Why Dual-Branded Hotel Developments are becoming Increasingly Popular

 

Dual-branded hotels are establishing themselves as a norm in the hotel industry. Several hotels of this kind have cropped up all across the world. As of January 2015, a study done for the 2015 ALIS conference showed that in the U.S. alone, there were 79 operational dual-branded hotels with 54 additional being under construction. According to this research, a projected 32 percent increase in dual-branded hotels, across the top three hotel brands: Marriott, IHG and Hilton.

A dual-brand hotel is a property that contains two different hotel brands, at a single location. For example, if a developer or investor was responsible for organizing a dual-branded project, they would be able to use Holiday Inn and Holiday Inn Express, or a Holiday Inn and Staybridge Suites concept. Often referred to as a “dual pack”, such hotels have been constructed and have operated at an extremely high efficiency rate for several years now. A couple of the more popular dual-brand hotels include the 65 storied Courtyard-Residence Inn in Central Park, NY—which is the tallest hotel in all of North America and the L.A. Live Complex which includes an 879-room JW Marriott and a 123-room Ritz Carlton.

What are some advantages of the Dual-Branded Hotel concept?

There are plenty of advantages associated with dual-branded hotels. First of all, hoteliers and developers enjoy the ability to tap into two different customer bases instead of only one. Here, hotel owners can fill up their hotel rooms by targeting different demographics, stay occasions and price points — stemming from the business traveler, to the extended stay visitor and family travelers. Each hotel brand focuses on a particular set of guests, whether that be millennials, gen-X’ers, or boomers. Additionally, each brand in a dual-branded hotel, offers different amenities but aims to consolidate many back-of-house expenses and costs, ie.) laundry, staffing, etc. Hoteliers are able to take advantage of the possibility of travelers and prospective guests experiencing new brands and what they offer, and ultimately becoming loyal-long term clients.

The potential for growth is in the ability to reach a more diverse group of travelers, such as those in need of extended-stay amenities versus others in search of a full-service hotel. Guests of a dual-branded hotel now have the ability to choose which amenities they want depending on the brands at play. For example, consolidating things like a swimming pool, fitness center, and meeting rooms allows the developer to build a nicer version of it. You essentially have two development budgets sufficing one amenity that guest of both properties can use.

Not only does a dual-brand hotel cater to a wider customer base, it also allows developers and hoteliers to save on costs as well. Generally, when you think of two hotel brands, you think of double the costs, but the reality is that there are some significant construction cost savings. You have some unique economies of scale at play. One of the great advantages of dual-branded hotels is that they are “designed to maximize resources while minimizing costs for owners and developers,” according to Ian Carter, the president of global development for Hilton Worldwide. Operational costs will be low considering that certain areas of the hotel, such as the laundry room and employee facilities, will be combined. Also, land costs will generally be lower because the footprint and site plan will consist of only one building. Additionally, from an operational standpoint, not only are construction costs decreased, but costs for staff and sales and marketing departments as well.

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Already in Motion

Although the dual-branded hotel seems to be a pretty normal trend in today’s booming hotel development industry, there are signs that this hotel concept has marked its spot and continuing to expand in popularity. At the moment, hotel owners and existing properties are starting to flirt with the idea of carrying three or even four flags from different hotel brands in one single location. Hilton Worldwide has already built a “three-pack” hotel in Canada which combines a Hilton, Hampton Inn and Homewood suites. Also, there are some properties out there that are starting to combine different brands from different hotel families while still maintaining each brand’s unique identity, such as White Lodging’s, Chicago River North project, which includes a Hyatt, Starwood and Marriott flag under one roof.

Your Hotel Investments:

Lastly, there are companies and tech platforms, like EquityRoots.com, that have decided to jump on board with the dual-brand hotel concept and explore the possibilities it has to offer. Currently, the crowdfunding company is scheduled to break-ground on a dual-brand hotel project in Schaumburg, Illinois. Specifically choosing two IHG products (Holiday Inn and Holiday Inn Express) to create a dual-brand hotel that captures 100% of IHG’s transient travel segment. Experienced developers, and crowdfunding platforms such as EquityRoots.com, have taken advantage of the dual-brand concept in order to maximize investor returns and investment profitability. Given the competitive advantages over single flagged properties, EquityRoots.com strongly believes that a dual brand hotel investment will out perform its single flagged counterparts.

Sources:
http://www.cnn.com/2014/06/09/travel/hotel-two-pack/
http://www.bu.edu/bhr/files/2016/02/Dual-Brand-Hotels_Winter16.pdf

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