Operations

Luxury Hotel Brands On a Major Development Push

LCT Staff
Posted on March 21, 2007

NEW YORK CITY — As if it isn't already hard enough to tell some hotel chains apart, hotel companies have launched 24 brands in the past two years, more than any similar period since the 1980s. All but one of the new brands are in the luxury and upscale segments, where demand and rate increases have been highest in the past few years, according to PricewaterhouseCoopers. In luxury hotels alone, 11 brands have been launched, including the Waldorf-Astoria Collection by Hilton Hotels Corp., and LXR by an affiliate of Blackstone Group.

The hotel industry has been on a tear for nearly four years as travel has increased while new hotel construction has been constrained, first by a booming housing market and then by high construction and land costs. "This time the single biggest driver is to appeal to Gen Xers and 'Millennials,'" says Bjorn Hanson, a lodging consultant with PricewaterhouseCoopers., referring to the post-Baby Boomer generations who make up an increasingly significant portion of travelers and demand different amenities and experiences than Baby Boomers.

In 1980, there were 81 different hotel brands, while today there are about 210. About 56% of all hotel reservations are now made on the Internet. As a result, where a brand launch used to require spending tens of millions of dollars on marketing to become recognized and valuable, the scale of the marketing required now can be smaller, Mr. Hanson says.

Source: Wall Street Journal

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