My question doesn't involve names that stem from mergers and acquisitions. Keeping these names is less costly than replacing them, like replacing Ritz-Carlton, Sheraton, Delta, Westin with Marriott.

Rather, why did Marriott commence Fairfield Inn in 1987, when it founded Courtyard in 1982?

Similarly, Hilton founded Hilton Garden Inn in 1996, and acquired Hampton in 1999. Why then did it commence Tru by Hilton in 2016?

The screenshot beneath is from Hilton and Marriott.

enter image description here

  • In all these cases the Wikipedia pages appear to explain clearly the reasons behind each of these hotel chains and how they differ. Do you have a specific question not answered there? – Michael Hampton Nov 4 '18 at 19:51
  • The pages you are linking to, all explain that the 'product labels' are placed on quite distinct service packages. Why do you describe these as 'same class'? – Tor-Einar Jarnbjo Nov 4 '18 at 19:54
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    Why do Nestlé and Mars produce so many candy bars that are just slightly different combinations of chocolate, caramel, and nuts? – choster Nov 4 '18 at 20:55
  • @MichaelHampton Sorry, but the differences aren't obvious to me. – NNOX Apps Nov 4 '18 at 22:02
  • @Tor-EinarJarnbjo Sorry, but the differences aren't obvious to me. – NNOX Apps Nov 4 '18 at 22:02

The hotel brands have differences in amenities within the class. To use your Hilton example, from lower to higher service, it goes Tru (smaller, more basic rooms), Hampton Inn (middle of the range, no food operation allowed outside free breakfast), then Hilton Garden Inn (requires full-service restaurant, no free breakfast). There's also some minor requirements about things like plastic cups, fridges, and microwaves.

To the owner, requirements like a restaurant and room sizes can have a significant impact on profitability, given the location. Mass-market hotels are built on the principle of predictability, and it's critical to convey the level of service up front.

Second, the majority of hotels are franchises, so to the franchisee, their hotel does compete against a hotel from the same brand. As in all franchises, a hotel is granted exclusivity over their brand for a certain area. By making different brands with different amenities, the chain can offer more hotels, and rooms, in the same market, while limiting to a certain extent the competition between franchisees.

  • Thanks. I can spot the differences now. But do guests truly pay attention to "minor requirements about things like plastic cups, fridges, and microwaves" and the food that's probably average at Hilton Garden Inns? – NNOX Apps Nov 4 '18 at 22:13
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    @Greek-Area51Proposal In-house food is big for business travelers who just want to eat with minimal fuss, and free breakfast is important for families and leisure travelers. You can see how they try to segment those markets. And you'd be surprised how frequent travelers notice small things; I personally really like the smell of the soap at my preferred brand. – user71659 Nov 4 '18 at 22:19
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    @Greek-Area51Proposal Guests may not pay that much attention (some certainly will to whether food is available), but hotel chains have two types of customers: guests and franchisees. Even if a guest doesn't care about something, the owner of a new property cares whether they have to buy microwaves and fridges, and they really care about how large the rooms have to be or whether they need to operate a full-time restaurant. – Zach Lipton Nov 4 '18 at 22:20
  • Also keep in mind that business travelers are usually price insensitive to a certain point, since the company pays for all their expenses. Therefore this segment of travelers will often choose their favorite hotel brand, even if it's more expensive on a given day. These are the best kind or customers and having more brands ensures more opportunities for attracting loyal customers. – JonathanReez Nov 5 '18 at 3:23

The Hotel market is, like many other markets, splintered into many different brand names, and consumer don't follow consolidations well.
In other words, a single brand name is not able to capture more than 3 or 5% of the market, no matter how great they are.

Therefore, offering multiple brand names allows the chain behind it to grasp a larger share of the overall market. Consolidating all Hilton brands in for example two brands would reduce their market share over the next years significantly; obviously not something Hilton is interested in.

Other well-known examples are detergents (basically the complete detergent market consist of two companies, but they need to offer several dozens of 'brands' to defend their market share); sweets; and so on.

In addition, each brand tries to cater to a slightly different market segment, as customers have different priorities.

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