Hotels Cut Back on Multi-Brand Strategy

Hotel brands have become a dime a dozen. In recent years, hotels have frequently announced and launched new brands to appeal to multiple demographic groups and prices points, and in many case cross groups. That is changing. Hotels are beginning to realize quality over quantity and are cutting back on sub-branding, according to experts at ALIS this week. On the opening Boardroom Broadcast panel, featuring moderator Suzanne Mellen , senior managing director at HVS; and speakers Michael George, president and CEO of Crescent Hotels and Resorts; Ken Greene, president of the Americas at the Radisson Hotel Group; and Greg Mount, president and CEO at RLH Corporation, discussed hotel strategy to capture customers.

“We have reduced our brands over the past few years,” said Mount on the panel. That said, we run from budget to upscale, and we continue to look for opportunities.” Mount’s company has decreased its sub-brands from 15 to 9 in the past few years to focus on customer experience and to decrease costs. “Owners aren’t really getting the benefit from soft branding, and costs are going up,” he added. He expects many soft brands will return to independent chains in upcoming years.

George agreed, adding that owners really need to do the due diligence before partnering with a brand to make sure that the ROI is there. However, he said the right partnerships can be beneficial. “As an owner operator, you have a choice about who you align with. If you align with a brand for a reason, so you have to respect their business plan,” he said.

That was an important point of the discussion as well: listening to the operators and managers on the ground. Greene said that owners have moved away from listening and implementing ideas from onsite management, and that has become a problem. “Great brands grew because owners and managers had a voice at the table,” he said. “At some point we lost the voice of the owner and manager working out in the field. There is an arrogance that happened. I am a true believer in brands, but the brands have to be listening and adopting those ideas.”

However, Greene also agreed with the need to scale back brands and create more focused brands with clear, well, branding. Some hotels have four or five brands in the same segment, and in those cases, hotel owners have seen a decrease in revenues as a result. “If you look at success of every major hotel, there was one brand per segment, and it was laser focused on the demographic. There wasn’t all this blending,” he said, adding that most of the employees in some of these new brands couldn’t tell you who the customer is. That is a problem, and he expects that many of the brands will fail as a result. “There are a lot of brands that need to die.”

In the end, the strategy was the same for all of the operators: to provide good service to customers. “People want to come to a place with a good culture and good people,” said Greene. “That is the game in hospitality. If you set the right culture up, you’ll win the overall game.”