The US hotel industry has reached a crossroads. After seven years of continual growth following its worst year since the great depression, US hotel industry performance should expect to plateau in 2017. It’s tough love time for an industry that continues to consolidate, but remains too timid to prune brand portfolios that confuse customers and commoditize lodging product through undifferentiated brand bloat. Plus, competing against rapidly growing, favorably perceived global organizations like Airbnb that structurally trade in unique, highly personalized experiences, does not result from inaction.
Which Marriott and/or Starwood hotel brands deserve to survive or die? Marriott International is acquiring Starwood Hotel & Resorts Worldwide for $12.2 billion, creating the world’s largest hotel group, representing over 30 individual hotel brands with over 1.1 million rooms. The objective for global hotel groups hotel is to maximize room density in high demand destinations, but some of the brands will be cast aside into the hotel brand deadpool. Keep, Merge, Kill or Sell are the strategic options facing Marriott’s senior executive team.
What should have been a simple task of matching descriptions to the appropriate hotel brand, was instead an impossible challenge. The world’s largest hotel groups, in an effort to rapidly grow have taken shortcuts with fundamental branding. By introducing new, poorly differentiated, lifestyle lodging brands the problem has reached epidemic proportions. In most cases, the major hotel brands do not successfully differentiate themselves based on product, scale or personality traits. As intermediaries continue to grow distribution market share, this could become a problem.
The world’s largest hotel chains have recently embarked on an unprecedented period of introducing new lodging brands. Hotel brands differentiate themselves through a combination of physical attributes, service delivery processes and marketing communications that create a unique character in the minds of travelers. Unfortunately, the language used to describe the hotel brands on the hotel websites does a poor job of creating a unique or highly defensible consumer value proposition. This quiz challenges readers to match a genericized description with the correct hotel brand.
Led by Starwood, with Wyndham and Carlson picking up the rear, the online poll asking participants to match each of 100 hotel brands to the appropriate top 10 global hotel group proved to be challenging, with the average score a woeful C-. With hotel groups adding brands at a record pace, this does not bode well for the future.
The hotel industry is running at record occupancies and rates. However, all the major hotel groups appear to be most interested in creating new hotel brands while business is strong. To see how well this approach is working, here is a brief test – Match the hotel brand with its parent hotel group. Be warned; there are 100 hotel brands for the top 10 hotel groups alone…
Consumers wanting to save money booking hotels need to learn how to play the game. The best way to save money on hotel bookings is to use a simple process that includes searching Hotwire and Priceline before aggressively rebidding on Priceline exploiting a major rebidding loophole. It seems the hotel industry itself is an active participant in the game and somewhat unintentionally provides the reward and positive reinforcement that incent consumers to abandon hotel brands and seek the best deals in a commoditized purchase process.
Video of the hotel industry leadership panel from the 2011 HITEC conference discussing the RockCheetah/Amadeus IT Group white paper, “Transform Your Growth Strategy Now – Remove barriers between hotel technology,marketing and operations.” The discussion with Flo Lugli from Wyndham, Mike Blake from Hyatt and Caryl Helsel from Aramark explores the role an IT Pathfinder can play in facilitating hospitality industry business transformation.
The hotel industry requires an IT Pathfinder to help align hotel business and technology priorities over the next three years so the industry can successfully leverage information technology to drive business growth and profitability. A RockCheetah/Amadeus IT Group white paper, “Transform Your Growth Strategy Now – Remove barriers between hotel technology,marketing and operations” explores the role an IT Pathfinder can play in facilitating hospitality industry business transformation.