In 2016, Marriott Hotels, which had 19 hotel brands, merged with Starwood, which had 11. They didn’t abolish any brands in the merger, and so the company faced a challenge: How to explain to customers, or even to its own employees, what makes all 30 of these brands different from each other.
Don’t understand Marriott’s brands? Just check out the chart. They’re all either luxury, premium, or “select,” and they’re either classic (normal) or distinctive (quirky). Your regular Marriott is a “classic premium” hotel, while a hip W Hotel is “distinctive luxury,” and a value-priced Fairfield Inn is “classic select.”
“It made no sense,” says Gary Leff, who writes the View From the Wing blog on the travel industry, of this chart.
But the wealth of brands, and Marriott’s use of these terms to categorize them, persists, even if the matrix presentation does not. CEO Arne Sorenson has taken to calling the spaces occupied by similarly positioned Marriott brands “swim lanes”; as in a crowded pool, you may have to share one.
“If you ask most average consumers, they will not be able to list the brands that belong to the different companies or necessarily tell you what the differences are,” says Makarand Mody, an assistant professor of hospitality marketing at the Boston University School of Hospitality Administration. “It’s becoming harder for these companies to develop brands that are clearly distinct from each other.”
But is it really a problem to have so many brands? Marriott is, after all, the world’s leading hotel company. Two years after the merger, Marriott has shown it’s possible to live and thrive with 30 brands, even if your customers don’t really understand them all.
This is because the hotel business is quite different from airlines or automobiles or other brand-centric industries. Hotel brands do matter. But they matter more to hotel owners than to hotel customers. And if customers form strong enough loyalty to an umbrella hotel brand like Marriott, they may never need to develop a clear grasp of the underlying brands; they can rely on the company to help them navigate.
Marriott, like the other big hotel companies, owns very few of its own hotels these days. The hotel owners enter into multiyear contracts with companies like Marriott allowing them to use a specific brand.
“If we had not merged with Starwood, would we be trying to build 30 brands from scratch?” Sorenson asked, rhetorically, on Marriott’s November 6, 2016, earnings call, the first after the Starwood merger closed. “I think the answer is probably not. At the same time, having done this deal, the 30 brands all exist. They all have substantial capital that has been invested in them, particularly by the hotel owners who have made deliberate bets about which flag they put on their hotels. And we don’t have the power to, nor the desire to, try and convince them that those bets have not been good bets.”
That’s the first thing about Marriott’s brand challenge: It can’t easily get rid of any of its brands even if it wants to. The hotel owners won’t let them.
Consider Sheraton, the first Marriott brand I’d probably put on the chopping block if I were king. In that odd matrix diagram, Sheraton is listed as a “classic premium” brand. It has a strong reputation in some foreign markets, but in the U.S. it faces a perception of uneven quality — perhaps an outdated perception, as Starwood and Marriott have long worked to upgrade or disaffiliate the dingier Sheraton properties.
But besides the quality hiccups, Sheraton is not strongly distinguished from the flagship Marriott brand, which is also “classic premium.” So, is Sheraton necessary? Conceivably, Marriott could be better off with just one brand in this “swim lane,” in the same way that all of Hilton hotels that are like a Marriott or a Sheraton are just called “Hilton.”
(Back in 2016, Hilton CEO Christopher Nassetta poked some light fun at Marriott for its excess of brands by echoing Sorenson’s “swim lane” terminology. “We are very focused on having pure-bred brands that are leaders in their individual segments, that have clearly defined swim lanes, that have premium market share and, as a consequence, help us drive industry leading organic net unit growth,” he said on an earnings call. “That’s our strategy. Others have taken different paths.”)
It’s not strictly true that you can’t have two same-flagged hotels so close together, but property owners understandably prefer to avoid the situation.
Plus, reflagging a hotel is a much costlier proposition than repainting an airplane. To bring properties to a uniform brand standard, you might have to replace carpet and mattresses, even if these hadn’t reached the end of their useful life — not to mention the cost for new signage and stationery and printed napkins and pens. And properties that change their flag have to reintroduce themselves to customers under a new name. All of which is to say, Sorenson is right that hotel owners would stand in the way of a brand consolidation.
Plus, the downside of having to present a large and confusing stable of brands to consumers is much smaller for a hotel company than it is for, say, an auto company.
One of the main costs of operating several nameplates within one car company is that each must be marketed separately. The more brands GM has, the more television ads it has to run. But major hotel companies these days do very little marketing of their individual brands, focusing instead on building customer loyalty to the umbrella brand.
“I think the principal model today is we go to market through our loyalty platform, through our dot-com site, through our app,” Sorenson said on that November 2016 earnings call. “And those things allow us to essentially market a portfolio, and offer through that portfolio an incredible range of choice to our customers, which drives, actually, conversion from looking to booking that much higher and makes the economics of each brand better, not weaker.”
