Lecture Notes on Hotel Industry Branding and Business Models

Key Points

• Common Ownership of Hotels
  • Major hotel brands owned by the same parent company (e.g., Marriott).
  • Other hotel chains include Hilton (19 brands), Hyatt (29), Choice (22), IHG (19), and Wyndham (24).
  • Total of 146 brands under six major hospitality companies.

Purpose of Multiple Brands

• Brand Differentiation

  • Confusion among consumers due to similarities between brands.
  • Example: Townplace Suites vs. Residence Inn (both Marriott) - similar amenities and target market.

• Historical Context

  • Before the 20th century:
    • Options: Luxurious city hotels, inns, taverns.
  • Rise of middle-class hotels in the early 1900s.
  • Post-1950s: Increased travel due to the Highway Act of 1956 sparked demand for dependable lodging.
  • Emergence of Holiday Inn due to a bad experience by a family.

Evolution of Hotel Business Models

• Asset-Light Business Model

  • Hotels focus on operations rather than owning physical assets.
  • Companies like Uber and Airbnb exemplify this model.
  • Enables rapid growth and focus on customer experience.
  • Hotels largely operate through franchising and management contracts.

• Growth Strategy

  • Less financial burden by minimizing liquidity tied up in assets.
  • Rapid expansion by partnering with investors and developers.

Marketing and Loyalty Programs

• Branding vs. Loyalty
  • Unique hotel experiences marketed to attract consumers.
  • Loyalty programs tie various brands together; marketed collectively rather than individually.
  • Loyalty programs extend beyond hotels to airlines and credit cards, providing significant revenue streams.

Consumer Benefits and Choices

• Geographical Dominance

  • Availability of various hotel tiers allows consumers to find suitable options.
  • Categories based on amenities (luxury, select service, etc.).

• Post-Merger Landscape

  • The 2016 Marriott-Starwood merger added brands but maintained brand distinctions (CEO described them as "swim lanes").
  • Consumer benefits from a wide range of options as long as they remain loyal to a brand.

Conclusion

• Hotels have evolved significantly, and the plethora of brands offers choices for consumers.
• Loyalty to a brand can enhance the consumer experience, leading to better offerings and amenities.