A study to verify if this strategy is potent to cause a positive and breakthrough impact in the current scenario of hospitality sector. -Utsav Negi (59)
Need and Significance of the Study:
The aim of this study is to understand the concept of Dual Branding as a strategy, which can be beneficial and fruitful by its application in the hospitality sector. As we know, the hospitality sector is an ever-growing business in the current era. However, due to easy access and continuous exhaustion of this sector, it is reaching to a saturation stage. Many parent hotel chains are continuously striving to form strategies that would present their service as different and worth-every-penny. This study will go through the impact dual-branding creates in this particular sector. Also, this is a new approach being taken up by a quite a few big names in the hotel industries like Accor, Marriot and Lemon Tree. This approach is at a stage where it can be classified as Experimental, and therefore has positive as well as negative outcome after its execution. This study will look at all the phases of dual branding in the hospitality sector and understand the concept which is at a neo-stage. Therefore, the aim of this study is to not only understand the concept of dual branding, but to also find out whether this strategy would really make an impact in the hospitality sector,
which still functions on a conservationist approach and a single
brand.
Brief Literature Review with citation:
1. A new trend in the hospitality sector, dual-branding, is drawing strong industry interest, with developers and operators trying to double up offerings at a single property. Developers like the concept because it allows them to tie up the market. Brands such as Marriott have been known to locate different properties within sight of each other, making two separate owners compete for guests. By going dualbrand, the developer can go after both the select-service and extended-stay hotel customers with one property, with less chance of local competition. Dual-branding is popular today because of a lack of available, affordable land and the increased costs for construction, says Tye Turman, senior vice president of lodging development for Marriotts Western region. However, the strategy is more challenging in the beginning and his firm has learned from mistakes along the way. The challenge is that individual brands work hard to provide different experiences, and two hotels in one can confuse guests. Bottom line, owners like dual-branding because it brings in more guests; operators like it for efficiency and brands are amenable to the strategy, but wary. Investors, however, are united in their desire for the sites, says Erich Baum, a senior vice president with HVS, a hotel valuation and consulting firm in Boston. Baum has consulted on a few dual-brand
deals and investors believe the vehicle delivers tremendous
economic benefits from its diversification, he notes. Buyers and investors love these properties because of their better chance at cash flow, Baum says. If your point of view is your return on investment, theres nothing not to like about it. (National Real Estate Investor) 2. Several hotel chains in India are exploring dual-branding, where two different hotel brands are available at the same property, in a move aimed at maximizing the returns from increasingly expensive plots of land in urban markets. "The concept helps to reduce risk by reaching out to a broad range of potential guests," explained Patu Keswani, chairman of Lemon Tree Hotels. "Moreover, it helps in saving common costs like security, finance, administrative costs, human resources and brings in staff synergies," he told the Economic Times. Accor Hotels recently opened a dual-branded PullmanNovotel property in Delhi's Aerocity and is planning another dual-branded property in Chennai. Jean-Michel Casse, SVP operations/India, concurred on the risk reduction strategy. "Putting large inventory of the same category in one big land parcel is a big challenge," he said. "So, once you map the market and look at the potential customers and business feasibility, you need to split the risk in two different brands and different positioning." (WARC advertising) 3. Dual-branded hotels are not a new idea; however, the trend is gaining traction. Recent trends reflect a shift towards greater sophistication in tailoring guest experiences and targeting specific demand segments, thereby creating less overhead and greater cost efficiency. The concept has become increasingly popular as these developments include
two hotels, and in some cases even more, that share
construction/conversion costs and operational expenses, resulting in attractive development savings as well as an enhanced opportunity to achieve economic feasibility of a proposed project. The majority of newly-developed and under-construction dual-branded hotel developments offer value enhancement opportunities by cost-efficiently developing new products within dense urban markets. However, many successful dualbranded hotels exist in airport markets as well as suburban markets where supply is limited or demand is strong, such as the Homewood Suites and Hampton Inn by Hilton located in Syracuse/Liverpool, New York. Dual-branded hotels eliminate the expense of constructing separate towers for each brand while allowing for shared amenities such as fitness centers, pools, and meeting rooms as well as back-of-house spaces including kitchens, storage, and mechanical areas. Furthermore, from an operational perspective, efficiencies are created through utilization of shared staff, specifically as it relates to management, sales & marketing, and maintenance. (Boston Hospitality Review) 4. Intercontinental Hotels Group (IHG) has set out plans to open a number of dual-branded hotel developments across the USA, using combinations of a number of its brands. According to IHG, the dual-branded model will allow for operating efficiencies while at the same time not compromising the distinct offerings of each brand. While they will typically share the same building structure or services such as fitness centers, pools and food & beverage facilities, some back-of-the-house operations may also be shared or separate.
Dual-branded hotels are attractive for our owners because
they are able to achieve construction cost savings, through shared facilities such as meeting space, swimming pools, fitness facilities and back-of-house areas, as well as operational savings, through shared services, said Joel Eisemann, chief development officer, the Americas, IHG. (Hotelier Middle East) 5. Marketing of two or more similar and competing products by the same firm under different and unrelated brands. While these brands eat into each others sales (cannibalism), multibrand strategy does have some advantages as a means of: (1) Obtaining greater shelf space and leaving little for competitors' products (2) Saturating a market by filling all price and quality gaps (3) Catering to brand-switchers users who like to experiment with different brands (4) Keeping the firm's managers on their toes by generating internal competition. (Business Dictionary) 6. Marriott International Inc., the Bethesda, Maryland-based luxury lodging service provider, opened its first dual branded propertyCourtyard and Fairfieldin Bengaluru with an investment of around Rs.300 crore. Global luxury hotels have increased their focus on the Indian market on account of growing demand coming in from tier II and III cities. According to a September 2015 report released by HVS Global Hospitality Services, a hospitality consulting firm, demand for hotels is set to increase in 2016 as occupancy rates were over 60% for the first time when compared to the previous five year. (Live Mint) 7. Putting large inventory of the same category in one big land parcel is a big challenge. So, once you map the market and
look at the potential customers and business feasibility, you
need to split the risk in two different brands and different positioning. (The Economic Times)
Proposed Research Methodology:
Research Design - Descriptive Sampling Method Quota Sampling, Convenience Sampling Sample Size 50 Data Type - Primary, Secondary (Theoretical purposes) References: 1. Carr, Robert (Feb 8,2016),Whats behind the dual brand hotel trend?, National Real Estate Investor http://nreionline.com/hotel/what-s-behind-dual-brand-hoteltrend 2. WARC advertising (Feb 16,2016), Hotels explore Dual Branding http://www.warc.com/LatestNews/News/Hotels_explore_dual_ branding.news?ID=36215 3. Poovanna, Sharan (Jan 28, 2016), Marriot launches its first dual branded hotel in India, Live Mint E-paper http://www.livemint.com/Companies/28hcBOfIR8RfeN5gVzSD KN/Marriott-launches-its-first-dual-branded-hotel-inIndia.html 4. Daniel Lesser, Jonathan Jaeger, & Jeremy Gilston of LW Hospitality Advisors (Jan 12, 2016), The Evolution of Dual Branded Hotels, Business Practices, Boston Hospitality Review
5.
http://www.bu.edu/bhr/2016/01/12/the-evolution-of-dualbranded-hotels-how-the-marriottstarwood-acquisitionenhances-opportunities-for-developers/ Business Dictionary