There are ways for management companies (at least those with the right experience) to leverage a multi-brand property as well. “Dual branding is a smart use of expensive land and a financially responsible operating model that experienced management companies can use to deliver truly superior results,” said Gerry Chase, president and COO of New Castle Hotels and Resorts, a Shelton, CT-based management company. “There are several advantages to a dual-branded property, including lower development and operating costs and better market penetration.” A dual-brand strategy may be a sensible approach when land costs are high and supply gaps are spread out across segments.
“For example, suppose the density required to make a project financially feasible is 200 rooms, but the market doesn’t need 200 of any one type,” the company’s CEO said. “By offering two different products, like a select-service and an extended-stay, you can address two different segment gaps, reach two different types of guests and achieve the necessary density to contain the development costs.”
“In 2013, when we opened Residence Inn/Courtyard in Syracuse, there were only 26 dual-branded hotels in the entire country,” explained Chase. “By 2015, there were 79, with 54 more under construction and another 100 in development. We currently have one under construction and two more in the pipeline. I think it’s a smart play for many different situations. You’ll begin to see developers deploy this strategy with new pairings in new locations, such as resort towns. With all the consolidation, multi-branding offers some good alternative solutions to entering a market.” Read More