desk on my hands and knees trying to plug in my laptop. The good news is that finally the new designs have caught up with our need for power. The Holiday Inn Express I stayed in during the recent trip to Berlin for these two conferences had eight power sockets in that one small room, and a USB charger incorporated into the power socket by the bed. It almost made up for the fact that the room flooded for two out of the four days.

At least there was free wifi. Hotels are still trying to charge for this, of course, and many have introduced complicated (and largely ignored by customers) two-tier pricing, where basic speed internet is complimentary, and high speed (which few use) is chargeable.

So what should hotels be doing on the technology front to satisfy not only the business travellers of today but those of tomorrow, “future-proofing” the rooms so they do not quickly become obsolete? Although a lot of innovation has come from trendy smaller brands such as Citizen M, the larger brands such as Accorhotels, Marriott and Hilton have all set up their own innovation labs to test new technology. We have written previously about shower cubicles which allow you to sketch out your morning ideas on the steamy glass as you wake from sleep, and memory mattresses, but there’s much more coming.

Hilton as innovator

To offer a glimpse of one version of the future technology we might encounter in hotels, Hilton brought over demonstration versions to the Waldorf-Astoria in Berlin. Jonathan Wilson, Hilton’s vice president, product innovation and brand services, was on hand to explain them.

They included NuCalm, which promises to give users the equivalent of two hours’ sleep in just 20 minutes; and Nightingale, a plug-in socket device which emits white noise and combats common disruptions heard in hotels such as traffic, voices or construction work. Although these are being trialled, some innovations are further progressed. Hilton currently has rooms completely kitted out with fitness equipment in more than 30 hotels, and is expanding this scheme. The reason for doing so, according to John Rogers, senior VP brands and franchise operations EMEA, is partly “to make guests’ experiences better”, partly to provide a “real differentiator” between the Hilton Hotels & Resorts brand and that of its competitors, and also because all of this fits with Hilton’s history. “Hilton has a history of innovation,” Rogers claims. “A lot of things you see in hotels that are commonplace were trialled by Hilton – TVs, air conditioning, and hotels at airports.”

Rogers says that today innovation is changing more quickly than ever because it is being driven by technology, and “it’s a huge challenge for the industry to combine technology with hospitality to make guests’ experiences better.”

The amount of data that many companies have on their customers, and hotels have on their guests, will allow a new level of personalisation. “When you walk into the room it will be the temperature you like because we know it, and we could even have a picture of your family by the bed.” But Rogers is clear that “there is a line to draw. “You have to be careful that it doesn’t become creepy.”

The question of Airbnb

No discussion of hotels (or between them) would be complete without mention of Airbnb. The company would like to be thought of as part of the “sharing economy”. As we first described the wider phenomenon back in 2013, “The principles at its heart are efficiency, democracy and trust – the last cemented by online reviews. Not only is it creating a new generation of micro entrepreneurs, but providing consumers with cheaper, more personalised services, products and experiences.”

For many hoteliers however, such sentiments would at best elicit a hollow laugh. They point to the fact that a significant proportion of properties are simply “buy-to-let” by professional landlords, and in some cities mayors and local authorities have used regulations to ensure that Airbnb lets run as a business (for example of more than three months) are forbidden. Airbnb itself says in the help section of its website: “Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city’s zoning or administrative codes. In many cities, you must register, get a permit, or obtain a licence before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local governments vary greatly in how they enforce these laws. Penalties may include fines or other enforcement.”
Nevertheless, there’s little doubt that despite protestations to the contrary, most hotel chains are worried about it. It’s not hard to see why. Just as serviced apartments generally costs less per night than a similar standard hotel room, so does Airbnb.

Forbes, the US business magazine, recently used data from German hotel reservation website HRS and the AirDNA site to compare prices on traditional and non-traditional lodging options in eight major cities. On average hotel prices were consistently higher than average Airbnb prices, and the differences were significant. In Tokyo, for example, the average price of a hotel room in January 2018 was US$220, whereas a Tokyo Airbnb would cost travellers US$93 per night. A stay in a New York hotel this month would typically cost US$308 per night, compared to US$187 for a typical Airbnb stay. The reasons are obvious. The overheads are lower, and there are fewer services offered (no restaurant, fitness centre, meeting rooms, 24-hour reception) meaning prices to the traveller can be lower. Airbnb doesn’t release figures on how many people are using its services.

As a result of this disruptive competition, hotel companies have fought back in a number of ways. Firstly, by pointing out to local authorities that the rules should be applied consistently to both hotel operators and Airbnb, or to the Airbnb owners renting out their properties effectively as hotel rooms. In recognition of the size of Airbnb, few have tried to launch new products against it. IHG has its own serviced apartment brand, Staybridge Suites. Accorhotels has Adagio, while serviced apartment operators Ascott has the Citadines Apart’hotel brand. Hyatt has built relationships so that members of its loyalty programme, World of Hyatt, can use their points towards Oasis, a provider of serviced home rental accommodations with around 2,000 homes across more than 20 destinations worldwide.

The last word goes to Accorhotels’ Bazin, who clearly recognises the threat of Airbnb – he bought Onefinestay, one of its competitors, in 2016, but now believes he has its measure. Airbnb had “impacted” Accor in 2016, less in 2017, and less in 2018, he says, and despite expressing admiration for the company, Bazin said that his belief was that Airbnb had “lost its soul”. “They were rock solid when the soul of the business was all about ‘You are meeting a local’, ” he told me. “Now two-thirds of Airbnb [venues] say it’s a host room, but there’s no host room and there’s no host, it’s a serviced apartment. No wine, no host. They lost their soul. They were volume driven but not emotion driven.”


Hilton showcased a number of products and innovations at a media event at the annual travel trade show, ITB Berlin


Allows guests to project their own entertainment, or visually receive information about the hotel. The pico projector runs from a light bulb socket and can create a full-screen theatre experience.


A device that puts travellers into a recovery state, said to give users the equivalent of two hours sleep in just 20 minutes; for use in spas and meeting rooms, not guest rooms.


Emitting a range of noise-masking sounds, this plug-in socket device combats common disruptive noises such as traffic, voices or construction work, helping to improve sleep.


Allows you to customise your room with a digital art screen that can display anything – a favourite artist or even family photos.


A wireless translation earbud that will allow Hilton employees to communicate with guests no matter what language they are speaking.

Ava Mobile Telepresence

Video-conferencing on wheels, this device allows anyone, anywhere, to be present for a meeting without leaving their location. The person who dials in can control the device’s movement, and see and hear what’s going on in real-time.