In a bid to compete with Airbnb and appeal to travelers’ increased desire for unique experiences, hotel companies have rolled out what The New York Times calls “cheap chic” spinoff brands: well-designed properties at budget-friendly prices. These new brands, like Intercontinental Hotel Group’s Avid or Marriott’s Moxy, feature hotels where unique themes or hip designs are the focus. Avid is geared toward young professionals, and promises “basic done exceptionally well.” Avid’s guest rooms have a smaller footprint but are designed to provide a great night’s sleep, and before guests head out for the day, they have access to health-minded breakfast options in the lobby. At Moxy hotels, the front desk has been replaced by a bar, and lobby screens display guests’ Instagram posts from Moxy hotels around the world.
While these properties will no doubt appeal to younger travelers or those on a budget (particularly millennials, who want unique, Instagram-worthy experiences, but not at Four Seasons prices), it’s not enough to merely launch a brand that fits into the “cheap chic” concept. Creating a hipster vibe is great, but the success of these new brands, and their ability to compete against Airbnb, is all about the execution.
Since new brands will require resources on the front and back end, leadership and franchisee buy-in is critical. You’ll need to integrate new brands into your larger business strategy, and have the development, PR and marketing budget to support them, so if leadership isn’t fully committed, the new brands could fall apart.
You also should make sure that the spinoff brand is a fit for your internal culture: Do you really believe in the brand you’re creating? Relatedly, think about whether your new brand makes sense coming from your parent company – will customers associate your spinoff brand with it, and how obvious should that connection be, or not be? Either way, customers can smell a fake, so authenticity is key.
Perhaps most importantly, hotels need to clarify the problem that they’re trying to solve with the new brand. What do current, or new, travelers want that your legacy brands aren’t giving them? How much overlap is there between the target traveler segments and value propositions of a Courtyard vs. a Moxy? Define the value propositions for each brand, old and new, and figure out why they’re distinct and how to market them in a way that ensures incremental growth, not cannibalization. Additionally, consider how your spinoff brand is differentiated from others in the marketplace. Make sure it has a unique value proposition from your competitors, as well, and isn’t just a “me too” effort.
If you shift your focus to creating new brands, think about how your core brands should evolve, too. All hotels are, in fairness, improving their old-school brands by redesigning hotels, and improving signage, logos and color palates. Renaissance, for example, borrowed from Airbnb’s “live like a local” concept by redesigning neighborhood-centric hotels a few years ago. In New York’s fashion district, lobby and in-room artwork is made of pin cushions and high-heeled shoes. In Allentown, Pa., lobby designs are forged in local steel. In Montreal, graffiti from local artists adorns the walls.
Hotels are smart to try to capture a bigger share of the market and appeal to travelers’ interest in unique experiences by launching something new. However, they must be careful not to lose sight of the harmony of the broader portfolio. When executed thoughtfully, there’s room for both.