NEW YORK -- Embracing the spirit of the Broadway productions
nearby, Marriott International earlier this month took over the Hunt & Fish
Club restaurant here, moving more than 20,000 pounds of furniture and fixtures
in a single day to transform the midtown Manhattan eatery into a pop-up gallery
for its three soft brands.
It was all done for a splashy event that featured a
half-dozen stage sets, including an urban rooftop mock-up for the Tribute
Portfolio, a buzzy lounge for the Autograph Collection and a Spanish vineyard
retreat facsimile for the Luxury Collection.
The world's largest hotel company was looking to capitalize
on New York University's (NYU) annual International Hospitality Investment
Conference by hosting prospective hotel owners at the event.
"Both are strong," Julius Robinson, Marriott's
vice president of Autograph Collection and Tribute Portfolio said of the
development pipelines for the two soft brands. "But the chatter is much
stronger than that."
While Marriott aspired to create soft-brand buzz at the
first NYU conference since it acquired Starwood Hotels and Resorts, competitors
such as Hilton, Choice Hotels, Wyndham Hotel Group and InterContinental Hotels
Group were also in the race to snap up prospective independent hotel owners by
selling the concept of soft branding at the conference.
Hilton representatives touted the growth of its Curio
Collection and the recent launch of the Tapestry Collection in Syracuse, N.Y.;
Choice Hotels executives reminded people that its Ascend Collection inaugurated
the soft-brand concept in 2008; Wyndham Hotel Group announced its entry into
the sector with its Trademark Hotel Collection; and InterContinental Hotels
Group said that it would introduce its own soft brand by the end of the month.
"No owner wants to get out there and try a hotel that's
not connected," said Choice Hotels chief development officer David Pepper,
speaking on a conference panel. "The amount you spend on marketing a
single asset is outrageous."
With U.S. hotel room demand expected to level off after
seven-plus years of revenue increases, hotel companies are trying to sell
independent hotel operators on the idea that soft branding will enable those
owners to reduce distribution costs via cheaper OTA commissions.
Additionally, hotel companies said their loyalty programs
and booking engines will enable independent hotels to cut their percentage of
the more expensive OTA bookings and generate more revenue directly via the
larger companies' websites and call centers.
Once under a soft brand, OTA commission rates, in the form
of wholesale room prices, can fall to about 15% within the larger hotel company's
umbrella from as much as 25% as a pure independent, according to Mark
VanStekelenburg, New York-based managing director at CBRE Hotels Consulting.
"Anything that's being stewarded by one of the big
international hotel companies such as Marriott, Hilton, Hyatt or
[InterContinental] has a leg up right now," VanStekelenburg said. "The
question is whether these concepts are all set up to stand the test of time."
The trade-off for an independent hotel owner is investing in
a concept -- in the form of fees paid to the larger companies -- that is still
proving itself to both the general public and travel professionals. With the
Ascend Collection and Autograph leading the way with about 170 and 120 hotels
worldwide, respectively, soft brands still account for fewer than 500 hotels.
And while U.S. room rates for soft brands averaged about
$175 a night last year, compared to about $124 for all U.S. hotels, soft-brand revenue
per available room rose 2.7%, or slightly less than the overall average,
according to STR and CBRE.
"The hype is coming before the true growth," said
Michael Heflin, senior vice president of Travel Leaders Group's hotel division.
"All of the major chains are talking about them, but the bookings are
small enough that it's hard to even quantify."
With an already crowded group of upper-upscale brands, there's
also a risk of new soft-branded properties taking business from chain
properties in the same sector, said John Keeling, executive vice president of
the Valencia Group, using his company's former Hotel Sorella in Kansas City,
Mo., as an example.
"When the Raphael became the Autograph across the
street from the Sorella, it didn't affect us one bit. What it affected was the
Marriott down the street," Keeling said during a panel at the Boutique
& Lifestyle Lodging Association conference, held in New York the day after
the NYU conference concluded.
While Marriott's Robinson allowed that he's concerned about
the "me, too" nature of more hotel companies launching soft brands,
he said he has seen no evidence of cannibalization between the Autograph
Collection and Marriott's upper-upscale chain properties.
What's more, he insisted that, at least within Marriott,
customers will be able to clearly differentiate the amenities and approach of
Autograph from the Tribute and Luxury Collection soft brands that Marriott
obtained when it acquired Starwood last year.
Hotel executives say there's less of a soft-brand overload
for both customers and potential hotel owners because newer entrants such as
Wyndham, Hilton and InterContinental are moving downscale with their unbranded
collections, where the promise of at least some standardization as well as a
brand endorsement will be even more welcome.
"We've done a great deal of research, and the
respondents were telling us that if we know Hilton is affiliated with it, we
know we're going to have a property that we're confident in booking," Mark
Nogal, Hilton's global head of Curio and Tapestry, said in an interview at the
NYU conference. "Because it's going to be well cared for and clean. And in
the off chance that something goes wrong, Hilton's going to take care of it and
make it right."