Diverse mix: How to avoid competition among sister brands

NATIONAL REPORT—Brand proliferation is a term we hear often in the industry. While some executives say there are too many brands, others feel there aren’t enough. More brands within a portfolio opens a hospitality group up to potential competition among sister brands. Preventing these brands from overlapping requires hospitality companies to conduct enough research in order to diversify brand promises and principles.

“We are known for creating brands that elevate, innovate and evolve the guest experience—it’s how we stay relevant to consumers and maintain our competitive advantage,” said Tina Edmundson, Marriott International’s global brand officer.

Much like its competitors, Marriott starts with the consumer when it comes to adding new brands to its 30-brand portfolio. “We figure out if and where there is a gap in our current portfolio by asking questions: Is this a psychographic we are not satisfying today? Is this a region where we don’t have distribution today? Is this a market with high barriers to entry? Can one of our existing brands work for this opportunity?” she said. The Bethesda, MD-based hotel group asks these questions to ensure there’s limited overlap.

Marriott also considers the strengths and weaknesses of marketplaces. “Our goal is to build something new that captures the best of both worlds,” Edmundson said. “We work to understand the customer segment: What do they like/dislike; what motivates them; [and]what do they value?” After taking the answers to these questions into consideration, the hospitality giant takes a deeper dive into the data provided by its consumer insights group. Marriott then gathers this data to further strengthen the guest experience in terms of the following aspects: design, programming, F&B and more.

“As we evaluate, we’ll conduct research that will cover consumer demand, target markets [and]the competitive landscape to determine if the opportunity is appropriate,” said Bill Duncan, global head of all suites and focused-service brands at Hilton. “We’ll also involve owners who may have an interest in developing to ensure we are meeting their needs from both a cost-to-develop [and]build and operate perspective.”

The McLean, VA-based hotel group also looks for potential white-space opportunities in the markets; this is something Hilton is “constantly evaluating,” he said. For Hilton, finding these opportunities means examining potential segments of strategic interest.

“Typically, we’ll get feedback from owners telling us they feel we may have an opportunity for certain segments,” Duncan said.

Wyndham Hotels & Resorts also elicits input from its owners when adding new brands to its portfolio. For instance, before launching Trademark Collection by Wyndham, the Parsippany, NJ-based hotel group reached out to owners operating landmark, independent hotels in the upper-midscale segment who had no existing soft-brand options. What the hospitality company learned was these owners desire more choices.  

“We saw a void in the soft-brand space, and we created Trademark as the solution,” said Lisa Checchio, SVP and CMO of Wyndham. “It complements our portfolio of iconic brands, offering guests unique hotel experiences at a more affordable rate than existing luxury options, and also creates a space for autonomous upper-midscale hotel owners to maintain independence while benefiting from the support of the world’s largest hotel franchisor. The research has paid off. Trademark has ballooned to more than 90 locations across the United States and Europe since we launched just over a year ago.”

Whether it acquires brands or grows them organically, Wyndham deploys the same growth strategy. “Wyndham has a long track record of spotting opportunities in the market and moving to meet that demand,” she said. “Over the last 30 years, we have averaged one brand acquisition every 18 months. We look to acquire brands that enhance the quality and growth potential of our portfolio and advance our mission to make travel possible for all.”

For example, take Wyndham’s acquisition of La Quinta. “[The acquisition] offers scale, a high-quality and consistent portfolio, a clear strong brand in the midscale segment and a loyal customer base,” she said. “It bolsters our leadership position in the midscale hotel segment—which currently makes up about 29% of our total roster—while propelling our portfolio to nearly 9,000 hotels around the world, roughly 40% more than our next-largest competition. With the global middle class expected to balloon to five billion people by 2030, our core growth strategy remains focused on the economy and midscale segments to meet that demand from everyday travelers looking for real value and authentic brand experiences.”

To prevent competition among its sister brands, Hilton leverages the results of its research by understanding white-space opportunities. “Also, an up-to-date brand refresh and renovation strategy for more mature brands helps drive relevancy and performance,” Duncan said. “In our ongoing evaluations, we see as our brands age, they get stronger.”

Curating distinctive brands also helps crack down on internal competition. “Having a large and diverse portfolio of brands necessitates a disciplined approach to keep the brands distinct and gives us an opportunity to offer unique travel experiences in all corners of the world,” Edmundson said. “The diversity of our portfolio means we are able to provide an unmatched variety of travel experiences depending on the guest’s mood, travel intent or trip purpose—no matter the guest’s style, preference, budget or whether they are traveling with family, for business, a honeymoon, or a getaway with friends. The challenge is to keep the brands distinctive and avoid overlap by ensuring that every touchpoint for a brand is in keeping with that particular brand’s ethos. Having a large portfolio of brands forces us to be even more rigorous and disciplined in this area.”

Hilton’s approach to keeping brands distinct is a direct one. The company’s brand diversification strategy has “clear swim lanes among its brands” and three dimensions, according to Duncan: physical design, programming and personality. (He considers brand personality to be one of Hilton’s “most important differentiators.”)

