Multi-branding Mushrooms

The concept of ‘One is Done’ is no longer relevant to the hospitality industry. Today, hotel chains like Marriott, AccorHotels, IHG, et al have a multitude of hotel brands within their ambit in different categories, to cater to the different groups or class of people. Nowadays, hospitality companies are seen having different categories or profiles of hotels – luxury, upper upscale, upscale, upper midscale, midscale and budget, etc. within their ambit.

One of the ways in today’s hospitality industry to reach out to varied market segments is through mergers and acquisitions and the other is through multi-branding. Both are not mutually exclusive. The mergers and acquisitions do not prevent the hotel groups from continuing the growth of their multiple brands. Ashok Malkani examines the present multi-branding scenario and its future, in the context of the Indian hospitality industry.

With a plethora of hotels opening all over the globe, and also in India, it has become extremely important for them to compete with each other. One of the unique features of modern day hospitality industry is that a growing number of hospitality brands are owned by the same parent company. 

Over the past few years, multi-branded hotel chains have mushroomed in the country. In its early days, multi-branding resulted from unique circumstances. Today, it is a common practice. Hotel chains have expanded and diversified their offerings to capture more of the travel market.

Along with multi-branding, merger of brands is also taking place. The Indian Hotels Company, owned by Tata Sons, some time back launched a new brand, Vivanta by Taj, in the upper upscale segment.

With this Taj was slotted in the luxury space, Vivanta by Taj in the upper upscale segment, Gateway in upscale, and Ginger in the economy segment.

However, in January this year, the hotel chain brought its Vivanta and Gateway hotels under the ‘Taj’ brand as part of a major rebranding exercise.  Under this new initiative, the company is upgrading all the 53 premium hotels of Vivanta and Gateway in India and abroad, and migrating them into Taj brand. These hotels will now be divided into four sub-categories—Taj Hotels, Palaces, Resorts and Safaris depending upon the location and nature of the properties.

For Diversified Guest Profiles

The business philosophy behind the multi-brand portfolio is actually quite straightforward. Over the years, new consumer segments have emerged within the hotel industry and one brand doesn’t fit all. Different brands cater to different consumer segments. 

Even within cities too, there are different markets for the hospitality industry. For example, people from South Mumbai could have a different taste for hotels from the people of Borivali. What appeals to one set of customers can be a put off for another set of people.

Patrick Pacious, the President and Chief Operating Officer of Choice Hotels International is of the view that travellers’ needs vary over time. He is right. Whether one is travelling for business or leisure, alone or with family, locally or internationally, and whether one would be requiring a short stay or an extended stay, hotel companies want to cater to all kinds of needs of varied range of travellers. This has probably paved the growth of multi-branding in hospitality. The increase of soft brands is another driver of brand proliferation. “Unique, boutique or historical hotels want to keep their identity, but at the same time they also get the benefits of a larger company’s reservation system, marketing efforts and rewards programs,” added Patrick.

Jean-Michel Cassé, Chief Operating Officer (COO) – India and South Asia, AccorHotels, disclosed, “The concept of multi-branded hotel chains has been becoming extremely popular primarily due to the rise of diverse types of guests. Moreover, the profile of guests today is very different when compared to those from 15 or 20 years ago. Over the years, increased disposable incomes; easier access to affordable flying and exposure to various destinations have all contributed to a number of cohorts of travellers with varying expectations.”

“As hoteliers, we at AccorHotels have ensured that our multiple hotel brands reflect the ever-changing demands of both the consumers and the industry,” he stated further. 

 “Multi-branding is very popular in this era. It helps the umbrella brand to monitor each and every hotel in an easier way.  Every hotel falls under one major campaign for the year followed by monthly campaigns by the hotel which is monitored closely,” averred Henna K Punjabi, Marketing Executive — Holiday Inn Chennai.

 “IHG (InterContinental Hotels Group) has 14 brands under it all around the globe. In India, we have four brands: InterContinental, Holiday Inn, Holiday Inn Express, and Crowne Plaza. These hotels operate in major cities of the country like Delhi, Mumbai, Chennai, Kochi, Kolkata, Bengaluru and so on,” disclosed Henna.

