Research: Heritage matters to hotel brand value

Brands with a long-established heritage remained dominant in the minds of guests despite the disruption of the pandemic, according to BVA BDRC’s latest Brand Margin research.

The group reported that flags such as Hilton, Sheraton and Holiday Inn were the most familiar to consumers, while brands with a reputation for value, such as Premier Inn and Ibis, also featured strongly.

The Brand Margin research reports on how much more or less a consumer would pay for a branded product, against a competitor or unbranded alternative, measuring what a brand can add to a hotel. Brand Margin combined with how familiar the brand is to the consumer creates a Brand Advantage score.

The research took in brands across the segments, from economy to luxury and covered hotels around the world, including Europe, the U.K., Middle East, China and the U.S.

Around the world, Hilton Hotels & Resorts was most frequently found to hold the brand advantage—the combination of brand familiarity and brand margin, which made it the most widely-known flag in the market.

“Hilton Hotels & Resorts and Holiday Inn were two of the first brands to launch in the hotel sector and have come to dominate the market and helped to spread the idea of the branded hotel around the world,” said James Bland, director, BVA BDRC. “Hilton Hotels & Resorts’ parent company has recognized the power of this formative brand and, to capitalize on this, we have seen the group add ‘by Hilton’ to its subsequent brand launches, keeping this connection with the consumer.”

While Hilton Hotels & Resorts’ reach was such that it held the brand advantage in markets as diverse as the Middle East and China, it did not always rank highest in terms of brand margin. However, the power of the brand came through in markets such as Benelux, where Hampton by Hilton ranked highest in terms of brand margin.

Local brands have risen up to challenge these heritage flags. In the U.K., Premier Inn was ranked ahead of Hilton Hotels & Resorts in terms of brand advantage, pushing rival Travelodge into fourth place behind Holiday Inn.

Bland added, “The U.S. led the way in branding, but we are also seeing domestic brands rising to the fore around the world, particularly in the budget and economy segments. Investment in advertising alongside strong word of mouth has meant that flags such as Premier Inn are able to convert their brand advantage into direct bookings and keep their cost of acquisition low.”

Across the rest of the world, Accor illustrated its hold on the budget and economy segments in Europe, with its Ibis brand leading the ranking in terms of familiarity in countries including France and Germany.

In the company’s home market of France, Accor brands took the top three slots for brand advantage, with Ibis, followed by Mercure and Novotel; all flags associated with value.

Away from the value segment, in the more mature market of the U.S., it was luxury brands Four Seasons and The Ritz-Carlton that were able to offer a premium against unbranded hotels in terms of Brand Margin.

“The latest Brand Margin results underscore the value that adding a brand can bring for investors, particularly in the value and luxury ends of the market,” said Bland. “These owners must weigh the costs of adding a flag over their property, which can vary significantly according to the market segment. Our research found that the luxury brands can drive rate and also enjoy higher customer loyalty, aided by frequency programs, which can be expensive to participate in.”

He added, “The good news for investors is that the branded sector has come a long way since Hilton opened its first hotel in 1925. There are a growing number of products on the market which mean that owners need not embrace the full brand, with its multiple guidelines, mattress requirements and plate specifications. The pandemic has helped to accelerate the growth of the soft brands such as Hilton’s Curio, giving owners cheaper access to distribution, while the hotel groups maintain their pipelines in what is proving a virtuous circle.”