Hotel Decoupling

The common practice of hoteliers running on the same track with a specific brand has changed. The switch has been thrown! What’s happening in the lodging industry? Hotel brands and management/ownership are decoupling. Hotel operators, formerly staunchly unswerving to their brand of choice, are now running on different tracks from those brands, and even changing brands multiple times.

More than a few IncomeWorks client jurisdictions have large lodging sectors, whether for local employers, transportation amenities, or tourism. Following is what we have noticed over the recent past about hoteliers.

Hotel operators no longer have much brand loyalty. Many own properties of multiple brands and switching them is simply product repositioning, similar to juggling clothing brands in a retail store. Buyers of existing properties see only how they can maximize property operations to create value; this often means a franchise change.

Hoteliers sometimes don’t even get caught up in product type! While there are strong monetary incentives to stay with original subtype (such as Full Service, Limited Service, or Extended Stay) limitations in use, related to lodging design, can be overcome.  Getting in early on the next trend, through innovative renovation in the right location, is compelling.

Finally, hoteliers may buy or develop just to own, and not manage at all. Or they may buy or develop and then immediately resell, retaining management or simply a brand presence in a particular location. Creative specialization is now required to meet an increasingly fickle customer profile.

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