It’s Not a Secret: Execs Can’t Agree on Impact of Brand Proliferation

PHOENIX—It’s not a secret: The industry can’t agree on whether there are too many brands in today’s market. While some executives believe customers are driving the demand for new brands, other leaders claim the new brands are saturating the market and confusing consumers. The debate on brand proliferation continues even at the highest levels.

“Are there too many brands?” said Geoff Ballotti, president and CEO of Wyndham Hotel Group—leaning forward in his chair—during a C-suite panel at The Lodging Conference, held last week at the Arizona Biltmore, a Waldorf Astoria Resort. “I don’t think there are.”

Geoff Ballotti, president and CEO of Wyndham Hotel Group

Geoff Ballotti, president and CEO, Wyndham Hotel Group

The Wyndham executive took his comments a step further by suggesting brand proliferation is the new norm (expect many more brands in the future). “I don’t think we are close to any point of saturation,” he said. Sitting on the other end the stage, David Kong, president and CEO of Best Western Hotels & Resorts, added to the argument for continued brand creation.

Other industries are also offering consumers more choices. “Just look around you,” said Kong. “If you go to the supermarket, go look at any consumer packaged goods—toothpaste, razor blades, anything—you’ll see a dizzying array of choices, and it’s true, in today’s world, people want choices.” New brands may enable companies to tap into new customers.

For his part, LaSalle Hotel Properties President/CEO Michael Barnello said, “I don’t think it’s that simplistic. I think there’s definitely a gray spot around scale.” From an owner’s perspective, adding another hotel around with a different name does in some way shape or form affect surrounding hotels. “There is impact,” he said.

“I don’t know if two years ago, there were millions of would-be Tapestry consumers that were just waiting for this brand to be created,” he said. “I find that hard to believe. Now, it doesn’t mean that people won’t come to use that brand—I’m sure it will be great—but they were coming from somewhere, and if they were at the time Hilton loyal, perhaps they came from an Embassy or a Hilton or a Conrad that somebody else owned. There absolutely is impact there.”

As hospitality groups continue to create new brands, the former will also look for consolidation options. “My personal opinion is consolidation will continue,” said Dave Johnson, president and CEO of Aimbridge Hospitality.

Trump Hotels CEO Eric Danziger

Trump Hotels CEO Eric Danziger

Trump Hotels CEO Eric Danziger posed a question to the panel: “How can we ignore cannibalization?” While he agreed with Kong, his answer to whether brand proliferation is good for the industry was more blunt and to the point.

“There’s room for new brands because, frankly, some of the old brands ought to be shot in the head and put out to pasture,” Danziger explained.

That being said, he did express concern for owners. “It’s hard for me to imagine that some owner who bought into a company that had x brand, and now there’s 30 of them coming through the same distribution, is not being negatively affected—that’s why there are lawsuits against the franchise companies,” he said.

Danziger summed up the discussion at hand with the following: “You might be doing a good job for a consumer, but you might not be doing the best job for an owner—and that’s what pays the bills.”