One of the changes hoteliers have adapted to in the past decade is the rise of the dual-branded property. While these are commonly housed within one building, a complimentary opportunity that has more longevity is the hotel campus. This is when multiple hotels – usually two but sometimes more – occupy the same parking lot and may even have shared amenities. These are generally complimentary flags and usually within the same brand family such as Hilton Garden Inn and Homewood Suites, Fairfield Inn & Suites and Residence Inn, or Holiday Inn and Staybridge Suites. Campus hotels provide unique opportunities to maximize your investment in hotel assets and the benefits heavily outweigh the challenges.
Shared expenses between the two properties provides economies of scale to benefit both assets. As we continue to face wage pressure, any labor savings can be of immediate value. From shared team members cross-trained for both brands to efficient housekeeping, sales & marketing, maintenance, and senior management, almost every department can benefit. As an example, instead of one Sales Manager and one Sales Coordinator at each hotel, the Campus may benefit from a Campus Director of Sales, Sales Manager focused on a specific market segment such as business or catering, and a Sales Coordinator. While these team members will likely command higher wages for selling two properties, the overall savings are beneficial to each hotel. Additional shared expenses such as landscaping, maintenance supplies, and parking lot repairs are just some of the areas to reduce overall costs. Depending on the siting of each building, the pool or other outdoor spaces may be able to be shared as well.
Another benefit to having two complimentary flags is access to greater market segments of travelers. Whereas your hotel may be a business hotel busy on weekdays and lagging on weekends or a leisure hotel where the opposite is the case, the shared resources of a combined campus provide you with steady business everyday of the week and if you efficiently manage oversell opportunities, there should be no fear of walks because you can walk guests to the other hotel on your campus.
The savvier among you may negotiate with the brands and find complimentary flags across brand families such as Hilton’s Hampton Inn and Marriott’s Residence Inn. While careful negotiation needs to be had with each brand and distinct brand standards including uniforms and name tags need to be maintained at each property, an additional benefit to different market segments is access to different reservation systems and guests with strong affinity for their loyalty program. If you can navigate the strengths of Hilton and Marriot while also capturing Hilton Honors and Marriott Bonvoy members, your Campus could be even more of a success.
While these are only some of the benefits, the combined asset value of your Campus should be stronger than running each hotel as a complete standalone because reduced labor costs and expenses yield tangible savings recognized at the bottom line. It must be recognized that truly bifurcating expenses between the two hotels could be slightly more sophisticated, but as hotel operations directly impacts asset value, your ability to refinance, take distributions, or sell should be that much stronger.