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Non-Branded Hotels Outperforming the Competition

Non-Branded Hotels Outperforming the Competition

 

If you had to write a state of the union speech for independent hotels, you would likely follow every U.S. president’s lead and comment that “the state of the union is strong.” Indeed, in 2015 hotels not affiliated with a brand showed occupancy growth of 2.5 percent, ADR increases of 4.4 percent, and RevPAR acceleration of 7.1 percent. At this point in time, both investors and owners should find the possibilities presented by independent properties very appealing.

That said, the U.S. lodging industry is dominated by brands. Roughly two-thirds of all rooms are chain affiliated, which, as defined by STR, means that three or more hotels use the same brand name, marketing message, and franchise headquarters. The remainder of the industry, some 1.5 million rooms, are not affiliated with a brand, hence independent. Independent properties can run the gamut of chain scale, with price points ranging from very high in luxury hotels on the coasts to more reasonable in very limited-service motels in the middle of the country.

Hoteliers may decide to forgo a brand association for a variety of reasons, whether they be financial, strategic, or even that the ownership group is just happier running its own ship. The real question is whether branded hotels perform better or worse than their unbranded counterparts. The verdict is of course impossible to render on a high level, as all hotel demand is local and so is the answer to this question. What we can report is that the absolute ADR for a chain hotel in 2015 was $121, while for an independent hotel it was $118. Additionally, branded hotels reported an occupancy of 67 percent, while independent hotels saw an occupancy of only 62.2 percent.

Read rest of the article at: Lodging Magazine

 

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