Palladium Hotel Group has become the latest company to launch a collection brand, under the name Bless.
The group said that it planned to target the premium market, following in the footsteps of the larger global operators, with InterContinental Hotels Group also due to launch a soft brand.
The 48-strong group signed a management contract with Grupo Didra and Aina Capital, for the first property in central Madrid, due to open in November 2018.
Abel Matutes, CEO, Palladium Hotel Group, said: “We are moving at a pace to roll-out the development of new brand ‘Bless Collection Hotels’ with the first property planned to open in Madrid in November 2018, followed by Ibiza in Summer 2019.
“The new upscale brand will leverage our position in the premium market and draws on our existing experience within the luxury and lifestyle sector.”
Palladium said that the Bless Collection Hotels launch was in line with the group’s strategy to expand its luxury portfolio, in city centres and beachside. The company said that it expected to announce further growth outside its domestic market of Spain in the coming months.
InterContinental Hotels Group has widely flagged its own collection brand, with CFO Paul Edgecliffe-Johnson telling analysts last Autumn: “Something in the collection space and something the luxury space are two logical next steps for us”.
The group has since acquired a 51% stake in Regent Hotels & Resorts for USD39m and is to rebrand 12 hotels in the Principal portfolio acquired by Foncière des Régions, with flags to include Kimpton. Edgecliffe-Johnson said that the deal would also allow the group to “quickly establish a position for our soon-to-be launched new upscale brand”. The brand was due to be launched at the time of going to press.
Last summer saw Wyndham Hotel Group launch Trademark Hotel Collection, for independent entrepreneurs who have built “an iconic hotel and are looking to boost its distinctive legacy with unmatched support”.
Lisa Checchio, Wyndham Hotel Group’s VP, brand marketing and insights, said: “A trademark is a symbol of character, an emblem of individuality. Trademark isn’t just another brand: it’s a rally cry for independent entrepreneurs who aren’t afraid to make their own mark.
“The Trademark Hotel Collection is the next step in our mission to flip the script on existing expectations and champion all hoteliers by offering them an independent choice outside of the current luxury and upscale options available.”
At launch, the brand’s pipeline included more than 50 hotels and owners of both existing hotels and new construction opportunities in urban markets around the world. The collection became Wyndham Hotel Group’s 19th hotel brand.
“The explosion of soft brands in the last several years has been focused on luxury and upscale hoteliers – with demand still growing at a rate of nearly 20% – leaving a market void for independent hoteliers in the upper-midscale segment, the largest segment accounting for 18% of rooms in the US,” said Chip Ohlsson, Wyndham Hotel Group’s chief development officer.
“Wyndham is the only hotel company positioned to champion upper-midscale-and-above independent hoteliers so they can compete in an ever-changing distribution environment with brand-backed support and guest recognition and loyalty.”
At the time of the launch Marriott International underlined its commitment to its own three collection brands, with Tony Capuano, EVP & global CDO Marriott International, commenting: “With our three-tier collection strategy that includes The Luxury Collection, Autograph Collection Hotels and Tribute Portfolio brands, independent hoteliers have more options to leverage Marriott’s powerful loyalty and distribution channels, whether through a new build or conversion hotel, depending on the location and physical product.
“We’re seeing increased demand for Marriott’s collection brands given consumers’ desire to stay at properties with unique stories and independent hotel owners realising that Marriott’s size and scale can drive significant value to their properties.”
Last year Marriott International said that it expected the three brands to grow 20% – or by over 40 sites – expanding the portfolio’s distribution to 50 countries and territories.
HA Perspective [by Katherine Doggrell]: The collection brands have become a must have for any global operator looking to round out their portfolio. They provide low-cost pipeline for operators, options for loyalty programme members and cheap access to distribution for owners who don’t want to brand up. But does the sector need any more?
James Bland, director, BDRC, told Hotel Analyst: “It’s been a few hours since Europe got another hotel brand, so I’m highly relieved that normal service is being resumed. Thankfully, les mots-du-jour all seem to be present in this press release and on the brand’s embryonic website – “contemporary luxury” (tick), “iconic” (tick), “wellness” (tick), “social” (tick) “meet the needs of the modern traveller” (Bingo).
“I’m not sure it matters that “only” two openings are forecast at the moment as I don’t think that there is a threshold required before one can launch or define a brand. A single hotel, essentially, is a brand (The Ritz, The Savoy and Claridge’s being examples that spring to mind) and everything has to start somewhere, as Conrad Hilton, John Willard Marriott and Kemmons Wilson would no doubt point out to us. Some are destined to take over the world, which is fabulous for them, while others exist purely to add a premium to a handful of bedrooms, and if they do their job, well, that’s just great too.
“However, the continuing proliferation of brands does highlight one of the challenges facing the hotel sector – genuine, transformational product innovations are few and far between, so what we’re left with – frankly – is packaging. For the most part in healthily-supplied cities, where hotels compete for space on the shelves of OTAs, a visual or verbal gimmick may well put one at an advantage over another. However, it’s essential to get that packaging right – increasingly we’re seeing a disconnect between the language used by hotel brands to describe themselves and the words that consumers understand. We recently did a test involving the five most widely-known brands in the UK during which we showed consumers the ‘official’ descriptions of the brand. 40% were able to identify Travelodge, but one of the world’s largest brands was only recognisable to 12% of respondents.”
Marriott International has maintained that it doesn’t need to get rid of any brands – so it will be hanging on to Le Meridien – because it doesn’t market the brands individually, but more cost effectively, as a package. So why not add another? Why not add 20?
Additional comment [by Andrew Sangster]: The official unveiling of IHG’s new upscale brand occurs on June 11th. This is going to be a conversion brand which, according to IHG, taps into a segment worth US40bn currently but that has a further US20bn of growth to 2025.
The IHG pitch is a compelling one: revenue management and reservation tools plus the B2B strength and loyalty programme. Is Palladium’s offer as compelling? Unless IHG is getting things very wrong, it is hard to see Palladium being competitive globally.
But in its home markets Palladium is likely to have the edge. While it won’t have access to the B2B or loyalty guests in the same way, Palladium has the local market knowledge in places such as Ibiza which IHG is going to struggle match.
And this is the same old conundrum for the global hotel brands: location and local contacts trumping global reach as a driver of business. But when smaller chains or individual hotels allow commercial discipline to crumble, they become vulnerable and the siren call of the big brands makes sense to owners.
Well-run local and regional players are unlikely to easily fall prey to the big brands. But for the likes of Palladium, growth is a challenge too. Small, steady and incremental, in usually adjacent geographic or market segments makes the most sense.
And done well, these chains have the prospect of a lucrative exit to the big brands. IHG makes no secret of its desire to buy small, asset-light luxury brands. Palladium does not fit the bill for IHG but with a restructure there is likely to be a number of suitors.