The notion that a hotel’s brand contributes significantly to the property’s market value is supported by an analysis of nearly eleven hundred hotel transactions over the past fifteen years. The analysis found that brands added value beyond the usual contributors to a property’s value, such as net operating income and revenue per available room. The effects of branding were most noticeable in midmarket and upscale hotels. Based on per-room sales statistics, certain brands added significantly more value to their franchisees’ properties than others.
J. W. O’Neill, “An Automated Valuation Model for Hotels,”Cornell Hotel and Restaurant Administration Quarterly45, no. 3 (2004): 260-268.
2.
J. W. O’Neill and A. Lloyd-Jones, “One Year after 9/11: Hotel Values and Strategic Implications,”Cornell Hotel and Restaurant Administration Quarterly433, no. 5 (2002): 53-64.
3.
O’Neill, “An Automated Valuation Model for Hotels,”260-268.
4.
See, for example, J. P. Walsh, “Hoteliers Convert Properties to Find Better Brand Partners,”Hotel and Motel Management218, no. 3 (February 17, 2003): 23-23.
5.
J. W. O’Neill and A. S. Mattila, “Strategic Hotel Development and Positioning: The Effects of Revenue Drivers on Profitability,”Cornell Hotel and Restaurant Administration Quarterly47, no. 2 (May 2006): 146-154.
6.
Hotels, “The Largest Hotel Brands,” July 2005, p. 50-50.
7.
E. Watkins, “Brand Bonanza,”Lodging Hospitality61, no. 15 (November 2005): 56-63.
8.
D. Aaker, Managing Brand Equity: Capitalizing on the Value of a Brand Name (New York: Free Press, 1991).
9.
J. W. O’Neill and A. S. Mattila, “Hotel Branding Strategy: Its Relationship to Guest Satisfaction and Room Revenue,”Journal of Hospitality & Tourism Research28, no. 2 (2004): 156-165.
10.
J. Kapferer, Strategic Brand Management: Creating and Sustaining Brand Equity Long Term (Dover, NH: Kogan Page US, 1997).
11.
Previous research has indicated that the effects of other potential variables, such as location and age, are captured by variances in occupancy, average daily rate (ADR), net operating income (NOI), and number of rooms.
12.
P. H. Farquhar, “Managing Brand Equity,”Marketing Research1 (September 1989): 47-47.
13.
Aaker, Managing Brand Equity.
14.
K. L. Keller and D. R. Lehmann, “How Do Brands Create Value?”Marketing Management12, no. 3 (2003): 26-40.
15.
Keller and Lehmann, “How Do Brands Create Value?”26-40.
16.
S. Onkvisit and J. J. Shaw, “Service Marketing: Image, Branding, and Competition,”Business Horizons32 (January-February 1989): 13-18.
17.
L. A. Cai and J. S. P. Hobson, “Making Hotel Brands Work in a Competitive Environment,”Journal of Vacation Marketing10, no. 3 (2004): 197-208.
18.
P. C. Yesawich, “So Many Brands, So Little Time,”Lodging Hospitality52, no. 9 (September 1996): 16-16.
19.
S. G. Bharadwaj, R. P. Varadarajan, and J. Fahy, “Sustainable Competitive Advantage in Service Industries: A Conceptual Model and Research Propositions,”Journal of Marketing57 (October 1993): 83-99.
20.
K. Prasad and C. S. Dev, “Managing Hotel Brand Equity: A Customer-Centric Framework for Assessing Performance,”Cornell Hotel and Restaurant Administration Quarterly41, no. 3 (June 2000): 22-31.
21.
H. B. Kim, W. G. Kim, and J. A. An, “The Effect of Consumer-Based Brand Equity on Firms’ Financial Performance,”Journal of Consumer Marketing20, no. 4 (2003): 335-351.
22.
W. Jiang, D. S. Chekitan, and V. R. Rao, “Brand Extension and Customer Loyalty: Evidence from the Lodging Industry,”Cornell Hotel and Restaurant Administration Quarterly43, no. 5 (2002): 5-5.
23.
See J. deRoos and S. Rushmore, “Hotel Valuation Techniques,” in Hotel Investments: Issues and Perspectives, 3rd ed., ed. L. E. Raleigh and R. J. Roginsky (Lansing, MI: Educational Institute of the American Hotel & Lodging Association, 2003), 71-102.
24.
Note that the ADR rule of thumb has been updated to be $1 in ADR per every $600 to $1,000 in value per room depending on the hotel type.
25.
Ibid.
26.
Ibid. and
27.
O’Neill, “ADR Rule of Thumb,”1-10.
28.
Keeling, “Brands Have the Financing Edge,”26-26.
29.
Kinnardet al., “Intangible Assets in an Operating First-Class Downtown Hotel.”
30.
Appraisal Institute, The Appraisal of Real Estate, 11th ed. (Chicago: Appraisal Institute, 1996), 578-578.
31.
deRoos, “Business Enterprise Value in Hotels.”
32.
Kenney, “Quantifying Business Enterprise Value in Shopping Malls.”
33.
Kinnardet al., “Intangible Assets in an Operating First-Class Downtown Hotel.”
34.
Hotels, “The Largest Hotel Brands.”
35.
J. P. Walsh, “Brands Add Value to Gain Advantage,”Hotel and Motel Management218, no. 16 (September 2003): 44-44.
36.
J. P. Walsh, “Group President Hired to Aid Cendant Brands,”Hotel and Motel Management218, no. 14 (August 2003): 6-6.
37.
Consumer Reports, “Hotels.”
38.
Walsh, “Group President Hired to Aid Cendant Brands.”
39.
F = 6.12, p < .05.
40.
O’Neill and Lloyd-Jones, “Hotel Values in the Aftermath of September 11, 2001,” 53-64.
41.
Y. Morrison, “Lodging Segmentation Study Overview” (presented at the 2004 International Hotel/Motel & Restaurant Show Hospitality Leadership Forum, New York, November 13, 2004).
42.
S. Paterik, “Sheraton Plans to Pay Guests for Bad Service,”Wall Street Journal, September 6, 2002, p. B1-B1.
43.
O’Neill and Belfrage, “A Strategy for Estimating Identified Intangible Asset Value,”78-86.
