Why Do Hotel Companies Have So Many Brands?

By Josh Barro

Why Do Hotel Companies Have So Many Brands?

In 2016, Marriott Hotels, which had 19 hotel brands, merged with Starwood, which had 11. They didn’t abolish any brands in the merger, and so the company faced a challenge: How to explain to customers, or even to its own employees, what makes all 30 of these brands different from each other.

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CEO Arne Sorenson has taken to calling the spaces occupied by similarly positioned Marriott brands “swim lanes”; as in a crowded pool, you may have to share one.

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But is it really a problem to have so many brands? Marriott is, after all, the world’s leading hotel company. Two years after the merger, Marriott has shown it’s possible to live and thrive with 30 brands, even if your customers don’t really understand them all.

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“If we had not merged with Starwood, would we be trying to build 30 brands from scratch?” Marriott CEO Arne Sorenson asked, rhetorically, on Marriott’s November 6, 2016, earnings call, the first after the Starwood merger closed. “I think the answer is probably not. At the same time, having done this deal, the 30 brands all exist. They all have substantial capital that has been invested in them, particularly by the hotel owners who have made deliberate bets about which flag they put on their hotels. And we don’t have the power to, nor the desire to, try and convince them that those bets have not been good bets.”

That’s the first thing about Marriott’s brand challenge: It can’t easily get rid of any of its brands even if it wants to. The hotel owners won’t let them.