How Net Unit Growth Drove Hotel Industry Brand Proliferation

Skift analysis explains why major hotel groups operate around 200 brands, driven by the net unit growth (NUG) metric. In the asset-light model, parent companies collect fees per room while third parties fund construction, so adding rooms efficiently converts to profit. With market saturation, brand proliferation becomes a growth tool; franchise 'area of protection' clauses typically shield only one brand, prompting parents to launch sister brands to add rooms in the same market. The strategy traces to Quality Inns' 1980 segmentation and Marriott's 1983 Courtyard, but has shifted from consumer-driven to growth-metric-driven.