Dual-Branded Hotels on the Rise

5 min read

Dual-Branded Hotels on the Rise

It’s the era of the dual-branded hotel. Dual-branded hotels have cropped up all across the world, emerging as a norm in the hotel industry. As of January 2015, a study done for the 2015 ALIS conference showed that there were 79 operational dual-branded hotels with 54 additional being under construction in the U.S. alone. Additionally, the top three hotel brands (Marriott, IHG, and Hilton) project a 32 percent incrase in dual-branded hotels in coming years.

The L.A. Live Complex dual-branded hotel combines a JW Marriott with a Ritz-Carlton in the same building.

The L.A. Live Complex dual-branded hotel combines a JW Marriott with a Ritz-Carlton in the same building.

Essentially, a dual-brand hotel is a hotel asset that houses two distinct hotel brands in a single construction. Hotel developers and investors can create Holiday Inn/Holiday Inn Express, or Holiday Inn/Staybridge Suites concept. Also referred to as a “dual pack”, dual-branded hotels have been constructed and operated at an extremely high-efficiency for several years now.

Notable dual-brand hotels today include the 65-story Courtyard/Residence Inn in Central Park, NY — the tallest hotel in all of North America, and the L.A. Live Complex which combines an 879-room JW Marriott and a 123-room Ritz Carlton.

Two Brands are Better Than One

With dual-branded hotels, hoteliers and developers enjoy the ability to tap into two different customer bases instead of only one. By combining two hotel brands, hotel owners can fill up their hotel rooms by targeting different demographics, such as combining:

  • One hotel brand targeting Millennials, while the other brand targets Gen-X’ers
  • A corporate-centered brand with a more leisure-focused hotel brand
  • An extended-stay hotel (i.e. a Staybridge) with a full-service hotel (i.e. Holiday Inn)

From price points to demographics, there are endless possibilities.  Each brand in a dual-branded hotel offers different amenities to guests. The potential for growth is in this ability to reach a more diverse group of travelers. 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 for guests of both hotels.

Leaner Costs

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. Dual-branded hotels consolidate many back-of-house expenses and costs such as laundry and staffing. 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.  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

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. From an operational standpoint, not only are the construction costs decreased, but costs for staff and sales and marketing departments are decreased 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 is continuing to expand in popularity. At the moment, hotel owners and existing properties are starting to experiment with the idea of carrying three or even four flags from different hotel brands in one single location. Marriott International has already built a “three-pack” hotel in Nashville which combines an AC Hotels, a Residence Inn, and a SpringHill Suites.

There are also hotel developments that 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.

Marriott’s triple-brand hotel takes a further step from the dual-brand innovation to add a third hotel under one roof.

Marriott’s triple-brand hotel takes a further step from the dual-brand innovation to add a third hotel 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 outperform its single flagged counterparts.

Sources:

Becker, Jill. “Rise of the two-in-one hotel.” Jun 10, 2014.

“Construction Begins on Marriot’s First-Ever Triple-Brand Hotel, Located in Nashville’s Popular SoBro Neighborhood.” Marriott International. Jul 14, 2016.

Lesser et al. “The Evolution of Dual-Branded Hotels: How the Marriott/Starwood Acquisition Enhances Opportunities for Developers.” Winter 2016. Vol 4, Issue 1.

 

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