The bloat associated with hotel brands doesn't seem to be a weight issue that will go away anytime soon.
On Wednesday, Mexico-based Hotels City Express and Marriott International announced a $100 million partnership, adding a surprising new brand to the portfolio.
The agreement puts Marriott in a position to buy the brand family of City Express, a network of budget-friendly midscale hotels spread throughout Latin America.
According to the company, it also puts Marriott on course to overtake Hilton as the biggest hotel chain in the Caribbean and Latin America.
When compared to its younger brand siblings, such as Ritz-Carlton, St. Regis, and even Courtyard, which all have higher weekly prices, City Express will stand out.
Marriott is now able to enter new, more accessible hotel markets thanks to its 31st brand.
Larger corporations like Hilton and Hyatt have made an effort to set themselves apart from that in recent years, particularly when attempting to explain why their consumers are less susceptible to rising gas prices.
Marriott CEO Anthony Capuano stated in a statement, "We're pleased to enter a new lodging category – the popular cheap midscale market where we see considerable opportunity.
"With City Express by Marriott, we will be able to give our consumers more options with a fresh, approachable, moderately priced offering, expanding opportunities for owners and franchisees as well as colleagues," the company said.
The City Express brand family includes the following brands: City Express Plus, City Express Suites, City Express Junior, and City Centro.
The 152-hotel portfolio is spread out over Mexico, Colombia, Chile, and Costa Rica.
Except for adding "by Marriott" at the end, the brand names are anticipated to stay the same.
Curious addition? perhaps not
Given that Marriott CEO Anthony Capuano discounted the possibility of any mergers and acquisitions just a month ago, the move might be a little bit perplexing at first.
But I still comprehend it.
Although brands like Residence Inn and Fairfield Inn may seem to fall into the "upper midscale" category and higher, analysts generally view Marriott's portfolio of brands as starting at this level.
Even Fairfield Inns and Courtyards can charge rates above $500 per night, depending on the area and time of year. Admittedly, that's a fairly strange term.
Urban, suburban, and even extended-stay hotels are all operated by the clearly affordable brand City Express.
In a statement, Hoteles City CEO Luis Barrios said, "When we started thinking about City Express, we were confident that a modern, effective, and economical brand would be very attractive to the local traveler."
"After having the chance to collaborate with the Marriott staff, we were able to affirm that we share similar cultural values and hospitality practices."
With its 2016 blockbuster acquisition of Starwood Hotels & Resorts, Marriott has reduced its focus on mergers and acquisitions, which fits with its decision to enter the more affordable, midscale part of the market.
Capuano and Leeny Oberg, the chief financial officer of Marriott, frequently promote the idea of "tuck-in" or "bolt-on" acquisitions, which provide the business a stronger footprint in a particular region of the world or expand its position in a market sector where it isn't yet present.
When it comes to location, consider a brand like AC, which was originally focused on Europe before Marriott expanded it internationally.
Given that, it shouldn't come as a surprise if City Express eventually gains recognition outside of Latin America.
Additionally, Marriott's recent push into all-inclusive resorts had already demonstrated the company's interest in Latin America and the Caribbean.
According to a statement from Marriott International's president of the Caribbean and Latin America area, Brian King, "Our goal is to be everywhere our guests want us to be, with the appropriate property in the right location and at the right price point."
This deal with Hoteles City Express will increase our capacity to carry out that same task, initially in [the Caribbean and Latin America], but with opportunities beyond.
Reason for going low (in price)
A compelling case can be made for continued expansion into more affordable pricing ranges.
This area of the hotel market is dominated by companies like Wyndham and Choice Hotels, both of which recently increased their position in more expensive areas of the hotel market by acquiring Radisson Americas by Choice and adding the Registry Collection by Wyndham.
Not everyone wants to pay the escalating prices for some of the more well-known brands of the larger firms on the loyalty front.
According to a proverb in the sector, it's bad for a hotel chain if it doesn't provide its regular clients a choice, so they choose a rival brand instead, enjoy their experience there, and never return.
Although I don't believe many Bonvoy members switched from Marriott to Wyndham or Choice, it's a wise move to at least have a few options at this pricing point.
This may be Marriott's 31st brand, but it will be a little simpler to distinguish from the other participants in the "upper midscale" brand family, such as Moxy and Aloft or SpringHill Suites and Fairfield Inn & Suites, than this really budget-friendly option.
They haven't even reached the 40-brand threshold set by Accor, after all.
Brand obesity is what that represents, not simply brand bloat.
FACEBOOK