As the hotel industry learns to streamline costs and position itself to be more competitive against entities like Airbnb, many of the world’s leading hotel owners have taken toÊcombining multiple concepts under one roof in a trend known as dual-brand hotels.Ê
ÒWhen was the last time you saw a new 800-roomÊMarriott? That day is over,Ó said Tom Engel, head of Boston-based hotel advisory and asset management firm T.R. Engel Group. ÒThey’re white elephants.Ó
While vastÊsingular hotels serve their purpose in the market, especially as it pertains to large events and conventions, dual-brand properties are the future of the industry, said Mr Engel.
The concept became increasingly popular as developers aimed to ownÊall corners of a market by pairing hotels from different cost segments under the same roof. The benefit of this effort was twofold: it brought the best of both brands to more guests, andÊconsolidated back-of-house operations like housekeeping.
ÒI think the idea of large and replicated is gone,Ó said Gary Isenberg, President of asset and property management services at New York’sÊLW Hospitality Advisors. ÒPeople want individuality and local flare through smaller hotels.Ó
The power of two
It all comes down to competition, Mr Isenberg said, and a dual-brand property is a great way to compete against other brands. The power of two different hotel flags operating under the same roof (albeit from a smaller footprint) can discourage developers from building new supply near theÊdual-branded concepts. It also gives hotel developers a tighter control of room inventory by having smaller room counts.
Another plus is lack of available space for such large concepts in today’s markets. Whereas a market may not be able to support a single 300-room hotel, it could accommodateÊtwo smaller brands, each with 150 rooms operating akin to a boutique hotel.