 “In India, AccorHotels has the fastest growing network of hotels spanning from the luxury to economy segments. In India, we have 45 hotels across nine brands namely — Fairmont, Sofitel, Pullman, Swissôtel, Novotel, Grand Mercure, Mercure, ibis, and ibis Styles. Across pan-India, we are present in 22 cities, spread from Mumbai to Kolkata and Delhi to Kochi,” stated Jean-Michel Cassé.

“Globally, AccorHotels has over 20 brands across economy to luxury segments; operating in over 95 countries, encompassing more than 4,200 hotels, resorts and residences and over 10,000 of the finest private homes around the globe,” he pointed out.

 “Marriott International presently has 84 hotels in India, spread across 15 brands, which include The Ritz-Carlton, St. Regis, The Luxury Collection, W Hotels, JW Marriott, Renaissance Hotels, Marriott Hotels, Le Meridien, Westin, among others,”  stated Tina Edmundson, Global Brand Officer, Marriott International, about a year earlier.

“I am not sure how well-known is the fact that Marriott has 450 hotels in the luxury and lifestyle space. When you think about Marriott International you obviously think about Marriott hotels, but there are so many other brands—many of which don’t carry the Marriott designation—that are certainly part of the portfolio. Ritz-Carlton, Bulgari, JW Marriott, Renaissance, Autograph, AC, and Moxy are all part of our portfolio,” she affirmed.

She is vehement in her assertion that each brand of Marriott International is a different proposition and they live and breathe on their own. She adds that the strength of Marriott International “lies in the unmatched diversity of our portfolio as we offer the largest and most compelling range of properties in hospitality. This allows our guests to pick the hotel that best suits their travel needs. We see great strengths and synergies in guest loyalty and owner satisfaction,” pointed out Tina.

She believes that for a hotel to become a favourite these days it is essential for it to lead in digital space and cultivate the spirit of innovation, in general. As far as Marriott brands are concerned, she asserted that she would continue her focus on growth, while ensuring that the individual spirit of each brand remained intact. 

Looking at the Indian hospitality industry, one can opine that some of the brand proliferation may be driven by a desire for hotel chains for growth, to sign more operating agreements, rather than identifying unique customer segments. 

One is expected to be left gaping when one is given details about the number of brands under different giant hotel chains. Marriott International now manages 30 brands under its corporate umbrella. The Wyndham Hotel Group has 18 brands across 8,000 hotels. Choice Hotels International’s 6,500 hotels include 11 brands. Hyatt Hotels Corporation carries a portfolio of 13 brands, distributed among about 700 properties. AccorHotels, based in Paris, manages 17 brands worldwide. The list could go on.

Choice currently franchises more than 6,500 hotels, representing more than 500,000 rooms, in more than 35 countries and territories. Ranging from limited service to full service hotels in the economy, mid-scale and upscale segments, Choice-branded properties provide business and leisure travellers with a range of high-quality, high-value lodging options throughout the United States and internationally. 

 “Over the last few years, Choice International terminated contracts with 600 lower quality properties and invested 40 million USD to spruce up the rest, including updates like modern lobbies, flat-screen TVs and faster Wi-Fi. More than 50 additional Comfort Inns are planned or are under construction,” Patrick disclosed.

The proliferation of brands under one parent company can also be construed as a byproduct of hotel companies’ consolidation exercise. Tina is of the opinion that the more hotels and choices that a hospitality group offers the more competitive it becomes.

Understanding Multi-branding

But operating different brands in several countries poses problems towards maintaining identical standards of service level in all the hospitality properties coming under a given brand.  

Jean-Michel Cassé, however, is not fazed by this challenge. “AccorHotels’ approach ‘Born in France, Made in India’ is what strings all our brands together,” he affirmed.

“At AccorHotels, we ensure that our team members understand the brand culture, as that is exactly what translates into our guest experience at our hotels. In order to achieve a consistent work culture throughout the team, it is pivotal for every team member to understand the brand’s mission and vision, thus enabling us to adhere to them. It also allows us to work towards delivering seamless services to our guests,” proffered Jean-Michel Cassé.

 “Every AccorHotels brand has its unique set of offerings and facilities, tailored to the clientele it caters to,” Jean-Michel Cassé pointed out.

“For instance, the SOPs that a server would follow while waiting a table would be the same, but the product that he/ she serves would vary depending from brand to brand, in each country,” he explained.

The question often posed by the layman is: Why should one hotel group have so many brands? Doesn’t it lead to confusion? 

