U.S. hoteliers appear to be taking a closer look at dual-branded properties as a way to get a faster payback by catering to a broader range of guests.
Courtyard by Marriott/Residence Inn properties are under construction in both midtown Manhattan and downtown Los Angeles, while a 228-room Hilton Garden Inn/Homewood Suites property opened in midtown Atlanta in December.
Meanwhile, Starwood Hotels & Resorts and Hyatt Hotels executives speaking last month on a panel at the Americas Lodging Investment Summit (ALIS) said they’re in discussions with developers over additional dual-branded properties.
Hyatt Vice President of Development Chris Gebert said, “When you get to certain amenities that are the most benign, such as pools and meeting centers, those can pretty easily be shared, but there is an effort to preserve the entry point and initial experience.”
So far, the most prominent example of this trend is in downtown Los Angeles, where AEG, developers of the L.A. Live entertainment district, opened a 1,001-room property with both a JW Marriott and a Ritz-Carlton in 2010.
As of last week, weekend rates for late February at the JW started at $359 a night, while the Ritz-Carlton next door had about a $60 nightly premium over the JW Marriott.
But it’s not just an upscale or urban phenomenon. Choice Hotels International last year starting pitching a combined Sleep Inn/MainStay Suites prototype to budget-hotel developers and franchise partners, and Gebert said that his company’s Hyatt Place and Hyatt House select-service brands are the two that would be most likely linked.
As for Hilton’s Atlanta dual-branded property, Homewood Suites’ late-February weekend rates started at $119, while the Hilton Garden Inn charged $50 more.
Either way, the practice is notable because, unlike destinations like Las Vegas where brands from different companies are part of the same project, these projects involve two brands from the same parent in the same building.
“It’s not something that’s going to go super-mainstream, but you can have economies of scale on the cost side and still charge very different rates,” said Jan Freitag, senior vice president at Smith Travel Research. “Maybe the company’s chairman of the board stays at the Ritz and your V.P.-level guy stays at the JW.”
Judging from Marriott’s ensuing development activity, that strategy appears to be working. Granite Broadway Development is building a 68-story, 639-room Courtyard/Residence Inn property that will be New York’s tallest hotel-only building when it opens in midtown in late 2013.
And across the street from Los Angeles’ JW/Ritz-Carlton, the steel girders are in place for a 377-room Courtyard/Residence Inn that developer American Life Inc. is set to open next year.
While the “standard” dual-branded setup is side by side, New York is the exception, with the Residence Inn taking the building’s upper floors.
Hilton appears to be the most active practitioner in this niche. The company has about a dozen dual-branded properties in the U.S., with another dozen in the approval or construction stages.
The trend appears to be on the rise overseas, as well. Last year, a 559-room ski resort in Changbaishan, China, opened under Starwood’s Sheraton and Westin brands, while Marriott and developer Galaxy Entertainment Group announced a 1,300-plus room JW Marriott/Ritz-Carlton slated to open in Macau in 2015.
And in December, Hilton said a 385-room DoubleTree/Hampton hotel would open in Krakow, Poland, next year, while a 250-room Hilton Garden Inn/Hampton would open near Disneyland Paris in 2015.
As for bringing Starwood’s dual-branding efforts stateside, Starwood Senior Vice President Allison Reid, speaking at ALIS, said four projects had been discussed, though she didn’t give specifics.
“One developer asked for a W and an Aloft,” Reid said. “We didn’t want to do that.”
Follow Danny King on Twitter @dktravelweekly.