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ACCEPT

With the multiplication of brands, who can still follow them all? It becomes more and more difficult to manage all of these, some in very close distance, in the most profitable way.

So some owners and operators have invented the best solution insofar as managing assets is concerned: put two mutually supportive brands in one building and combine all back of house resources & operations together.

Some hotels have two separate buildings in one, sharing just the back of house. It does make a lot of sense: many responsibilities are similar between brands, in fact all support functions can indeed be shared.  The good thing is that, because of the economies of scale, these hotels can attract better talent than if each hotel was to hire these separately.

What is valid for back of house however isn’t always valid for front of house. Quality standards between brands can differ greatly: valet service or not, in-room minibar or not, automatic check-in or not, full service restaurant or not, breakfast and many other standards.

This can be confusing for the customer and staff alike. When entrances and guest areas are clearly differentiated, this can be avoided as far as hardware goes.  However, when staff start working in both brands simultaneously one can experience the first problems as staff members could be tempted to do more than what the customer is actually paying for and therefore diluting the brands in the eyes of the customer.  Upon their next visit, and should they not receive the same level of service as before, the customers may be disappointed.  We’ve seen these similar problems when GM’s from a simpler service brand got promoted, within the same company, to a more luxurious brand and they had difficulties to adapt or used the same cost structure approach.  Even more difficult was the opposite journey, where these GM’s delivered too much service for the brand that they now worked for.

There are some problems also in regards to the construction and mainly so when converting an existing monobrand property into a dual brand property. Heating, ventilation, noise insulation, lighting levels, square meters per room, width of corridors are just some of the brand specific construction parameters that have to be adhered to. All these can be different per brand and are very capital intensive to separate when going for dual brands in an existing property.  That is why most dual brand properties to date are new buildings.

There are clear advantages however, and we’ve addressed the cost side of things. From a revenue perspective you can yield a lot better and maximise the revenue per square meter for your location. Most of these hotels are city centre and most of these dual brand properties report less customers turned away on basis of rate.

From a land use perspective, dual branding is also about maximising the profits of the investment. Hence you’ll see many dual brand properties combining short stay and long stay solution, mainly in the US.  In Europe you see Accor using two brands like Novotel and Budget Ibis in same building. Other brands like Radisson Blu and Park Inn have done some, but beware of the confusion.

A major challenge for an owner is what happens in case of underperformance, if one of the two brands is underperforming. As most back of house operations will have been synergised, an owner cannot turn to another family of brands.  The owner of a building housing Novotel and Ibis cannot go to Marriott or Hilton and try his luck there.

 What should owners consider before deciding on a dual branded property model?

Pros:

  • Customer is more likely to stay as more choice/options present on same location
  • Cost saving opportunities exist for the operator
  • Operator can attract more qualified staff
  • Owner can maximise profit on any given land plot
  • Works best in new built properties

Cons

  • Customer may be confused by possible mix of standards
  • Employees may be confused if working for two brands with different standards, adding to customer’s confusion
  • High risk in case of underperformance; as choice of moving away from one brand is heavily restricted

Dual branding does offer real opportunities for owners/investors but one needs to consider all aspects and weigh them correctly, not in the least against brand confusion as this drives ultimate revenue for operator and owner alike.

 

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Pierre Verbeke Senior Consultant at Lausanne Hospitality Consulting

Pierre Verbeke is a Senior Consultant at LHC. He has an extensive career in hotel operations, pre-openings and re-brandings. He is first and foremost an operational person having managed several hotels in Belgium and having set up many pre-opening teams in different countries. He also has gained a wealth of experience opening hotels for a large Hotel Operator in various European, North African and Eastern European countries. He is particularly at ease with project management and knows how to deliver the highest quality of service within the agreed timeframe.

Pierre has experience with leased, managed and franchise properties and undserstands the various demands from owners, investors, and operators within the different projects. Pierre is an alumnus of Ecole Hôtelière de Lausanne. He speaks Dutch, German, French and English, with some notions of Spanish.