what do this hotel this hotel and this hotel have in common they're all owned by the same giant company in this case Marriott what about this one and this one and this one and this one and this one and this one yeah that's right they're all owned by Marriott but I'm not just picking on Marriott here Hilton has 19 Brands Hyatt has 29 Choice has 22 and ihd hotels have 19 and Windam has 24 altogether that's 146 Brands under just six Hospitality behemoths so what's the benefit of having so so many Hotel Brands enough to bewilder anyone trying to tell the difference between them I'm speaking from experience here you know you could blindfold you and put you in both and the likelihood that you'll tell me which one you're at may not be very high this is Townplace sweets and this is the residents in both are owned by Marriott both are geared as options for Extended Stays both are midscale both offer three kinds of accommodations both are equipped with full kitchens both allow pets both have fitness centers both have pools now the resident in has has a hotel bar which is pretty important to the wey traveler but honestly they don't look that different choosing between them is pretty marginal so why even have them both if the devil's in the details or the residents in so I think maybe like the midscale to the lower if you pick up like two Brands you know you take the brand name away and the experience may start to look like pretty similar there were no hotel chains before the 20th century up till then you basically had three options one luxurious City hotels like the Walder ftor or two ins where the Inn was a private residence and the inkeeper was living there or three taverns which also provided food and drink all of these options operated independently middle class oriented options started popping up in the early 1900s but it wasn't until the 1950s when Americans were traveling more it got really popular thanks to the Highway Act of 1956 The increased travel also caused demand for lodging that's how we got the holiday in as an emergent franchise thanks to one bad family Road trip the dream began when family of five and conveniently a millionaire Kevin Wilson struggled to find Dependable lodging on a summer vacation from New York City to DC hotels were the luck of the draw expensive and to top it off in his words in those days you wouldn't dream of renting a room without inspecting at first well we can thank Mr Wilson for being so annoyed that with the beginning of the holiday in chain he effectively eliminated the then prevailing image of a motel a group of shabby cabins huddled at a roadside and other Hotel like Marriott followed and began franchising in the 1960s and70s with second generation hotelier when Hotel companies started they were more sort of operations and and management oriented where they would actually be involved not only in financing the hotels but also in actually operating them over time though as Hotel ecosystem sort of got more sophisticated a lot of this the hot companies effectively started to Outsource it not only did they sort of give up the ownership of the asset of the hotel building but also sort of in a sense Outsourcing some of the operations of the asset to third party companies franchise and management contracts make up a huge chunk of Marriott's ownership structure but these just fall into the business model that dominates Marriott and most Hotel companies today I'm talking about the asset like business model or albm the asset likee business model prioritizes operations over heavy investments in physical assets take Uber and Airbnb for example they thrive on this model neither Uber nor Airbnb own any of the big assets Uber doesn't own any cars and Airbnb doesn't own any houses or Shrek caves which I imagine has a ludicrous cost as an operating Hub unburdened by heavy physical assets these companies are free to grow and expand rapidly and focus on customer experience and hotels have followed souit with their increasingly divested real estate properties and instead fav in managing and franchising hotels the model strategy is to minimize its investment in tangible assets like property buildings Etc rather the focus is on leveraging external resources Partnerships and Outsourcing and and if you think about why Hotel companies do this it's not only to drisk your business but also to enable faster growth so if I am trying to Source money for example for every hotel that I'm going to be putting up in the word and Marriott has 8,500 of those you can imagine the amount of liabilities I'm taking on on my balance sheet but also I have to go through the process of financing that debt but if I can find 8,500 investors and developers who already have the money to build that hotel as Marriott or as you know another hotel company like Hilton or or Hyatt I'm not spending that time effectively to come up with the money for a property as well so it it it also makes growth much faster because you know if I can find you with a bunch of money and you agree to build a hotel with one of my brands on it you know we can sign an agreement in the matter of a few days and effectively that's one more Hotel I've added to the pipeline so we can see why having a lot of nice light assets like Brands instead of numerous heavy Hotel buildings is a great move for hotels but why not just name them all Marriotts I mean McDonald's has McDonald's is everywhere but they're named McDonald's but not all Marriotts are named Marriotts from a marketing standpoint creating unique experiences in hotels has become a generational priority so lots of these softer Brands can be marketed as Niche ironic take the Moxy described as an experiential Hotel it's a playful affordable and stylish hotel brand designed to give guest everything they want and nothing they don't I too look for a hotel to give me nothing I don't want but beyond all that the Loyalty program is the Crux of it all it ties all the brands together it's it's the connective tissue that these hospitality companies are pushing for that's why all of these apparently desparate Brands work for hotels they're trying to direct the focus to the Loyalty program and if you look at how all the big hotel companies at least they market right and they advertise they don't advertise individual Brands they advertise the loyalty programs so you know maritt will do Bor boy Hilton will do their loyalty program H it they really focus the consumer attention on the program because that's what they want them to be a part of but the loyal programs benefit even more on the back end of things these loyalty programs extend from Beyond hotels to Airlines and credit cards and that's where a lot of money is made hotels like Marriott and Hilton can pre-sell Millions even billions of loyalty programs to credit card partners and create co-branded cards you know that's when the loyalty programs become increasingly valuable those are ANC revenue streams that that add up to billions of dollars on the other side of things if you happen to notice a Marriott is in fact a Marriott and given that you're a mar fan they can benefit by your brand loyalty and the lore of their loyalty programs now if you don't know what's what and or you are a regular Benedict Arnold of brand disloyalty you have the illusion of choices geographical dominance is great for the umbrella company here in a given area all types of Hotel tiers are available allowing the opportunity for customers on any level to book with them so usually hotels are categorized by the amenities they provide for instance the standards of a luxury hotel brand can include things like a spa or a daily turndown service a select service Hotel normally does not have restaurants or room service on properties premium will fall somewhere in the middle we're up to our eyeballs and Brands and since the 2016 Marriott Starwood merger Marriott has picked up two more Brands and as confusing and redundant as having all these Brands seem it doesn't really matter to them the CEO at the time of that 2016 merger Arin Swenson described the distinction between Brands as swim Lanes all of the brands will keep their relative positioning and the Loyalty program serves as an umbrella for all of them hotels have come a long way from their individualized real estate owning days as long as hotels are benefiting from these extensive brand portfolios whether or not they are distinct you as a consumer can benefit too but only by being loyal let's hope the brand we have to stick with forever has good bathrobes