For Hotels the Future Is Branded. Or Is It?
Recent Changes in Consumer Purchasing Behavior Could Slow the Ongoing Hotel Brand Proliferation
In the U.S., 72% of hotels are affiliated with a brand. Ever since Kemmons Wilson started his first Holiday Inn in Memphis, Tennessee, in 1952, the makeup of the hospitality industry has become more and more heavily focused on brands.
In the U.S., 72% of hotels are affiliated with a brand. Ever since Kemmons Wilson started his first Holiday Inn in Memphis, Tennessee, in 1952, the makeup of the hospitality industry has become more and more heavily focused on brands.
This trend is hardly surprising, as standardized hotel products are well liked by guests and owners alike. As importantly, over the years the performance of a branded hotel could easily be tracked and then used by lenders to underwrite more properties of the same type, allowing for an easier way to model future results.
In addition, loyalty programs that provide owners and operators with access to a strong customer base make brand affiliations attractive, despite their associated costs. As large companies try to offer their customers new experiences, brands have proliferated. CoStar's hospitality analytics firm, STR, currently counts 278 brands with hotels in the U.S.
The trend toward branded hotels can also be observed when looking at the past 12 months of hotel openings. Despite the pandemic, more than 100,000 rooms opened in the 12-month period ending in February. Of those rooms, 94% were affiliated with a chain and only 6,800 rooms were opened in independent hotels.