The Brand Bubble: Navigating an Overloaded Market

By Horwath HTL on June 10, 2024

Screenshot 2024 06 10 at 16.30.49

This latest report, authored by Navid Walizadeh, explores the transformation of the hotel industry over the past few decades, focusing on the shift from ownership to franchising and branding as a strategic response to high costs and risks.

Key Insights:

Strategic Shift to Franchising and Branding:
– Hotel chains have increasingly moved away from creating new brands due to the high financial and operational costs.
– Acquiring established brands allows hotel chains to expand their portfolios more efficiently and securely.

Franchising Benefits:
– Franchising reduces the direct costs and risks for hotel chains, as franchisees handle property development and management.
– Established brands leverage local expertise and benefit from shared resources and loyalty programs, generating steady income from franchise fees.

Market Expansion Examples:
– Accor group, with brands like Sofitel and Mövenpick, expanded significantly through acquisitions, such as the German hotel brand 25 Hours in 2016.
– Accor increased from managing 16 brands in 2014 to 54 brands in 2024, with more than half acquired.

Market Saturation and Consumer Confusion:
– The proliferation of brands has led to an overloaded market, making differentiation difficult.
– Consumers struggle to navigate the vast array of similar hotel offerings, leading to a “sea of sameness.”

Franchising as a Primary Business Model:
– Hotel chains use franchising to mitigate risks linked to property ownership and operation.
– Hilton Hotels, with brands like Spark by Hilton and Hampton by Hilton, operates approximately 81% of its hotels under franchise agreements.

Challenges and Questions:
– The industry faces challenges in maintaining distinct brand identities amid market saturation.
– The critical question remains whether hotel brands can ensure meaningful differentiation and sustained consumer loyalty in an overcrowded market.


The report highlights the significant transformation in the hotel industry, emphasizing the shift towards franchising and brand acquisition to manage costs and risks. However, this strategy has led to market saturation, posing challenges for brand differentiation and consumer decision-making.


About the author

Horwath HTL