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Do brands matter?: A comparison of branded and independent hotels' performance during a full economic cycle
Pennsylvania State University, University Park PA, USA.
University of Gothenburg, Gothenburg, Sweden.ORCID iD: 0000-0002-6365-930X
2011 (English)In: International Journal of Hospitality Management, ISSN 0278-4319, E-ISSN 1873-4693, Vol. 30, no 3, p. 515-521Article in journal (Refereed) Published
Abstract [en]

By analyzing longitudinal data of more than 51,000 hotels operating in the United States during the previous economic cycle, it is possible to draw conclusions regarding the performance of branded hotels compared to independent operations under various economic conditions. The results of the study indicate that while branded properties experience significantly higher occupancy rate during the different phases of the economic cycle, independent hotels experience significantly higher average daily rate (ADR) and rooms revenues per available room (RevPAR) during the same time period. While branded hotels are faced with various payments attributable to the brand, such as royalty payments and other franchise fees, those fees do not have a deleterious effect on net operating income (NOI) compared to NOI for independent hotels, suggesting that independent hotels are unable to bring their ADR and RevPAR premiums to the bottom line despite their savings in franchise expenses. Instead, the results indicate similar NOI for branded hotels and independent hotels during economic expansion, but significantly higher NOI for branded hotels during economic recession. The results of this study suggest that the intangible asset value of hotel brands may not be a static construct, but may vary by time. Sources of such intangible value of brands may include shared resources, guest loyalty programs, and yield management systems. These results contribute insight into the complex hotel owner decision of choosing between a brand affiliation and independent operation.

Place, publisher, year, edition, pages
Elsevier, 2011. Vol. 30, no 3, p. 515-521
Keywords [en]
Performance measurement, Intangible asset value, Branded hotels, Independent hotels
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:oru:diva-64134DOI: 10.1016/j.ijhm.2010.08.003ISI: 000291338200005Scopus ID: 2-s2.0-79955166491OAI: oai:DiVA.org:oru-64134DiVA, id: diva2:1173900
Available from: 2018-01-15 Created: 2018-01-15 Last updated: 2018-05-08Bibliographically approved
In thesis
1. To Be or Not to Be . . .: Brand Affiliation in the Hotel Industry
Open this publication in new window or tab >>To Be or Not to Be . . .: Brand Affiliation in the Hotel Industry
2017 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

A large proportion of any business’s value comprises intangible assets, and for many businesses a considerable part of these assets' value is attributable to brands with which businesses affiliate. In light of increasing affiliation of hotel properties with hotel chains and the increasing importance of branding in the hospitality industry, senior managers/owners should be aware of the importance of concepts such as brand equity and brand value and, better yet, incorporate them into their strategic decision-making processes. The extent to which hotel management scholars and industry practitioners understand or use the concept of brand value attributable to affiliation (BVAA) is, however, limited.

The aim of this research project is to increase our understanding of the costs and benefits connected with operating a hotel independently or as part of an affiliation, using both quantitative and qualitative methods. Such an understanding could be used to spur further research but should also be directly applicable by the practitioners.

The results of this research indicate that affiliating with a brand matters to managers/owners in the hotel industry, but also that brand-related concepts are used only to a limited extent. One of the studies comprising this dissertation, which included 51,000 hotels in the U.S. during a full economic cycle, suggests that affiliated hotels produced better financial performance than unaffiliated hotels, especially during the global economic recession of 2007–2009. On the other hand, the results from a study of hotels and organisations in Sweden suggest that brand value–related information attributable to affiliation is not used to any large extent in the industry. In the third study, a method for financially evaluating BVAA is developed, making it possible not only to measure whether affiliating produces a positiveBVAA, but also to demonstrate a practical method for financially assessing a current affiliation and the various affiliation options. Consequently, these findings should contribute new ways of treating the strategic question of affiliation.

Place, publisher, year, edition, pages
Göteborg: Göteborgs universitet, 2017. p. 206
Keywords
Hotel Industry, Hotels, Intangible Asset Value, Valuation, Consortia, Brand Value, Constructive Approach
National Category
Economics and Business
Identifiers
urn:nbn:se:oru:diva-64032 (URN)978-91-88623-04-1 (ISBN)
Public defence
2017-01-20, 18:17 (English)
Available from: 2018-01-15 Created: 2018-01-11 Last updated: 2018-01-15Bibliographically approved

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Carlbäck, Mats

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