Hotel brand doubling up in cities where space is tight

New York TimesApril 26, 2014 

In hotels these days, it is the haves versus the have-nots.

At some dining rooms, guests have to produce their room keys to eat at the free breakfast buffet. No eggs and muffins for those guests from other hotels, even if – as is increasingly likely in major cities – everyone slept under the same roof.

At Chicago’s so-called triplex – where three hotel companies share space on a city block – Starwood’s Aloft guests work out in a small gym within eyesight of a much larger one shared by Marriott and Hyatt hotel guests.

“Starwood had an issue, they didn’t want their guests intermingling with the other guests in the fitness area,” said Deno Yiankes, the head of investments and development for White Lodging, which codeveloped and operates the Chicago triplex. “Each brand has its own little hot button. Marriott and Hyatt said it wasn’t a big deal, so they shared and got a bigger fitness center.”

Juggling those competing little hot buttons is one challenge developers face as they put up more and more hotels housing two or more brands in the same building.

Early this year, Marriott opened a dual-brand hotel in New York. The lower half is a Courtyard by Marriott, while the upper floors are the Residence Inn, Marriott’s extended-stay brand.

The Hyatt Hotels Corp. has two dual-branded hotels and at least four more in the pipeline. Hilton, which already has 15 dual-branded hotels in North America, has 17 more approved or under construction.

“It’s all the rage,” said Craig Mance, a senior vice president for development, North America, at Hilton Worldwide.

A hotel being remodeled on Chicago’s Magnificent Mile will be split between Hilton’s Hampton Inn brand and its Homewood Suites brand. The brands will even have some rooms mixed together on the same floor.

So even as hospitality corporations spend millions of dollars each year to create distinct brands and experiences they hope will attract repeat customers, the lines between brands are being blurred by the economics of higher land prices.

Seperate identities

And although some hotel companies are embracing dual-branding, they are struggling over how to maintain their separate identities and how to deal with the awkward logistics that can arise, such as free breakfasts for some hotel guests but not others.

Brands become particularly wary when it comes to mixing hotels from different corporations. Chicago’s triplex opened just last year with three hoteliers sharing some spaces, such as laundry and meeting areas, but keeping other areas, such as entrances and lobbies, separate.

Others see more difficulties ahead.

“I think that project is crazy – like crazy bad,” said Robert Sonnenblick, a real estate developer who constructs hotels and resorts. “They put in hotels from three big reservations systems, all at the same price point, so that they’re all competing with each other on price. Consumers are going to rate-shop the three of them and choose the lowest one. It’s a race down to zero for the three competing hotels.”

A look at prices on the three corporations’ websites for a king-size bed at the triplex on the same day in April showed they were within $10 of one another.

White Lodging argues that hotel prices for competing brands in urban settings tend to be close, whether the hotels are on the same block or across the street from one another. And executives at Hyatt say the experience has provided a real-time measure of how they stack up against the competition.

“Once in a blue moon, you'll see people from the neighboring hotel. But we still call our lobby the gallery, and we have gallery hosts who will check you in and pour you a glass of wine,” said Chris Walker, a vice president for Hyatt Place and Hyatt House brands. “It’s paramount to us that we have control over the lobby experience.”

Option to upgrade

Walker and others in the hotel industry say there are tensions and continuing debate about what elements are important and make up the total brand experience for the customer when companies consider combination developments.

“The purist in me says I don’t want to give up anything. For it to be the Hyatt experience, it has to be 100 percent. But I’m also a realist and know that that stance would dramatically eliminate a number of projects that the development team could pursue,” Walker said.

Some developers say this is the future.

Developers of the Arundel Mills property in Baltimore put in 150 Hilton Garden Inn rooms and 100 extended-stay Homewood Suites at the same site.

“We got all of the efficiencies of running the property with single housekeeping, one laundry, and amenities are also shared like the pool, fitness center and guest laundry,” says David B. Pollin, a co-founder of the Buccini/Pollin Group, which built and operates the site. “Plus, these two brands attract two different types of travelers.”

If one brand is full, Pollin adds, the group has the option to “upgrade” the traveler to the other.

But breakfast can be tricky.

“The Hilton Garden Inn guests are very smart and try to sneak in for the free breakfast available at the Homewood Suites,” said Pollin, who says hotel staff members try to check guest keys.

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