Market Saturation Driving New Brand Creation?

November 18, 2006

Have you read the new hotel headlines lately? New brands get ready to make a splash! Brands are back! Sound the trumpets-or sound the alarms?

Holiday Inns’ Indigo. Choice Hotels’ Cambria. Indigo and Cambria-sounds like a wine and cheese party to me. What will the corporate captains of industry think of next?

As if 300 hotel brands weren’t enough, now we have even more to confuse consumers and shrink owners’ wallets. If you’re like me, you won’t let a day go by that you don’t ask yourself “What’s really going on here?”.

Are owners and consumers being sold a new shiny thing that they don’t want or need? No matter what expert data you consult, brand power in the travel industry is plummeting faster than the Tower of Terror at Disneyland. You can’t sell the brand if you don’t have demand.

Can you say Commodity? Go ahead and say it, Commodity! [kuh-mod-i-tee]. Largely undistinguished goods or services sold based upon price and demand.

TIA (Travel Industry Association of America) recently stated that only 4 out of 10 online travelers believed brand was important to their purchase decision.

YPBR stated “travel marketers must realize that only 35% of web travelers view themselves as brand loyal.”

When Cendant founder Henry Silverman speaks-we listen, and you should too, stating in a January 2005 speech that “hotel rooms are commodities,” and that “less than 25% of consumers have brand loyalty in their choice of travel companies. At the end of the day, travel decisions are all about price-quality, not brand.”

Here’s what’s going on—the big chains have saturated the US and Canada so deeply, the only way they can sell more franchises is to come up with new and improved versions of the same tired act. It’s just Procter and Gamble marketing 101; now that everyone has Tide detergent, put some Indigo sprinkles in it, and all of a sudden, it’s new, exciting and helps the environment!

Even Best Western is getting into it—after decades of internal debate, the aging giant recently rolled out its upper tier brand extension in Europe and Asia called “Best Western Premier ” (nearly 100 hotels).As a former Best Western owner, Governor and Executive Marketing Advisory Committee member, my best guess is that a US rollout is not far away.

What does this mean for owners? If you own a Best Western, you’re fair game for a new Best Western Premier across the street from you.

About Magnuson Hotels, the fastest growing hotel chain in history.
In only seven years, Magnuson Hotels headquartered in Spokane, WA has become the world’s largest independent hotel group, representing nearly 1500 hotels and a combined affiliate base with assets in excess of $5.5 Billion. One of the top 10 global hotel chains, Magnuson Hotels was the #1 Hotel Company of Inc. Magazine’s 2009 annual ranking of the 5,000 fastest growing privately owned U.S. companies. With a four year reservation sales growth of 595%, Magnuson Hotels is listed in the top 100 U.S. business services companies.

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