Hoteliers tend to segment their market by hotel type; one generally accepted segmentation is economy, midscale, extended stay, upscale, and luxury hotels. In recent years, the number of brands in each category has skyrocketed.

As a proof point, look at the extended-stay segment. This specialized category serves individuals who need to stay in a hotel for more than a night or two and are looking for amenities similar to home, such as kitchens and multiple rooms. These hotels are typically used by corporate travelers on assignment or relocating home buyers and, more recently, by leisure travelers.

In this category alone, there are over 30 different brands, according to a 2004 survey conducted by Hotel & Motel Management. Three of the brands listed in the survey illustrate the dilemma: Homestead Suites, Homewood Suites, and Home-Towne Suites. How can a consumer possibly differentiate one similarly named brand from another?

This is just one aspect of the branding problem. The larger hotel companies seem to spawn brands whenever the mood strikes. And the problem is getting worse. "The hotel industry has launched several new brands in the past 18 months," says Jeff Weinstein, editor-in-chief of HOTELS magazine. "Not only is it hard to create the critical mass necessary to make these brands relevant, but these new hotel brands have to create a very distinct identity and then deliver the matching experience to have any chance of resonating in the mind of the consumer. Creating that identity, making sure there is enough demand, and then actually delivering the goods is not at all easy."

Last year, the Wall Street Journal tested nine leading hotel chains for consistency and reported on the results ("The New Hotel Name Game," Candace Jackson and Peter Sanders, September 9, 2006). Three hotels in each chain—one in a major city, one in a resort location, and one near an airport—were tested. Only one chain, the Four Seasons Hotel and Resorts, was considered "outstanding." Four of the chains were rated "fair" because of significantly varying quality across the properties tested.

The problems of the big brands haven't escaped the attention of a newer breed of hotel: the independent brand. Individual hotels are capitalizing on the lack of brand differentiation by creating unique personalities and targeting niche segments that larger chains may be unable to efficiently service. Yet these "boutique" hotels tend to serve targeted markets and be very trendy—resulting in a hotel room with an exorbitant price tag.

Ironically, the big chains are responding to the boutiques by offering their own "select-service" upscale properties. On the surface, these brands appear to be independent. It seems as if the chains don't particularly want travelers to know of their association with these different names; while the chains don't exactly cover up that fact, they aren't overt about it, either. Hotel Indigo (InterContinental), aloft (W Hotels/Starwood), and Cambria Suites (Choice) are three new such brands. This spin-off strategy is somewhat reminiscent of the ill-fated "Song" launched by Delta Airlines.

Hotel industry observers see a number of trends emerging in 2007 that may result in an influx of even more brands, with the emphasis on specialization. Spas, golf resorts, small urban havens, and even eco-friendly hotels are in the works. Generally, the hotel industry seems to be moving in the direction of very customized offerings.

But with so many hotel brands to choose from, travelers may well become confused, frustrated, or even immune to brand differentiation. And that could cause hotel owners to worry about this sobering reality: When it comes to new hotel brands, will consumers be checking in…or checking out?     

[19-Mar-2007]