Multibranding—combining more than one hotel brand into a single hotel property—is an increasingly common hotel development strategy. These properties may include brands from varied franchisors or, more commonly, from the same brand family. Whatever the case, they offer some appealing benefits—and some new challenges.
As multibranded concepts continue to become more popular, owners, operators, developers and investors would be wise to familiarize themselves with the costs, considerations, potential synergies and possible challenges that come with this intriguing contemporary format.
Brand benefits
On the revenue side, multibranding allows a hotel to benefit from multiple demand-generating systems. Even brands within the same brand family tend to have their own loyal base, so you are expanding your ability to book business through two distinct reservation systems and two brand loyalty systems. Additional cost savings can be found in a reduction of construction costs and (to some degree) in operating costs.
From the consumer perspective, it’s important for dual- or even triple-branded hotels to stay true to the brand touchpoints and maintain a separate guest experience for each brand. Consumers still make decisions primarily based on the brand(s) they like.
A loyal Homewood Suites or Hampton Inn customer should receive the same hospitality experience at a multibrand property as with any standard single-branded hotel. For brand consistency, it is particularly important that unique or familiar food-and-beverage offerings remain unchanged—Hampton’s breakfast for example, or the Homewood manager’s reception.
There are, however, likely to be minor procedural differences in arrival sequence (guests will probably arrive at a common lobby space) and some shared amenities. There are also opportunities for efficiency and collaboration, especially behind the scenes, such as laundry service, and perhaps consolidating desk service during certain slow hours.
Potential challenges
One practical challenge to be considered is the potential for confusing layouts in some multibranded hotels. Consequently, signage and wayfinding are particularly important, and designs should be thoughtful and intuitive.
Another potential challenge is construction itself. Floor plate variation and technical issues (if plumbing risers don’t stack up, for example) can add to costs and complications. Selecting brands that are harmonious from a layout and design standpoint is critical. Choosing multiple branding companies that aren’t in the same brand family can also result in fewer opportunities to share expenses and amenities, which means that choosing analogous brand families will typically give you a lot more flexibility and synergistic potential.
Where to?
To derive maximum benefit from a multibranded project, you need to be in an area that can accommodate that much hotel supply. Urban centers are an ideal location for multibranded projects, both because of the market potential and because the high infrastructure costs can make it challenging to locate a single select-service brand in some of these urban environments.
For example, First Hospitality Group will manage a new dual-branded hotel in Chicago’s Illinois Medical District that will be within walking distance of the University of Illinois at Chicago, the John H. Stroger Jr. Hospital, Rush University Medical Center, and a variety of shops, restaurants and businesses. This hotel applied to be a Hampton Inn and Homewood Suites and is expected to thrive in this unique, mixed-use area of the city.
FHG’s upcoming triple-branded McCormick Place project in Chicago—a combined Hilton Garden Inn, Hampton Inn by Hilton and Home2 Suites by Hilton—is another example of strategic placement. The triple-branded hotel will be connected by a skybridge to the largest convention center in North America, an enormous demand generator. The three Hilton family brands were selected to appeal to a broad range of demographic groups that utilize the convention center.
More or less
Multibranded properties are viewed by some as a kind of compromise, or a way to scale back. However, the best and most successful examples of multibranding—taking a single building and bifurcating it into two brands—see it as a way to upsize and get the benefit of scale. When executed correctly, multibranding allows you to build a bigger box with a better amenity core, and to reach different consumer niches in new markets.
The aforementioned McCormick Place hotel in Chicago will share a large rooftop bar and three restaurants. No single-branded property would support 500 keys in that location, but multiple brands makes it possible to expand the infrastructure, provide much more meeting space than any of those individual hotel brands could support and ultimately scale up the experience. In projects like these, you aren’t chopping a building in half; you’re multiplying the impact of your space.
No reservations
As multibranded hotels become more popular, it will be interesting to see how franchisors view multibranded projects. It allows them to get vertical marketing and representation in markets that may otherwise have been difficult to penetrate. On the flip side, concerns remain that poorly conceived or executed multibranded projects could end up watering things down and simply leave you with two brands awkwardly coexisting in a single building.
And, while hoteliers are becoming a little more flexible, a brand is still likely to be much more willing to share services with another member of the same brand family rather than with a competitor. That said, all successful hoteliers are practical and profit-minded, and tend to look at every project individually. And with the growing popularity and success of promising and profitable multibranded projects, I expect this trend to continue to pick up steam in the months and years ahead.
Robert Habeeb is president and CEO of First Hospitality Group, Inc., a national, experienced, and established hospitality management and development company serving the investment and real estate industries. Since 1985, FHG has been an award-winning pioneer in the hospitality industry. FHG has successfully developed, marketed and managed more than 16 brands and 50 properties throughout the Midwest. Visit www.fhginc.com.
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