I read with interest, the recent news that Procter & Gamble, one of the world’s largest consumer packaged goods companies, was eliminating about 100 brands (the actual number in the press varies). A foremost leader in branding and the place where I learned the ropes in marketing, this is fascinating news, for me at least. The cited rationale for this decision was that it would allow them to focus on their major businesses (Tide, Pampers, Gillette etc.) and, ultimately, lead to an increase in profitability. The stock market responded promptly and positively to the announcement, with shares instantly popping a few percentage points in value.

This made me wonder about our hotel industry. It seems that every time I turn the page or click through an online hospitality editorial, one of the leading hotel corporations is launching another new brand. While on a different scale, would it make sense for our major chains to take a similar approach and divest themselves of their minor brands to focus efforts on the core? Or, is this parallel not applicable to the hotel industry?

Being a P&G alumni with seven years in the brand marketing department, I am keenly aware that larger brands have more clout, can command a higher amount of marketing investment (due to economies of scale) and are more profitable. I also know full well that an unsupported brand, in particular one that has no budget for advertising support, is ultimately doomed for extinction, regardless of its product efficacy and consumer benefits. You see, it’s this simple equation: Awareness+ Interest + Desire = Purchase. “If you build it, they will come,” applies only in the movie Field of Dreams but not in real life. The bottom line is that a brand needs to gain awareness as the first stage to building a franchise.

So, let me see if I can recap this as a challenge to the larger brands in our industry, perhaps as a consideration to their strategic planning initiatives or mandates. The goal of any hotel CEO should be to increase and sustain long-term shareholder value. If this is agreed, then the ‘marketing gurus’ will suggest that larger brands be well-supported with meaningful marketing – including advertising – as the best pathway to long-term success. And, to accomplish this focus on big names, a company should consider a divestiture of minor brands that cannot financially rationalize support expenditures.

There it is. The gauntlet has been put down to the big boys. Are any ready to snatch it up? Are all their shareholders content with their recent returns? Is there a happy compromise that some of the larger hotel chains might reach as opposed to the extreme measures taken by P&G?

Two good terms to throw into the mix here are ‘house of brands’ and ‘branded house’. Based on P&G’s big move, it would appear to support the claim that hotels should move from the former to the latter. Obviously, there are arguments to be made both for and against.

And what about the independents or semi-independents? What can they do to distill their brand names and refine their marketing messages to consumers?

(Article published by Larry Mogelonsky in HOTELSmag on September 5, 2014)