The Hutton Hotel is slightly off the beaten path. It’s a little more than a walk to the famed honky-tonk bars on Broadway in Nashville and other attractions like the Country Music Hall of Fame and convention center. The 248-room independent hotel was designed to be an alternative to the usual array of branded hotels surrounding those venues, and to the behemoth Gaylord Opryland Resort a short 15-minute drive away.

When owner and operator Amerimar Enterprises was looking into purchasing the partially-filled office building in 2007, it considered going the franchise route. “We definitely thought about it,” says Amerimar Chief Operating Officer Jon Cummins, “but we felt we had an opportunity to do something different and make a go of it as an independent hotel.”

After a two-year adaptive reuse project, the eco-friendly luxury Hutton Hotel opened in April 2009 as a member of The Leading Hotels of the World. If Amerimar was looking into the same project today, Cummins says, the decision might not be the same. The options, at least, would be different.

No longer is it simply chain or independent. Now owners can opt for both independent and chain affiliated. Hotel franchising heavyweights — like Marriott International, Choice Hotels, InterContinental Hotels Group and Vantage Hospitality — are stepping outside their standard-sized boxes and into the arena of independents, and there’s a fancy new term to describe the offerings: “soft brands.”

The concept is easy: Owners can align with a franchise company to gain access to its global distribution, loyalty program, marketing reach and more, but still retain their property’s individuality. There are much less rigid standards and requirements an owner must maintain, minimal signage and collateral on property marketing the soft brand and the cost and length of the contract can be less than a franchise agreement.

Independent and Chain Affiliated
STR Global, the firm specializing in tracking and categorizing the hotel industry, counts properties in collections like Autograph (Marriott), Ascend (Choice), Lexington (Vantage) and Luxury (Starwood), along with Preferred, as chain affiliated. Each of those offerings is listed among STR’s chain scales, but the definition as chain is probably only of interest to industry insiders.

The owners, surely, would say their properties are independent and the soft branding is virtually invisible to consumers as well. “For all intents and purposes, these really are independents,” says Bobby Bowers, STR’s vice president of operations

Nothing more than a small plaque hangs near the entrance at the properties announcing their membership to most of these collections. Some collateral for the company’s loyalty program might be visible or a directory of other properties could be on the coffee table in the guestroom, but you won’t see Autograph or Ascend flashing in huge neon letters outside a property.

“The customer isn’t aware of the soft brand,” said Shane Platt, a vice president of franchise development for Choice Hotels, while speaking during a panel titled “Soft Brands: Fad or Fact of Life?” at the Midwest Lodging Investors Summit in July. “They know the Hiltons, Marriotts, etc. The soft brand is putting a name behind another name. We’re not pushing the Ascend Collection, we’re helping push that independent hotel and its name.”

Preferred Hotel Group and The Leading Hotels of the World have long been the main players in this space. The Luxury Collection from Starwood was the first from a brand company in 1994, although it came through acquisition and evolution. Vantage’s Lexington Collection launched in 2006, Choice’s Ascend and Marriott’s Autograph Collections followed in 2009 and last year, IHG introduced InterContinental Alliance Hotels & Resorts.

The Autograph plaque is one of the smallest, weighing only five pounds, but Marriott’s entrance into this space was the surest sign these soft brands were more fact than fad. The company synonymous with lodging and conformity now has 27 uniquely independent properties under contract, with expectations to reach almost 40 by year’s end.

“It’s flattering, I guess,” says Lindsey Ueberroth, president of Preferred Hotel Group, about the newfound competition. “If anything, it keeps us on our toes. They’ve got a lot of muscle, but we’ve created a compelling option for independent hotels. One could argue it’s tough to be an independent with a brand.”

Certainly that’s an argument Kip Vreeland, Marriott’s vice president of the Autograph Collection, has heard before. “We’re a collection, not a brand,” he stresses.

The collections aren’t all direct competitors. Ascend and Lexington feature properties in the three- and four-star range, while Autograph is more four-star and five-star quality. Preferred has several sub-brands, ranging from four stars up to five stars, where Leading Hotels and the Luxury Collection also sit.

