HENDERSONVILLE, Tennessee—STR data shows a slight uptick in the conversion of branded hotels to independents in 2008. In the most recent year, more than 67,000 guestrooms were converted from a branded hotel to an independent, an increase of around 1,000 rooms from 2007. At the same time, more than 50,000 hotels gained a flag, roughly 9,000 fewer rooms than in the previous year.
The reasons for the conversion from branded hotels to independent hotels vary. On one hand are the involuntary conversions of hotels that no longer meet the brand standard of the flag they are flying, or any brand standard for that matter. When franchise organizations believe a property no longer delivers on the brand promise and may in fact hurt the overall image, the days of the franchise agreement are numbered.
On the other hand, the past couple of years have delivered such good returns to owners that they might rethink the value of the brand. A simple cost-benefit analysis may convince them that the brand does not indeed deliver marketing and sales muscle and the hotel may perform well without corporate support. It will be interesting to see if the current economic situation will force owners to reverse course and gain their competitive advantage by reaffiliating again.
