For Hotels A Glut Of Brands

Glut of Brands Defies Differentiation - By John Hendrie

Boy have we created a miasma out there in terms of accommodation/lodging choice for that beleaguered Guest. All they want is some place to relax, feel safe, be served and attended to. What have we given them – a 'brandscape' filled with too many players.

LRA Worldwide Boy have we created a miasma out there in terms of accommodation/lodging choice for that beleaguered Guest. All they want is some place to relax, feel safe, be served and attended to. What have we given them – a ”brandscape” filled with too many players. As the Boston Globe on April 14, 2015 pointed out in an article, “For Hotels a Glut of Brands”, “The world’s 10 largest hotel chains now offer a combined 113 brands at various prices, 31 of which did not exist a decade ago”. This is stunning and unnerving!

And, that poor, prospective guest has to slog through all those choices and make one. It used to be so easy – a Holiday Inn in Bismark, ND was very similar to a Holiday Inn in Daytona Beach, FL. Guest used to rely upon a brand for a specific experience with minimum surprises. Now, with so many iterations on a brand name, the guest is left confused, and, at some point will become angry and take their business to another brand (where the cycle of dismay can begin anew).

Yet, major hotels are facing other challenges. The rise of AirBnB poses quite a shift in what people seek and require from an experience. Boutique hotels also offer that uniqueness. Big hotels have a hard time fitting into that mold, although they may try.

“Build and they will come” still has a nice ring to it, and developers are busy erecting. As the Globe article points out, “Thanks to high occupancy levels and cheap interest rates, developers are scrambling to build”. But, will we reach a saturation point in the marketplace (just like the gaming industry), will we be supplanted by the boutiques, will we lose business due to brand confusion, will the quest for the most memorable experience crush all entities? Newer on the landscape are the Lifestyle Boutique properties. They are eating the lunch of the bigger properties, as the millennial generation starts to test their wings and open their wallets. So, these larger hotels have a generation really not disposed to what they can offer. They want some buzz, some technology, some “hanging out”, something hip!

The industry is like a game of Monopoly, each of us trying to land as many houses and hotels on as many areas as possible. We might wreck the competition with our rents, but then we plow that money right back into further developing our properties. What can happen when it is our time to move the game piece? The article closes with a brief summary, which is a positive for most: “It’s a good time to own a hotel. US hotels sell 65 percent of room nights, up from 55 percent five years ago, according to STR Inc. Guests also pay more: $115.72 on average a night, up from $97.31. That’s why there are 128,874 hotel rooms under construction, up 32 percent from last year.” Hardly a “doubting Thomas”, I would beware this go around with my investments.



LRA LogoJohn Hendrie is the author of the LRA blog, focusing on anything and everything about customer experience. LRA Worldwide is the leading global provider of Customer Experience Measurement services for multinational companies with complex customer interactions. For over 30 years, LRA’s innovative brand standards audits, quality assurance inspections, mystery shopping programs, research, and consulting services have helped ensure our clients deliver consistent, memorable, and differentiated experiences to their customers. Many of the world's preeminent global hospitality brands, as well as companies in the gaming, dining, healthcare, sports and entertainment, real estate, retail and travel industries choose LRA to help them measure and improve the customer experience. For more information, visit www.LRAWorldwide.com.



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