“The way we talk, execute and what we call ‘winks and nods,’ all signal the unique tone and differentiators,” he said. “This includes everything from graphics, words, phrases and team-member training.”

Sometimes a hospitality company needs to undergo transformations to ensure each brand has its own distinguishing elements. Wyndham’s 20-brand portfolio underwent extensive changes two years ago to create brand promises for the hotel group’s owners and guests built on brand values and guiding principles that are “ownable, actionable and manifest in a true experience,” Checchio said. Wyndham’s goal was to build out an entire portfolio made up of distinct brand personalities that complement one another.  

“Our brand personalities are the foundation from which we build every aspect of guest engagement, from the greeting at the front desk to the ‘do-not-disturb’ sign on the door,” she said. “Take Super 8 and Days Inn, for example—they are two of the largest economy brands in the industry, yet they deliver two very distinct experiences. Guests know that Super 8 is their companion on the road, welcoming them with an elevated take on traditional economy that celebrates their specific journey—with distinctions like local art as their headboard and a thoughtful welcome for service members and veterans like VIP parking. At Days Inn, guests expect to wake up on the sunny side with fresh, bright interiors and optimism at every guest touchpoint.”

Not surprisingly, both Marriott and Wyndham don’t believe there’s such a thing as too many brands. “Brands make a promise,” Edmundson said. Upfront, these brands market experiences to potential guests, and without delivering on expectations, they fail.

“Brands help consumers make decisions and the most successful brands deliver on that promise consistently,” she said. “Marriott International now offers the largest and most compelling range of brands and properties in hospitality, allowing our guests to pick the brand that best suits their travel needs.”

Others believe the industry doesn’t decide if there are enough brands in the market; guests are the ones who determine brand supply and demand. “There are nearly 1,000 brands in the hospitality landscape today,” Checchio said. They have more options—and with multi-brand portfolios, more opportunities through loyalty programs like Wyndham Rewards, allowing them to earn and redeem points across a number of brand experiences and segments. As long as the brand experience resonates with travelers and meets an unfulfilled need in the industry, it has the potential to thrive.” There are benefits of brand proliferation for owners, too, she added, pointing out how more options gives owners the power of being able to choose from a vast selection.

“Guests’ needs are changing at a faster pace than we’ve ever seen before, which means the brand landscape is constantly evolving,” she said. “New brands will always emerge as travelers’ needs and preferences change, and existing brands will innovate to meet those needs. Ultimately, today’s traveler is looking for experience, value and access above all else, and the brands that can meet those needs are the ones that will stand the test of time.”

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distinguishing elements. Wyndham’s 20-brand portfolio underwent extensive changes two years ago to create brand promises for the hotel group’s owners and guests built on brand values and guiding principles that are “ownable, actionable and manifest in a true experience,” Checchio said. Wyndham’s goal was to build out an entire portfolio made up of distinct brand personalities that complement one another.  

“Our brand personalities are the foundation from which we build every aspect of guest engagement, from the greeting at the front desk to the ‘do-not-disturb’ sign on the door,” she said. “Take Super 8 and Days Inn, for example—they are two of the largest economy brands in the industry, yet they deliver two very distinct experiences. Guests know that Super 8 is their companion on the road, welcoming them with an elevated take on traditional economy that celebrates their specific journey—with distinctions like local art as their headboard and a thoughtful welcomes for service members and veterans like VIP parking. At Days Inn, guests expect to wake up on the sunny side with fresh, bright interiors and optimism at every guest touch point.”

Not surprisingly, both Marriott and Wyndham don’t believe there’s such a thing as too many brands. “Brands make a promise,” Edmundson said. Upfront, these brands market experiences to potential guests, and without delivering on expectations, they fail.

“Brands help consumers make decisions and the most successful brands deliver on that promise consistently,” she said. “Marriott International now offers the largest and most compelling range of brands and properties in hospitality, allowing our guests to pick the brand that best suits their travel needs.”

Others believe the industry doesn’t decide if there are enough brands in the market; guests are the ones who determine brand supply and demand. “There are nearly 1,000 brands in the hospitality landscape today,” Checchio said. They have more options—and with multi-brand portfolios, more opportunities through loyalty programs like Wyndham Rewards, allowing them to earn and redeem points across a number of brand experiences and segments. As long as the brand experience resonates with travelers and meets an unfulfilled need in the industry, it has the potential to thrive.” There are benefits of brand proliferation to owners, too, she added, pointing out how more options gives owners the power of being able to choose from a vast selection of brand options.

“Guests needs are changing at a faster pace than we’ve ever seen before, which means the brand landscape is constantly evolving,” she said. “New brands will always emerge as travelers’ needs and preferences change, and existing brands will innovate to meet those needs. Ultimately, today’s traveler is looking for experience, value and access above all else, and the brands that can meet those needs are the ones that will stand the test of time.”