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Hotels Swap Brands to Refresh Local Properties

Posted by Barry Silverstein on March 17, 2011 12:00 PM

As the W Hotel officially opened its first property in London last night with a bash that included a performance by Mick Jones and Roger Daltrey (a pre-opening sneak peek shows its Leicester Square surroundings, above) another trend is sweeping the hotel world.

Rather than opening new properties, major hotel brands are using a new strategy to grow. Squeezed by rising costs and tight credit, they're "reflagging" or rebranding to convert an existing hotel property to be part of a different brand family.

The hope is it will revitalize a sagging property and appeal to a new influx of travelers because of the new banner. The trend is catching on in the United States and, increasingly, worldwide.

In Charleston, South Carolina, a popular tourist destination, the 50-year-old Holiday Inn Historic District has been reflagged Courtyard by Marriott. In addition to a new name, the hotel will be expanded to include another 50 rooms and additional meeting space.

Ben Brunt, EVP of the property's owner, Noble Investment Group, tells The Post and Courier of Charleston, "We see the conversion to Courtyard as an up-branding. ... Our expectation is that we are able to substantially improve our revenue and income stream and the value of the property."

In Minneapolis, Minnesota, a Holiday Inn & Suites hotel near the Minneapolis-St. Paul airport has been rebranded as a Crowne Plaza hotel by Associated Hotels. Crowne Plaza and Holiday Inn are both brands of InterContinental Hotels Group, but Crowne Plaza appeals to a more upscale audience.

In order to attract more business executives, the hotel was upgraded with a Caribou Coffee oasis in the lobby and a comprehensive meetings program. Rooms were renovated to include signature bedding and other amenities that are part of the "Crowne Plaza Sleep Advantage" program.

Atlanta, Georgia is a veritable hotbed of reflagging. The city's Hotel Palomar, a Kimpton Hotels boutique, will be converting to a Marriott Renaissance hotel, while a downtown Renaissance was reflagged by Spanish hotelier Sol Melia.

According to the Atlanta Journal Constitution, Hilton has submitted a plan to the new owners of the Rosewood at the Mansion to reflag the property under the renowned Waldorf Astoria brand. The newspaper reports that conversions are common in the Southern city: The Four Seasons was originally the Occidental Grand, the Grand Hyatt was formerly the Hotel Nikko, and the Westin Buckhead used to be the Swissotel Atlanta. The current Comfort Suites Downtown Convention Center  went through three previous lives. 

Bill Fortier, Hilton's SVP for development for the Americas, told the Journal Constitution that the company's hotel conversions increased last year, up to 35% of new inventory. He said the most converted brand is DoubleTree. At InterContinental Hotels Group, reflagged properties accounted for half of the new properties in 2010, versus the more typical 10 to 15%, said Jim Abrahamson, president of the Americas division.

Reflagging can have its liabilities. For one thing, while a hotel management company may avoid building, it does incur costs when converting an existing property. Often there is refurbishment or expansion involved, as well as changing everything to the new brand name's way of doing business. Paul Breslin, managing partner of Panther Hospitality, a hotel management company, told the Journal Constitution that "everything from paint to the thread count in sheets to the speed of Wi-Fi can change in a reflagging. Even brands of toilet paper are switched."

And then there is the reaction of customers, who don't always agree with the change. The blogosphere's perspective on the reflagging of the Palomar as a Renaissance "was mostly negative," according to the Journal Constitution. One blogger even commented, "Boutique and chic gets replaced by the mundane and mainstream." 

 

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