THE BRAND GANGERS
By Joe Brancatelli
April 14, 2010 -- It wasn't too long ago that business travelers had two choices when they wanted to put their heads on beds: They went to a hotel, usually a big-lobbied, over-gilded, big-city palace. Or they went to a motel, a stripped-down, neon-signed, side-of-the-road bunker.
Then someone—no one knows who or when—invented hotel branding and lodging segmentation. Unlike airlines, which generally continue to stuff travelers into the two-sizes-fit-all coach and premium-class model, hoteliers have invented a type of lodging (and a new brand) for every two or three dollars along the price scale. Full-service hotels and no-tell motels are still around, of course, but they compete with a panoply of other concepts: "focused-service" properties like Courtyard by Marriott; all-suite hotels like Embassy Suites; "extended stay" brands like Residence Inn for travelers on longer-term assignments; hip hotels like W; and chained luxury brands like Park Hyatt. There's even a lodging category called "upper upscale," which requires simultaneous degrees in marketing, hospitality, economics, and psychology to fully understand.
Branding and segmentation has been good for business travelers, who can choose exactly the style of lodging they want and the services they want to pay for on a trip-by-trip basis. And it's been great for the major hotel chains, which have grown into worldwide franchising behemoths and now prefer to call themselves "families" of lodging brands.
Hilton, for example, has 3,500 properties and 10 brands. Marriott has 16 brands. Starwood is built around a traditional full-service brand (Sheraton), a studiously hip brand (Westin), and a barrage of new concepts (Aloft and Element) trying to leverage the popularity of its W Hotel line. Now publicly traded and largely free of the Pritzker family drama, Hyatt is developing brands such as Hyatt Place and Andaz. Britain's InterContinental Hotels not only controls the company's eponymous brand, but also familiar old names (Holiday Inn) and new chains like Hotel Indigo. Accor of France, with 4,100 properties in 90 countries, has so many brands that it displays them on a price/concept chart for the enlightenment of bewildered travelers.
But just when you think hotel chains have taken branding about as far as it can go, along comes a new concept we might as well call "brand ganging." If you have a blizzard of brands at an array of price points, why not maximize them by ganging them all in one place or one part of town?
That's what's happening in Indianapolis, where a management company called White Lodging is pouring five Marriott brands into a seven-acre development called (wait for it)…Marriott Place.
Near several of downtown Indianapolis's leading attractions (White River State Park, the city's convention center, a major shopping mall, and several sports venues), Marriott Place started with White's existing 622-room full-service Marriott hotel. In February, White opened three more properties: a 168-room Fairfield Inn, Marriott's economy brand; the 297-room Courtyard by Marriott; and the 156-room SpringHill Suites, one of Marriott's three concepts in the extended-stay arena. Next year brings the 1,000-room JW Marriott, a glitzier, less-formal take on Ritz-Carlton, which, not coincidentally, is another Marriott brand.
The $450 million complex is cross-marketing everything to meeting planners, convention bookers, and other potential customers: the banquet and meeting space, the rooms, the amenities, and the ability to mix and match accommodations across several price points. If someone is coming to Indianapolis, be it for an auto race, a trade show, a basketball game, or just a weekend getaway, White wants their business and has a Marriott hotel to offer.
"One size doesn't fit all in lodging. It's all about choices and options," says Cory Chambers, a Marriott veteran who is now White's overall director of sales for Marriott Place. "Marriott Place stratifies the market across multiple price points, and I have something for everyone."
An even more audacious example of brand ganging has just been completed in Los Angeles, inside a 54-story tower at LA Live, the mixed-use entertainment complex across from the Staples Center sports arena. LA Live encompasses the Nokia Theater, a bowling alley, a 14-screen cinema, a museum, and more than a dozen bars and restaurants. And, oh, yes, two Marriott-branded hotels: the 878-room JW Marriott and the 123-room Ritz-Carlton. Although they have separate entrances, the hotels share the skyscraper, the spa, and some of the meeting and function space.
On the other side of the country, in New York, another take on brand ganging opened last year in the Times Square area. Wedged into a piece of real estate that would normally accommodate one hotel of about 600 rooms, controversial developer Sam Chang built a so-called "three-pack" of properties. Two brands (Holiday Inn Express and Candlewood Suites) are part of InterContinental. But the third hotel, a Hampton Inn, is part of the Hilton empire.
"We treat each property individually, and each hotel is [legally] its own building with its own lobby and its own staff and standards," says Naveen Kakarla, executive vice president of Hersha Hospitality, the third-party management company that operates all three properties. "Nothing is shared, everything is unique, and we operate each according to the brand specifications of the chain. The brands are really focused on keeping separate identities."
Why would two separate and competitive hotel families allow their brands to be ganged in such a manner? Exposure to the lucrative New York market, explains Gina LaBarre, a vice president at InterContinental Hotels.
"Our Candlewood Suites brand is typically situated in free-standing properties in secondary and tertiary markets," she explains. "But everyone wants to be in New York, so it was a big deal for us to get into the market with a Candlewood property."
Although the rooms in the Candlewood Suites Times Square are slightly smaller than the brand's usual accommodations, LaBarre says everything else is handled exactly to Candlewood's other specifics.
"Would I have preferred all of the hotels [in the three-pack] to be InterContinental brands? Sure," she admits. "But I'm not worried. Hersha is a good management company, and they know how to deliver our product."
But there are limits to the power of branding, even in New York. Just ask Vijay Dandipani, president and chief operating officer of Apple Core Hotels, five Midtown Manhattan properties that focus on the mid-price lodging tier.
In the 1990s, Dandipani made a splash by rebranding his hotels as franchises of several chains that had previously been unable to crack the New York market. Suddenly, suburban brands such as LaQuinta, Red Roof, and Super 8 had prime Midtown Manhattan locations. And the chains won raves because Apple Core delivered the brands' standards in the $100-to-$150-a-night range, prices previously unknown in New York.
But now Dandipani has pulled the Super 8 flag off his hotel and gone independent as the Hotel at Times Square. And he's considering a similar strategy for his other properties. Part of the reason is cost—he said he paid $800,000 a year in franchise fees to Super 8—and part of the reason is tactical.
"When we cut the deal [with the chains], we basically cut our own deal," he explains. "But the bigger brands get tougher as they get bigger, and it stopped being a good deal for us and for our customers.
Besides, Dandipani insists, "There are too many brands in the city now."
The Fine Print…
How have the big hotel chains managed to leverage a single brand name like Hilton or Marriott into a family of lodging concepts? With their frequent-guest programs. Virtually every hotel in a family of brands belongs to the chain's frequency plan. Points can be earned at any property at any price point and used at any property at any price point. "We want you to be loyal to all of our brands," says the manager of one of the major frequency programs. "We want the largest share of your lodging dollar we can get, and we reward you for staying loyal to us regardless of how much you want to pay and what type of hotel you want."
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT This column is Copyright © 2010 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2010 by Joe Brancatelli. All rights reserved.