HB ON THE SCENE: On Brand Segmentation, Demand is Key

ATLANTA—On whether brand segmentation is a good thing for the hotel industry, executives agree: Demand and location is what matters.

Hosted by Hotel Business and sponsored by Choice Hotels International, the roundtable, titled “Playing the Field: Diversifying Your Brand Portfolio,” examined the benefits of more choices—or pitfalls—and challenges of over-segmentation.

“Everything today is segmented,” said J.P. Ford, SVP and director of business development at Lodging Econometrics. “Everyone is trying to differentiate themselves from the other person.”

The key to avoiding over-segmentation in the hospitality space is to focus on market demand—go where rooms are needed. “Change is inevitable,” said Brent LeBlanc, SVP of Peachtree Hotel Group. “New brands are needed, but it goes back to the fundamentals. If there’s deep demand in a market—hotel rooms are needed—you build it, and it will work. If it’s not needed, it’s not going to work.”

“Location, location, location,” said Kerry Ranson, chief development officer of HP Hotels. “Don’t paint yourself into a box. I think that’s the world we’re in, and recognizing that there’s something for everybody out there. You’ve got to find what’s going to fit for that market and that consumer.”

But how long will personalization in the industry last? While having a unique identity is one of the latest crazes in the space—for both consumers and properties—what will happen to properties in the future when it’s not?

“We want to play in all these segments that are being launched, but at the same time, what happens years down the road?” said Kristen Myers, VP of development at Raines Hospitality. “I mean, right now, we’re so focused on differentiating guests. At some point, this fad of trying to be extremely different and pinpointing each person individually is going to fade, so you’re right, we want to have some of those boxes available that will last long term.”

To avoid falling into a short-term traps, some companies are shying away from trendy brands. “Fundamentally, we try not to get caught up in the new brands and all the new emerging brands that are coming into the market,” said Chas Henry, director of development at GF Management.

While it’s important to be thoughtful around segmentation, brand proliferation can also create opportunities.

“I’m somebody who sees opportunity in everything,” said Ravi Patel, president of Hawkeye Hotels. “I would rather much look at segmentation as a way of growth and excitement if you’re doing it right and not be as concerned about it as long as the fundamentals are correct.”

“When you’ve got a loyal guest, you can target and market the brand, so the guest knows where the segmentation lies,” said Tom Nee, VP of franchise development at Choice Hotels.

Full coverage of this roundtable will be in the April 21 issue of Hotel Business.