By Robert Braun |November 10th, 2016
What are multi-branded hotel properties?
Multi-branded properties are two or more hotel brands
occupying the same property. Sometimes they are built side by side, or in the
same development; other times, they share the same building shell (and more, as
noted below). Typically, two roughly equal brands will be paired so that a
transit occupancy brand will be co-located with an extended stay brand. For
example, a Comfort Inn built together with a Comfort Inn & Suites, or a
Hampton Inn next to a Home2Suites by Hilton, or a W Hotel and an Element Hotel.
Or two luxury brands might be paired, such as a Ritz Carlton and a JW Marriott.
We have been involved in a number of issues on many
multi-branded properties, and our experience suggests that developers and
owners need to carefully evaluate both the advantages and disadvantages before
making a commitment to the complex relationship created with a multi-branded
Drivers for multiple brands
- Land costs – Some of the most attractive locations for hotels are also some of the costliest locations. Locating two brands on a single site can make it possible to utilize land more efficiently. While a particular location might not support a single hotel with 300 rooms, it might be appropriate for two different brands with 150 rooms each.
- Construction cost – Similarly, two hotels located on a single location may be able to share back of the house facilities, fitness areas, pools, parking, and even common areas or front desk space. Moreover, costs related to plans, permits, fees and entitlements can be shared, resulting in greater efficiencies.
- Operating savings – Two hotels may be able to share personnel that would otherwise be underutilized, such as engineering or maintenance personnel. It may also allow for overall lower staffing levels by allowing one hotel to “borrow” personnel from another to address higher occupancy.
- Premium pricing – While there is little more than anecdotal evidence, brands will often argue that where a lower chain scale property is matched with a higher one (e.g., an upper midscale property with a midscale property), the lower scale property will see higher rates, rather than depressing the rates of the higher scale.
- Limited choice – It is extremely rare for unrelated brands to share a single address. Hotel companies are loathe to allow their brands to mix with those of other hotel companies, and will generally insist that only the brands in their portfolio share a location. Thus, there may actually be fewer choices among brands (although the proliferation of different brands by hotel companies may at least partially offset that limitation).
- Choosing the brands – The potential problem of limited choice can exacerbate what is often a difficult decision: which is the correct brand? Where two brands are co-located, the owner must consider not only which is the right brand, but how to choose brands that complement each other.
- Duplication of services and facilities – While the hope would be that two related brands could share facilities and services, there may be enough differences between brands that duplication is required. Thus, the property may have two sets of fitness areas, pools, front desk and elevators dedicated to each brand. Moreover, the hotel companies may require dedicated personnel for each brand to ensure that brand standards are observed.
Property maintenance – Owners may find it difficult to coordinate brand upgrades and improvements, which will often be required on different schedules and can result in conflicts where the two brands overlap, particularly where facilities are shared. For example, a new public area design for one brand may conflict with the requirements of the other brand.
Maintaining separate identities – Unless the two hotels are completely separated, which would conflict with the goal of efficient design and operation, efforts will need to be made to separate the guest experiences, which can lead to confusion and, potentially, bad feeling. What would a guest say if they were denied access to the facility of a hotel that shares the same front door?