Courtyard/Residence Inn Manhattan/Central ParkNEW YORK — In the 1980s, Courtyard by Marriott and Residence Inn by Marriott existed as freestanding suburban hotels with sizeable rooms, plenty of parking and, in the case of Residence, one- and two-bedroom suites. Rates were squarely in the midrange.

But in 2014, hospitality is realizing an evolving urban reality. The hybrid Courtyard/Residence Inn Manhattan/Central Park occupies a 68-story skyscraper here, offering a combined 639 rooms midway between Central Park and Times Square. It's the tallest building in North America dedicated solely to hotel facilities and rooms. Rates for the Courtyard, on the lower floors, start at $300 a night and at the Residence Inn on the upper floors, at $350 a night. Original artwork covers the walls.

At a time when hotel operators emphasize the "promise of a brand," what does it mean when a hotel diverges dramatically from its original concept?

According to Bjorn Hanson, divisional dean at New York University's Tisch Center for Hospitality, Tourism and Sports Management, this phenomenon is not new, though in this case it has been taken to extremes.

"We are in the third generation of brand evolution and in how they can vary by location and market without that troubling either travelers or brand operators," he said.

The new property offers atypical versions of both brands. Rooms are smaller than standard for both brands, with all the Residence Inn's "studio suites" and none of the brand's usual one- and two-bedroom options. A single lobby serves both hotels.

"A brand means there is something clear about what we are and in the way we deliver the core of what we are," said Diane Mayer, Residence Inn's vice president and global brand manager. "You can deliver your brand promise even if the hotel looks or feels different. That doesn't detract from the brand essence if it is appropriate for the location and appropriate for an evolving customer target. It's healthy for a brand to be flexible, because it enables growth opportunities."

What makes a brand?

Courtyard/Residence Inn Manhattan/Central Park, Courtyard GuestroomAsked what constitutes the core of the Residence Inn and Courtyard brands, Mayer replied, "I would never allow a Residence Inn without a full kitchen, or a Courtyard without a Bistro [where meals are served] or bar."

She added: "Our tagline for Residence Inn is, 'It's not a room; it's a residence.' We target extended-stay travelers and are primarily a rooms brand. Courtyard is focused a lot more on the evening food and beverage and on the lobby space. "

Mayer said the Residence Inn rooms occupy the top floors of the Central Park hotel because "the views add to the feeling of spaciousness. And the desk faces out for the same reason. The furniture is more 'loungey' than at the Courtyard, with a white leather bucket chair. The focus is not on the bed."

Will consumers be confused?

How do consumers deal with brands that are markedly different in different markets? "It can get confusing, particularly as the physical plant, or the tangible offerings, become more inconsistent," said Chekitan Dev, marketing professor at Cornell's School of Hotel Administration.

"Smart brand managers have found a way to address this by de-emphasizing the inconsistent tangibles and highlighting the intangible or experiential elements of their brands," he said.

In the past, Hanson said, "brand standardization and uniformity were valued by travelers, but the world of travel has changed, especially among younger travelers seeking more local experiences and creativity."

Courtyard/Residence Inn Manhattan/Central Park, Residence Inn Hearth RoomIn turn, he said, "the brands are realizing that standardization has a different definition, where standards can be more about services and quality as opposed to more traditional measures."

Mayer asserted, "Younger travelers are a lot more savvy about travel. They communicate on a global level with friends and family and are aware that a Residence Inn in Manhattan will be different. … In urban areas, we tend to trade off square feet for more upgraded finishes and furnishings."

The developer's point of view

Hanson said there are markets that offer limited opportunities for development, and if a brand wants to be represented there, flexibility is required. If not, a competitor might move in.

"For brands, share of market is one important measure of success," Hanson said.

Dev observed that "brands permit some owner flexibility to customize standards to the local context. So it may not be unusual for economy hotel brands to have elaborate pool areas in resorts or a rooftop bar in an economy hotel in Manhattan."

What's more, he said, "Hotel owners can typically exceed standards to a point but cannot go below a threshold. Marriott brands have typically had the strictest brand guidelines. In today's highly competitive environment, where brands have to fight for every hotel with increasingly savvy owners asking to incorporate 'local context' in their hotels, I have seen some relaxation in these standards."

"If an owner comes to us and thinks they can do a 600-room, two-brand hotel, that makes a lot of sense to us," Mayer said. "That means two booking engines, complementary targeted guests, two [pools of rooms] that can meet a wider range of guest needs. These two brands are like brother and sister, with parallel quality levels and easy-to-segment markets."

Brand, market dictate service level
But if the developer is going to upgrade so many elements in the Central Park hotel, the obvious question becomes: Why not simply move to the next category, like a full-service Marriott?

"There are at least three explanations for this: one [brand-driven], one owner-driven and one market-driven," Dev said. "Brand managers like to have flagship hotels, sometimes known as 'living billboards,' in high-quality urban areas like New York City or Paris. This adds cachet to the brand."

At the same time, he said, "Owners sometimes prefer lower-priced brands, as it means a lower investment per key, saving money on the hotel, when they have to pay a lot for the land."

The third explanation, he said, "has to do with market gaps. In many high-cost urban markets, the higher-priced segment can get overcrowded, so a mid- or lower-priced brand can occupy an unserved or under-served 'sweet spot' in the marketplace."

Mayer agreed.

"While capital is easier to get than it was a few years ago, a full-service hotel in Manhattan would probably cost at least three times as much to develop as a midtier hotel," she said. "That's why the only growth in the industry has been in midtier and luxury, where they can get the appropriate returns."

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