Industry Update
External Article18 May 2020

Hotels Are Betting Big on Brand Conversions Coming of Out of the Crisis: Is That Smart?

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Depending on whether global brands or independent operators are the ones talking, there is a lot of money to be won or left on the table in a hotel brand conversion. Run the numbers on renovation costs and fee structures before making the plunge into one of these deals.

The world's biggest hotel companies are banking on brand conversions to fuel growth out of the coronavirus downturn in travel. But changing flags on a property isn't always a silver bullet to drive new revenues.

Travel demand plummeted in the first quarter while coronavirus spread around the world. But hotel executives still saw opportunities amid the turbulent environment. The chief executives of global hotel companies like Wyndham, Hyatt, and Marriott all mentioned growth over the next few years would likely stem from properties converting to a flag under their respective brands. But not everyone is convinced conversion talks will pan out as easily as some of these companies expect.

"Oftentimes in smaller markets, it's sad to say, but independent hotel owners are impacted when a person comes to their front desk with the business card of a larger corporation. They can't help but think, 'Oh, maybe this will save me,'" Magnuson Hotels CEO Thomas Magnuson said. "People keep thinking some brand is going to come save them. No. If a hotel has a good location, good ethic, and really reaches out to local business drivers, chances are they're still going to do well."

Read the full article at skift Inc.

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