Rise in new hotel brands and off-shoots
The Rise in New Hotel Brands: What is the Strategy?
If you are a loyal traveler to one or two particular hotel brands, you may have seen recent announcements of new brands or extensions under the same chain umbrella.
This trend of developing new brands and off-shoots is a rapidly growing strategy for major hotel brands to appeal to different classes and generations of travelers, fill gaps in price differences, increase accessibility and expand into new markets. These types of strategies allow the brand to stay true to its identity while also maximizing its footprint.
InterContinental Hotel Group’s (IHG), for example, has recently developed a new upscale brand, Voco. This new chain promises a lifestyle brand, with an upscale feel and attention to exquisite customer service. Hilton is introducing two brands, Signia and Motto, expanding in both the meetings and events market along with the more moderately priced "micro-hotel" area that provides a hostel-type experience with private accommodations for travelers on a budget.
In addition to the development of new hotel brands, there have also been a number of large-scale mergers in the past couple of years. Both Marriott's purchase of Starwood and Wyndham Worldwide's purchase of La Quinta have allowed the brands to gain a large number of hotels to add to an already diverse portfolio. Other brands like Best Western have used their purchase of WorldHotels to enter the luxury hotel realm, also expanding their portfolio.
The aim for many of these large brands, and likely the future trend of the hotel industry in general, is to develop loyalty and recognition for a parent hotel brand, under which many new, niche brands or acquisitions only create more options for an already loyal customer base. STR Senior Vice President of lodging insights Jan Freitag explains in this Business Travel News article that the hotel brands try to hook their customers with the promise of loyalty points so "they don't need to leave the fold of that loyalty system because the hotel company offers them [a property] for every occasion and for every price point." For travelers, this is an overall positive move toward offering a more diverse range of rooms and rates, from budget properties to long-term lodging.