Is Multi-Branding the Future of Hotels?
The old adage that necessity is the mother of invention is as true for our industry as it is for any other — and with the recent explosion of accommodation choices, definitions have continued to morph. When a businessperson books a trip, they don’t just look at “traditional” hotels anymore — oh no. They look at private apartments all over the city. They look at aparthotels and serviced condos. They may even consider “coliving spaces” with access to private quarters, dedicated workspaces and networking opportunities that otherwise wouldn’t have existed.
It’s no surprise, then, that multi-branded hotels are getting so much attention. The Sydney Morning Herald reported on the trend in the past year. So did the New York Times, ehotelier, and countless other outlets.
What’s the idea?
In a multi-branded hotel, guests book one property or the other — and their experience is totally distinct to that brand. The other brand(s) may occupy different wings of the building, or different floors, but each brand essentially remains itself. Obviously most of the current iterations of multi-branded hotels feature two brands from the same company, but even this is changing. There is already a 664 room property in Chicago that features a Fairfield Inn (Marriott), an Aloft (Marriott/Starwood Hotels & Resorts), and a Hyatt Place (Hyatt hotels). (All three are managed under franchise agreements by the same, white-label management company, but the challenge is still the same.)
So what are these companies trying to accomplish? More to the point, what are they getting away with?
The short answer is that multi- or tri-branded hotels use shared infrastructure to make operations more efficient. Those companies who are actively moving into this territory (the new Novotel and Ibis tower here in Melbourne is a buzz worthy example) are not primarily interested in fusing brands together, or creating identical guest experiences. Nor are they reaching for novelty in a world of expanding choices.
The first advantage is lower barrier to entry for new developments. A pair of brands can invest in a new construction that offers the very latest and best of both flags, but the investment is much lower compared to the behemoth task of building a standalone flagship property.
Once the properties are up and running, the advantages shift to back-of-house operations. Essentially, what you have is a pair of side-by-side boutiques with a set of shared, streamlined resources and operations, including housekeeping, maintenance, food and beverage, pools, and fitness centers. The lobbies are generally distinct, although new models are popping up all the time.
Less competitive or more?
From a purely competitive standpoint, multi-branding may seem rather counterintuitive, especially when the brands involved are not from the same company. But when seen as a de facto alliance, multi-branding offers a cunning way for both brands to compete in local markets. Lower overhead means new facilities with less capital. Smaller room counts offer greater control over inventory. And the mere presence of a multi-branded property may also discourage other developers from trying to compete in the same locality.
Multi-branding also sends a message (at least on a conceptual or emotional level) that neither property is “afraid” of the fact that guests have a choice. Each brand is confident enough to stand by its offering, whilst encouraging guests to walk into the other lobby and book the other hotel next time around. This encouragement may not be overt, but it is inherent to the concept of putting two brands in one development. It diffuses the sense that competition rules supreme (even if it does), and appears to put focus on value and guest experience.
One more advantage of multi-branding is a stronger sense of localism, individuality, and boutique sensibility. It’s no stretch of the imagination to view this growing trend as a step into AirBnb territory, where flexibility and local flavor rule supreme.
Like all inventions in our industry, multi-branding is no panacea. Many commentators have noted that a stronger global economy has fueled the trend, allowing multiple brands to maintain distinct identities — and charge distinct prices — within the same property. But in a weaker economic conditions, this may not be the case. Price points between two or more brands may level out, rendering the arrangement problematic from a business standpoint.
There are also possibilities for GMs to clash, or to feel the other brand is being favoured by upper management or the owners. This is a conversation unto itself, and it highlights the importance of proceeding with care.
But when you tally up the possibilities of 1) lower barrier to entry for new developments, 2) greater efficiency through shared resources, and 3) emotional values that appeal to modern travelers, multi-branding is an inventive move in the age of AirBnb.
February 14, 2018
February 07, 2018