The answer to this is that brand can easily communicate the standards of quality and service you can expect. You know that Westin gives you an upscale experience, with comfortable beds and curved shower rods in the bath. You know that Marriott stands for consistency.

A customer becomes aware of a brand and chooses a hotel flying that flag because the brand tells them just what they are going to get – that consistent experience they are comfortable and familiar with and feel favourably towards.

There are some basic characteristics of a reputed brand. Henna states that today’s travellers want to be as productive as possible, so they can work while they travel. They are aware that their best work requires a comfortable environment conducive to productivity. They seek a hotel experience that blends work and relaxation. That is what IHG hotels offer, according to her!   

However, there is a flip side to this too. With too many brands, and brands that don’t clearly distinguish themselves, it is hard for guests to ‘get’ the brand’s idea. Chinmai Sharma, the Chief Revenue Officer of Taj Group, said, “It is becoming increasingly difficult for customers to differentiate between 10-15 brands of the same hotel chain. After going through an internal exercise, discussing the matter with our guests, loyalty members and our staff and associates, we realised that everyone basically wants a hotel with delicious food and beverage offerings, and with clean rooms which provide good sleeping experience. Brands don’t matter so much.”

 “Every hotel can have several brand standards towards its approach of work. A great hotel is a 24/7 proposition, requiring a constant and sustained customer focus. At Holiday Inn, we have morning meetings where all the managers of every department, along with the General Manager of the hotel, sit down and discuss the activities and priorities for the day; keeping in mind our main motto – Great Hotels, Guests Love,” said Henna.

“Hospitality is all about the way you showcase your brand to the client by means of service. Service methods can change from country to country, based on the environment or society, but the main goal is being the best possible hotel for guests, in a given category.  Facilities can change based on who your target segment is and what category does the hotel come under,” emphasised Henna.

In this digital age, which is also the era of globalisation, luxury and luxury good can easily move from one country to another. When it comes to luxury, service quality and satisfaction, positive customer experiences are vitally important, because a positive experience will cause the customer to wish to return or stay longer and/or to recommend the establishment to others.

Many experts are of the opinion that today guests in hospitality properties seek trustworthy brand experiences based on the optimisation of conflicting needs. For example, some people want brands to address the opposing desires of wanting to belong and wanting to be an individual; being known to many and preserving anonymity; craving something rare that is easily available.

The Present and the Future

So how fast have different brands of the hospitality groups been growing?

“Multi-brands of hotel chains in India have grown like wildfire. Nowadays, it seems every umbrella hotel chain brand wants to have different categories of hotels under it. In IHG, we recently acquired AVID, which is now an IHG hotel,” observed Henna. 

“The Indian tourism and hospitality industry has been burgeoning and in turn driving the growth of branded hotels in India. International hotel chains which account for the bulk of branded hotels in India, are on an expansion spree as their growth has stagnated in most global markets,” pointed out Jean-Michel Cassé.

“It is estimated that international hotel chains will account for 47 percent of the share in the Indian hospitality industry by the year 2020, and approximately up to 50 percent by 2022 as compared to 44 percent at present,” he asserted.  Here it deserves a mention that international hotel chains have been expanding much faster across the country than the Indian ones.          

“With this growing pace of brands across various segments of Indian hospitality industry, it is vital to ensure each brand creates its unique identity and the target audience can distinguish one brand from another,” opined Jean-Michel Cassé.

But overall, what would be the future of multi-brands in India is a question that has been intriguing several hospitality stalwarts.

Jean-Michel Cassé seems to be optimistic. He disclosed, “Research suggests about 25 percent of the Indian hospitality industry falls under the branded category as compared to developed economies, where it is about 40 percent.” This portends a huge potential of growth of multi-brands in the Indian hospitality industry. “Owing to higher disposable incomes, profound infiltration of technology, awareness and reach, the Indian hospitality industry has seen a significant shift of customers from the unbranded segment towards the branded segment,” he proffered.

Henna too speaks in a positive vein. “In future, multiple branding will be the norm in that segment of the Indian hotel industry, which operates in large scale. In IHG, we have the IHG Rewards Club which induces our guests to stay at our hotel brands only, thereby making them loyal customers.  Likewise, some brands have different categories of hotels under them, which helps customer stay loyal to the brand across their choice of category and class,” she analysed.

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