An argument can be made for both independent and branded hotels. Issues including location, price point, target demographics and competitive set all figure into the decision that owners and operators must make when building or acquiring a property.
I witnessed a very persuasive argument for branded hotels during the annual NYU International Hospitality Industry Investment Conference in New York earlier this summer.
The lodging industry collectively took the opportunity to celebrate Hilton Worldwide during the conference in honor of its 100th anniversary.
One hundred years is a significant milestone for a company in any industry. Over a century, the name Hilton has become synonymous with hotels in the public’s mind. Hilton not only is one of the world’s most well-known brands, more important, consumers have a largely positive impression of the company.
Eight years a celebration of similar import will be held when Marriott International celebrates its 100th birthday.
Longevity for Hilton and Marriott has translated into success, both with consumers as well as with hotel owners and developers, the latter of whom literally pay to ride the coattails of these companies’ sterling reputations. The reputation also opens the doors and wallets of banks and other funding sources that provide franchisees with the capital they need.
Strong name recognition has facilitated the international expansion of well-known U.S. hotel brands. U.S.-based travelers, for example, tend to feel more comfortable when booking a recognized hotel brand name when booking accommodations in far-off destinations.
More recently, the lodging industry has gone through a period of tremendous brand expansion, the strategy being to create dozens of new brands to target various travelers’ needs and demographic preferences.
To help ensure the strategy’s success, the companies did not risk the likelihood that some potential consumers would equate the hotel name with its franchisor. So the brands added secondary identification to each hotel that shares the company name. Instead of Tru or AC Hotels, their franchisors dub them Tru by Hilton and AC Hotels by Marriott.
To be fair, this kind of sub-branding has gone on for a while (think Homewood Suites by Hilton or Courtyard by Marriott), but its use with new brands takes the strategy to a new level. Consumers, after all, may not have any idea of Tru or AC’s specific brand promise, but at the end of the day it may not matter; that’s how much they trust the parent company.