Hendersonville, Tenn., has launched a singular promise in recent years: Retain the flexibility of independence, get the backing of a major brand. This approach has been fueling the swell of so-called “soft brands” launched in recent years. And, for the independent hotelier who abhors the constraints of brand standards, this is a fairly compelling value proposition. Everyone wants a safety net, and global distribution can provide just that.
That’s the premise, anyway. But does the data complement or contradict?
Before we answer that question, let’s concretely define “soft brands,” which can be a nebulous term in this industry. For our purposes, soft brands will be individual hotels that are affiliated with major chain distribution that maintain their own design, name, and branding.
We aggregated performance data from the following nine soft brands: Ascend Collection, Autograph Collection, BW Premier Collection, Curio Collection, Dorchester Collection, Doyle Collection, Luxury Collection, Tribute Portfolio, and the Trump Hotel Collection. We then compared that data against national averages for traditional “hard” brands, as well as true independent hotels.
What did that data show? In the United States, soft brands displayed the ability to charge significantly higher average daily rates than traditional brands and independents.
On a trailing-12-month basis, which removes the effects of seasonality, soft brands were shown to yield, on average, ADR that was $81.59 higher than traditional brands and independent hotels combined. The resulting RevPAR was $57.79 higher.
A Closer Look
The above information is a tad misleading, however. Soft brands naturally play in higher-rated chain-scale segments. Thus, it shouldn’t come as a surprise that they yield higher ADR than a national average.
Of the nine soft brands we analyzed, two are categorized as upscale, three are categorized as upper-upscale, and four are categorized as luxury. We redid the analysis, comparing soft brand performance against aggregated performance of those three classes, which also includes independent hotels categorized as luxury, upper-upscale, and upscale.
While the change is muted, the results are the same: Soft brands still report higher ADR and RevPAR than a combined roll up of data from the luxury, upper upscale, and upscale classes. ADR, on average, was $32.70 higher, while RevPAR was $12.15 higher. Soft brands also fare comparatively well when class performance is separated. Soft brands on average play somewhere between properties classified as luxury and upper-upscale.
Keep in mind that the averages are just that—averages. This analysis begs many questions: How do individual brands or properties skew these numbers? Perhaps more importantly, what is the true cost of customer acquisition amid the context of brand franchise fees?
At a high level, at least, soft brand market reps can rest easy. The data suggests the backing of a major brand does give otherwise independent hotels a rate and revenue boost that delivers on that singular promise.
About the Author
Patrick Mayock is senior director of research and development at STR.
