For developers, a smart pairing of two brands remains the cornerstone of any multi-branded hotel strategy.
REPORT FROM THE U.S.—The flexibility and competitive advantages of dual-branding contribute to its staying power, according to hotel developers, and the concept is expected to see greater refinement over time, rather than radical reinvention, expanding by both chain scale and brand representation.
Developers maintain that multi-branded hotels—usually “duplexes” where two brands coexist in the same building footprint—still work best under specific circumstances, particularly urban locations where space is minimal. But when applied properly, a dual-branded strategy can offer owners a wealth of benefits.
Concord Hospitality Enterprises manages a 413-key Canopy by Hilton/Hyatt House at the Wharf in Washington, D.C.* Concord’s COO Nick Kellock said dual-brand development “depends on the market.”
“It really works when you believe there is enough demand to support two different hotels, and then you just get the construction and the operating cost benefits of doing them both together, rather than in two separate locations,” Kellock said. “But you have to first of all establish that there is a benefit and that there are distinct markets.”
The perfect blend of brands
Traditionally, the idea of combining more than one brand under the same roof has been applied when space was at a premium but more than one customer demographic could be served. That usually means pairing an extended-stay and/or all-suites product with a standard transient brand, allowing the two branded portions to share the same staff, back of house, amenities and, in some instances, even food and beverage outlets. Beyond the cost savings, investors also know that with a multi-branded property, they’ve “locked up” additional brands that might otherwise be competitors.
“You could decide to build a 250-room Courtyard and then somebody could come in next door to you and build a 100-room Residence Inn, and now you’re splitting all your Marriott reservations with somebody else,” said Greg Portman, president of PFVS Architecture, which has designed numerous dual-branded properties. “By building a 150-room Courtyard and a 100-room Residence Inn, now you’re getting the reservations from both.
“You’re more likely to have higher occupancy numbers by having the variety at the reservation system of both brands, and you’ve knocked out a competitor.”
The concept is even pushing above and beyond the select-service segment where it is mostly employed. One example industry insiders point toward is the dual-branded Ritz-Carlton and JW Marriott at L.A. LIVE in downtown Los Angeles, which represents a rare hotel duplex operating within the upscale tiers. Experts say in this case the pairing works, accommodating different—but still compatible—customer bases.
“If you’re going to go at the high end, you need to watch how you mix it, so that you have positive synergy instead of negative synergy,” said Hank Jones, founding principal of Kallenberger Jones & Company, a hotel investment consultancy. “The JW is positioned as a convention hotel in that particular situation, with all the meeting space, and the Ritz-Carlton is more for the people that really want that brand. But at some point, your customers really aren’t that distinct, and they would be happy with either.
“You’ve got to make sure that you’re offering a distinct-enough pairing that it makes sense to build two different products or brands, but not so distinct that your customers won’t mix very well.”
That also goes for trying to mix too many brands. As compelling as the dual-branded proposition has become, many developers agree that it is unlikely hotels in the future will push the envelope still further, combining three or more brands on a frequent basis. White Lodging has a triple-branded hotel—a combination Hyatt Place, Fairfield Inn & Suites and Aloft in Chicago—yet the company concedes that property type is likely to remain uncommon.
“There is ultimately a point of diminishing returns relating to the efficiencies and synergies,” said Deno Yiankes, president and CEO of investments and development at White Lodging. “Our triplex of Hyatt Place, Fairfield inn & Suites and Aloft in Chicago has worked out remarkably well, but it takes an appropriately-sized site to execute. Those are often a rarity in many dense, urban markets.”
The evolution of dual brands
Others are working to modify and improve upon the conventional wisdom behind the present crop of multi-branded hotels. Developers and brands often disagree over facets like shared check-in areas and breakfast offerings when more than one brand is present in a hotel, but according to Homer Williams, chairman of Williams & Dame Development, these concerns aren’t insurmountable. The company’s dual-branded Residence Inn and Courtyard by Marriott at L.A. Live—across from the aforementioned JW Marriott/Ritz-Carlton—is an impressive example of how to cleverly work around such obstacles.
“Marriott wanted separate elevators, but we don’t have them, so when you get off the elevator, if you go left, it’s a Courtyard room, and if you go right, it’s a Residence Inn room,” Williams said. “The people, they don’t know who’s staying in what, and they don’t care, and so the lobby experience is shared. It’s not an issue. Residence Inn serves breakfast, and it’s included in the room. In Los Angeles what we did was on the second floor, we had a room that was keyed. You’d take your key and if you were a Residence Inn guest, you’d go in and get your breakfast. It worked great.”
Such a harmonious balance could also be beneficial when promoting many of the newer niche brands that have emerged on the market in recent years. By pairing a fledgling flag with a more established one, guests who stay with the older brand still see and experience some of the unique aspects of the younger brand, and in the future, that may inform their booking decisions. Developers generally like the idea, again provided that the targeted guest profiles are a match.
“Some of these newer brands are very clearly defined,” Kellock said. “If you take AC or Canopy, which are two of the lifestyle brands that Marriott and Hilton have, they want that to be a very distinct experience. In those particular cases, the brand companies aren’t going to want you to co-mingle the facilities, because they’re so distinct and both are meant to drive a particular sort of experience. They’re not going to want that co-mingled with a much more traditional, functional brand like Courtyard or Hilton Garden Inn. So it depends.”
*Correction, 6 May 2016: An earlier version of this story incorrectly reported Concord Hospitality Enterprises is developing the Canopy by Hilton/Hyatt House at the Wharf.