The analysts from Source Strategies demystify the Business Value of Hotel Brands in this revealing article from The Appraisal Journal: New Option in Hotel Appraisals: Quantifying the Revenue Enhancement Value of Hotel Brands.
This article describes a new system that proves hotel brands contribute to hotel revenues, but with major differences in the degree of contribution by each brand. The system quantifies the income attributable to each brand, relative to the market average. O’Neill and Xiao analyzed sale transactions to show that a hotel’s brand contributes significantly to the property’s market value. The study presented here uses a distinctly different approach.
Key findings in the study include:
Each brand generates its own level of revenue to a hotel. The higher-tier brand conversion cases that were examined performed significantly better in RevPAR Index when operating under a major brand than they did when operating as independent or marginally branded properties. Conversely, marginal brands contributed far less in revenue generation, with nominal, if any, RevPAR Index changes noted for brands that are considered bottom tier. Naturally, a number of middle-tier brand names are distributed along the hierarchy between upper-tier and marginal hotel brands. Furthermore, the changes in RevPAR Index for upper-tier and middle-tier brands could be understated by a modest amount because the samples included many properties that converted not only from/to independent status, but also from/to marginal brands and did not entirely bottom out to independent status.
Contact Source Strategies with the details of your case. We offer customized studies with full documentation clearly proving hotel brands value via the ‘Scientific Method.’ We can also provide expert witness testimony if needed.