IHG’s Alliance debuted last year with news that the Venetian and Palazzo in Las Vegas affiliated with InterContinental. They’ve since added the Montelucia Resort & Spa in Scottsdale, AZ, and Del Ross, IHG’s VP of sales and marketing, says the focus will only be on adding unique and luxury resorts in top resort destinations.

“We are not entering this as a land grab,” he says. “This is a customer direct strategy … We are looking for select opportunities that fit our brand, our customers’ needs and also the owners and operators’ goals.”

Expanding Their Reach
Marriott can now offer its 35 million Rewards members the perk of a free night or weekend at one of the top casino resorts on The Strip in Las Vegas, with the 3,000-room Cosmopolitan, now an Autograph member.

“For the Marriott guest, I think it’s wonderful,” says Richard Kessler, whose seven properties were the first to join Autograph. “If you stay at a very standard Marriott hotel, rack up points in your business travel, here comes a whole new menu that offers you something very high end, personalized and unique. It’s a big positive for corporate Marriott, too.”

Kessler, though, isn’t a fan of the cost that comes with the loyalty-point redemptions at his properties. The reduced rate he gets on those is one of the things he hopes Marriott reconsiders as the collection evolves.

On the other hand, Cummins says the loyalty program and access to those business travelers is the reason Amerimar has considered Autograph. “That’s the toughest nut to crack,” he explains. “That traveler who has collected Marriott points or Hilton points or whatever, that person out on the road may understand your property is nicer and they might not even care about paying more, but they want their points.”

Kessler’s seven properties joined Autograph in January of last year after being members of Preferred. Each was the top property in its competitive set at the time, he says. “We had already convinced the traveling public we had the best places in town,” he says. “But the reservation system and getting more exposure have driven more demand on the product and allowed us to push rate.”

Kessler’s hotels are up 15% in revenue year over year, a huge credit to the affiliation, but he says the boost is also because of a new internal marketing program, revamped websites, significant renovations, a 20% increase in his sales force, the overall economy and industry rebound and the hiring of a new national public relations firm. He estimates 7% of the increase in revenue was because of the affiliation.

Choice, with its family of value-oriented brands for business and leisure travelers, is now gaining exposure in more primary and urban markets where it has little distribution. IHG is finding resort locations where it doesn’t have owned or managed properties already. The franchise companies are benefitting by broadening their reach, and revenue, while providing their customers with new places to stay.

The surge in these collections has come at a time when new development and more traditional brand growth have stalled.

“They need to grow somehow,” says Ted Teng, Leading Hotels president, CEO and an industry veteran who was with Sheraton when the Luxury Collection took roots after the acquisition of the CIGA hotels in Europe. “When public companies like Marriott fully penetrate a market they grow through different brands. Well, chain brands are becoming saturated so they are looking at growing markets in the more individually branded space.”

New construction, the most typical route to brand growth, has also waned the last few years because of the economy and a lack of financing.

Teng says it’s a credit to the industry and independent-thinking owners that “the ultimate chain brands like Marriott and Choice are entering the independent space,” but he wonders how committed they’ll be. ‘The culture of being consistent is very much counter to that of the entrepreneurial independent approach,” he adds. “That will be a challenge.”

So far, owners like Kessler and others have been pleased with Marriott’s hands-off approach when it comes to design standards and service mandates.

“Marriott is a brand all about conformity, but so far we’ve found a refreshing and surprising approach that has allowed us to keep our individuality,” said Tom Conran, a principal at Greenwood Hospitality, during the panel discussion at MLIS. His company manages The Henry in Dearborn, MI, an Autograph Collection property.

Decision Time
The decision for owners has never been more complex. Not only are more choices available among franchises, collections and soft brands, but the proliferation of the Internet, social media and electronic distribution have altered the landscape.

“What was a pretty monumental task 10 to 15 years ago in terms of establishing an independent hotel whether you have an affiliation or not has gotten easier,” says Amerimar’s Cummins, before adding, “if you know how to do it.”

