Do brands matter? A comparison of branded and independent hotels' performance during a full economic cycle

John W. O'Neill, Mats Carlbäck

Research output: Contribution to journalArticle

63 Citations (Scopus)

Abstract

By analyzing longitudinal data of more than 51,000 hotels operating in the United States during the previous economic cycle, it is possible to draw conclusions regarding the performance of branded hotels compared to independent operations under various economic conditions. The results of the study indicate that while branded properties experience significantly higher occupancy rate during the different phases of the economic cycle, independent hotels experience significantly higher average daily rate (ADR) and rooms revenues per available room (RevPAR) during the same time period. While branded hotels are faced with various payments attributable to the brand, such as royalty payments and other franchise fees, those fees do not have a deleterious effect on net operating income (NOI) compared to NOI for independent hotels, suggesting that independent hotels are unable to bring their ADR and RevPAR premiums to the bottom line despite their savings in franchise expenses. Instead, the results indicate similar NOI for branded hotels and independent hotels during economic expansion, but significantly higher NOI for branded hotels during economic recession. The results of this study suggest that the intangible asset value of hotel brands may not be a static construct, but may vary by time. Sources of such intangible value of brands may include shared resources, guest loyalty programs, and yield management systems. These results contribute insight into the complex hotel owner decision of choosing between a brand affiliation and independent operation.

Original languageEnglish (US)
Pages (from-to)515-521
Number of pages7
JournalInternational Journal of Hospitality Management
Volume30
Issue number3
DOIs
StatePublished - Sep 1 2011

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economic cycle
income
economic conditions
economics
savings
comparison
Economic cycles
Hotel performance
Hotels
resource
rate
fee

All Science Journal Classification (ASJC) codes

  • Tourism, Leisure and Hospitality Management
  • Strategy and Management

Cite this

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Do brands matter? A comparison of branded and independent hotels' performance during a full economic cycle. / O'Neill, John W.; Carlbäck, Mats.

In: International Journal of Hospitality Management, Vol. 30, No. 3, 01.09.2011, p. 515-521.

Research output: Contribution to journalArticle

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