Big hotel companies are developing new brands at a fast pace, a strategy that is not sitting well with some property owners.
Since 2013, five of the biggest publicly traded hotel operators in the world have launched 16 new brands, including five over the past year and a half, according to the Wall Street Journal. It reflects a push by the big companies to develop new products to market to hotel owners and collect fees from.
But these new brands can also lead to conflicts with hotel owners. Many of the big chains do not own properties themselves, and the new brands can end up taking business away from existing brands and starting fights over loyalty points and territory.
The activist investor Land & Buildings Investment Management recently criticized Marriott for having too many brands and urged the firm to just focus on those that are growing the fastest. But Marriott has defended the number of brands it has, and the trend of hotel companies coming up with new brands is unlikely to end anytime soon.
“I’ve been involved with the hotel industry coming on four decades and I can’t keep up with all the new brands being introduced,” SunTrust Robinson Humphrey analyst C. Patrick Scholes told the Journal. “I can only imagine what the average traveler thinks.” [WSJ] – Eddie Small