Therein lies the challenge. He believes managing the distribution channels and ecommerce is the most daunting task an independent faces. It’s why many owners are turning to help from franchise companies who have the infrastructure in place. “You couldn’t hire enough people at a cost-effective rate to do what we do in bundling all those services,” said Roger Bloss, founder and CEO of Vantage Hospitality, during the panel on soft brands at MLIS.

Scott Berman, the U.S. leader of the hospitality and leisure sector for PricewaterhouseCoopers, says he finds himself recommending the chain affiliation option to many of his clients because of the complexity of channel management.

“As an independent it can be incredibly costly to plug into every channel,” he says. “It sounds contrarian, that signing up with a brand can be cheaper, but look at the costs a larger hotel serving multiple segments and geographies — foreign and domestic — has. Access and exposure to all those channels is necessary.”

Conran and Greenwood Hospitality led the repositioning of the former, and foundering, Ritz-Carlton in Dearborn to The Henry last year, and earlier this year they aligned their Hotel Highland with Choice’s Ascend Collection.

He says Marriott has “provided an incredible lift” and year over year delivery through its channels has increased 600%. It’s only been a few months since Hotel Highland has joined Choice’s system, but he says rate has risen 5.5%.

In Milwaukee, Iron Horse owner Tim Dixon has resisted calls from Best Western, Choice, Marriott and more and kept his 100-room boutique free of a chain affiliation. His property, managed by Trust Hospitality and Desires Hotels, is the top-rated Milwaukee hotel on TripAdvisor.

“Maybe it’s ignorance, but I fear fees,” he said at MLIS. “Our premise is not distribution, but to drive our room revenue through food & beverage.” Winning over locals through his four popular f&b venues has helped bring out-of-town visitors and a RevPAR index of 140. Still, Dixon admits Autograph has been considered and is a possibility for a potential sequel to his Iron Horse in a different market.

At the Hutton, business has been good. The property is one of the top-rated Nashville hotels on TripAdvisor and July’s occupancy exceeded 80%, says general manager Steven Andre. For the year, it’s remained in the mid-70s. Still, Cummins says when the contract is up with Leading next year, they’ll take another long look at the options, which have changed quite a bit in the last five years.

Collection Samples

Autograph: The collection from Marriott now has 27 upper upscale and luxury properties across five sub-categories (Boutique Chic, Boutique Arts, Luxury Redefined, Iconic Historic and Retreat). The fees of the contract are almost identical to Marriott’s Renaissance franchise agreement. The term is 20 years, which has been a stumbling block for some independent owners, says Kip Vreeland, Autograph’s vice president, and it’s something Marriott is reevaluating.

Alliance: InterContinental Alliance Hotel & Resorts was launched by IHG last year when Las Vegas resorts Venetian and Palazzo joined. Montelucia in Scottsdale has followed to bring the total to three. The goal is to align with unique and independent luxury resorts in great locations where there isn’t already an owned or managed InterContinental property.

 Ascend: The collection from Choice is for upscale independent hotels that fall into one of three classes: historic, boutique or unique. There are currently 60 members and the goal is to have 100 open by 2014.

 Leading: Leading Hotels of the World is a collection of luxury hotels, resorts and spas with 430 members in 80 countries. Ted Teng says since he took over as CEO three years ago, Leading has reduced its portfolio by approximately 45 in an effort to strengthen the quality of the collection. Despite dropping in rooms, overall revenue has increased, he says.

 Lexington: Vantage Hospitality’s Lexington Collection of hotels, plaza hotels, boutique hotels and resorts has 27 properties in its portfolio, with four of those in China. Contracts and terms can be made for as little as one year and on an a la carte basis, says CEO Roger Bloss.

 Luxury: Starwood’s Luxury Collection Hotels & Resorts feature 79 hotels, resorts and residences in 35 countries. The roots of the collection began in 1906 with Compagnia Italiana Grandi Alberghi (CIGA) and evolved through acquisition into today’s Luxury Collection, which debuted in 1994.

 Preferred: Preferred Hotel Group has five sub-brands: Preferred Hotels & Resorts, Preferred Boutique, Summit Hotel & Resorts, Sterling Hotels, Historic Hotels of America and Preferred Residences. There are 840 members in 70 countries.