CBRE: The Significance of Brands and Brand Families: Reflecting on the Years 2013-2022

CBRE Hotels Research has conducted a comprehensive examination of hotel brand performance over a decade, covering six major publicly traded hotel companies, which collectively represent over 60% of the U.S. hotel supply as of the end of 2022. For a more extensive dataset dating back to 2000, you can find it available for purchase on their website.

The study revealed that only ten out of the 49 brands owned by these six companies achieved or exceeded the 2.9% Compound Annual Growth Rate (CAGR) of the Consumer Price Index (CPI) from 2013 to 2022 in terms of Revenue per Available Room (RevPAR) growth. Unfortunately, the remaining 39 brands, accounting for nearly 80% of the sample, either failed to keep pace with inflation or experienced negative RevPAR growth.

The choice of a brand can have substantial financial implications. For instance, the RevPAR CAGR gap between the strongest and weakest luxury brands was 7 percentage points, resulting in an impressive 87% cumulative premium over the examination period.

Both the individual brand and the broader brand family play significant roles in performance. The top-performing brand family achieved a RevPAR CAGR of 2.9%, whereas arguably the weakest-performing brand family had a declining RevPAR CAGR of 0.1%. Over the 2013 to 2022 period, the strongest brand family outperformed by approximately 30%. Interestingly, in 2013, these two brand families had RevPARs separated by less than $6, so the RevPAR growth discrepancy cannot be attributed to a difference in chain scale.

The analysis also considered the standard deviation in brand performance within a brand family. A higher standard deviation indicates greater variability in brand performance within that family, making it less certain that your chosen brand will perform at or above the average. The brand family with the highest variability in brand performance had a standard deviation nearly three times that of the most consistent brand family. Therefore, when selecting a hotel brand, hotel owners, developers, and investors should also take into account factors like occupancy rates, loyalty program contributions and fees, and overall performance.

Another noteworthy finding is that organically grown brands have outperformed acquired brands. Nearly 40% of organically grown brands experienced above-average room and RevPAR growth, compared to just 17% of acquired brands from 2013 to 2022.

Read the full report here