The length of brand affiliations across chain scales
The length of brand affiliations across chain scales
13 NOVEMBER 2017 9:17 AM

Economy hotels outlast all other chain scales when sticking with their first brand affiliation, but across the board, the average length of a brand affiliation decreases as a hotel property ages.

HENDERSONVILLE, Tennessee—Most changes to STR’s U.S. census hotel database come from brands and hotel owners directly, since the information about brand affiliation and ownership structure governs the distribution of the weekly and monthly STAR reports. This then allows us to take a deeper look at the average time a hotel spends affiliated with a brand. (STR is the parent company of Hotel News Now.)

It is probably not a surprise that once a hotel opens and chooses a flag, the initial affiliation lasts for a long time. Owners have spent a large amount of time and energy to select the correct brand for their specific property, and of course that first relationship is supposed to last. Maybe it won’t last forever, but at least until the owner realizes their financial returns. 

It seems a bit surprising that for luxury chains the first affiliation is less stable than for economy properties. Then again, this data does not comment on ownership changes, so it could be that owners change more often on the upper end, and with that come opportunities to reflag.

One number not charted above that is significant is that independent hotels, once they open, stay brand-free for the first 88 years of their existence. Overall, it should make franchise sales staff everywhere feel good about their products given that once the initial brand is selected, franchise fees flow for well over a decade.

But this only holds true for the first affiliation. Our data shows that brand affiliation length declines steadily after the first. For the remainder of the hotel’s useful life, the flag changes happen quickly and often. Let’s compare the above table to the average length of the fourth affiliation that the owner chooses:

So, where the length of the first affiliation is measured in decades, over time it only lasts for years. An interesting picture emerges when we track up to eight affiliations per property by chain scale:

In other words, the loyalty to any chosen brand diminishes rapidly once the “infatuation” with the initial brand wears thin.

This is of course not a statement about brand quality but probably more a statement about owner expectation and brand proliferation. As the major players develop more flags, they have dedicated franchise sales staff to sell their unique brand promise to owners. Owners have more choice, and as our data shows, they take full advantage of that choice.

So as a hotel ages and the existing brand requires a certain dollar amount per room for its property-improvement plan, an owner might find a new home in a new franchise organization for a fraction of the cost of keeping up the existing arrangement. The takeaway here for owners is probably that it is a buyer’s market when it comes to choosing a franchise.

Special thanks to an unnamed investment banker for asking the question and for Claudia Alvarado from STR’s Consulting and Analytics team for preparing the data.

This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.

1 Comment

  • K. JIANG December 7, 2017 9:29 PM Reply

    Dear HNN, many thanks for this definitely interesting article, do you it for Chinese market please?

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