That is, Marriott doesn’t have to spend a lot of money to educate the public about, say, Moxy Hotels. Marriott can just spend money to convince people to book at Marriott.com, where it can show off all its brands at once, including Moxy.
That cost-benefit analysis explains why a merged hotel company like Marriott wouldn’t hurry to shed weak brands in favor of stronger ones in the same “swim lane.” But the companies keep coming up with new brands, like Moxy Hotels, which you may have never heard of. Why is this relatively new brand necessary?
Moxy is “a playground that attracts Fun Hunter travelers and is designed to give guests everything they want and nothing they don’t at an affordable price,” according to Marriott. Moxy hotels have small rooms, but they’re balanced out by lively common spaces that encourage interaction.
Like Moxy, many of the newer brands exist somewhere in the “select service” space, offering fewer bells and whistles than a Marriott or a Hilton but more than a Fairfield Inn or a Hampton Inn. Maybe you don’t mind if your room is small, but you care a lot about the bed being comfortable. Perhaps you don’t need a bellman or a pool, but you definitely want a bar. Hotel companies are developing these new brand concepts with your preferences in mind.
Makarand Mody says these new concepts are appealing to owners because they provide an excellent value proposition: They can be built and operated much more cheaply than traditional full-service hotels, because rooms are smaller and staffing levels are lower, but customers are often willing to pay nearly as much as they would for a full-service hotel room, especially in supply-constrained markets like Boston.
Even Hilton, the company that’s proud of its restrained and clearly delineated portfolio of brands, announced in October that it will launch a 15th brand: Motto by Hilton, “a micro-hotel with an urban vibe in prime global locations.” The prototypical Motto hotel will have guest rooms of just 163 square feet, but those small rooms will be offset by lively public spaces meant to promote interaction. You can think of it as “Moxy, by Hilton.”
Other brands exist to make it possible for the large hotel companies to integrate independent hotels that meet quality standards but don’t fit in a specific brand box. These are called “soft brands,” and Marriott has three of them: the Luxury Collection, which is luxurious; the Autograph Collection, which is at “the upper end of upper upscale”; and the Tribute Portfolio, which runs from “upscale into upper upscale.”
Those latter two designations come from Brian Povinelli, who is Marriott’s senior vice-president and global brand leader for its “premium distinctive” full-service hotel brands, including the Autograph and Tribute groups, plus Westin, Renaissance, and Le Meridien. Part of Povinelli’s job is to help consumers, including me, understand what makes Marriott’s distinctive brands so distinctive, and to ensure the properties within the brands are living up to those distinctive expectations.
I will confess that I’m not sure I see a clear distinction among Marriott’s three soft brands; before the merger, Starwood had two (just Luxury and Tribute) and Autograph seemed to be Marriott’s competitor to both of them; now all three brands live under one roof. But since a soft brand is soft, developing a clear identity is less important than with the “hard” brands. These are just nice, independent-looking hotels where you can earn Marriott points, and they’re an easy way for Marriott to grow its network.
As for the hard brands, Westin has a clear strategy for distinctiveness: wellness. The “Heavenly Bed,” workout gear available to borrow, soothing pale-green tones: A Westin is supposed to leave you feeling rested and healthy.
Where I have the greatest bone to pick with Marriott’s alleged distinctiveness is Renaissance.
“It’s focused on that element of discovery and bringing the local neighborhood to life,” says Povinelli. This seems to be the official Marriott line: a Renaissance Hotel is “Business Unusual”; a full-service hotel, but more plugged-in and local. There’s even a “Navigator,” who can tell you where is cool to go in the area. (You may have heard of this service elsewhere, referred to as “concierge.”)
And if the unique brand proposition to the consumer isn’t obvious, it’s time to look for the proposition to the owner and the operator.
“It’s a conversion brand,” says Leff, the travel-industry blogger. “They can reflag some other hotel and call it a Renaissance pretty easily.”
Indeed, rather than calling it a hard brand, Renaissance might be best described as a “firm brand” that uses the frame of localism to allow for fairly wide stylistic variations across properties. A reasonably nice, full-service hotel can enter the Marriott network as a Renaissance without having to rip out and replace perfectly good fixtures like it might need to do in order to align with the brand standards for Marriott or Sheraton or Westin.
When you start slicing the distinctions among hotels this thinly, you start to see why it might make sense for a company like Marriott to have 30 different brands. Or at least why it would be in no hurry to get rid of any of them. So what if it’s not clear exactly what a Renaissance Hotel is? It’s a full-service hotel that’s not exactly a Marriott or a Westin, and you can get your points there. If you’re an elite member, they’ll give you the late checkout you’re entitled to.
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