The reality of the U.S. hotel industry is that most owners stay with the same affiliation, be it independent or otherwise.
HENDERSONVILLE, Tennessee and BOULDER, Colorado—The STR Census Database keeps track of U.S. hotels’ affiliation changes over time. Overall, there have been some 90,000 changes so far. Since we started tracking hotel data in 1987, we also have kept tabs on the name of the brand and the corresponding branding date. STR is the parent company of HotelNewsNow.com.
Brand executives and owners are keen to assure that we know which brand has access to which performance report because it is common for branded hotels to receive our weekly STAR reports, which show the property’s proprietary data. Thus the “brand affiliation” field in our database is about as real time as possible, which allows us to take a closer look at the average times a property is affiliated with a brand.
Number of affiliations by hotel
Almost 60% (28,500) of all hotels in our database never change the affiliation with which they opened.
This could either mean they remained independent for the lifetime of the hotel or remained with the same brand. Twenty percent of all hotels changed flags once (two affiliations), 12% twice (three affiliations) and the remaining 11% changed their affiliation three or more times (four or more affiliations). Despite a constant flood of press releases touting a brand conversion, the reality of the U.S. hotel industry is that most owners stay with the same affiliation, be it independent or otherwise.
The following table shows the absolute numbers of how many hotels have switched brands and how many times:
Affiliation length by chain scale
By breaking down the chain affiliation changes by scale, the following picture emerges: The average time a chain-affiliated hotel stays with a brand ranges between 10 to 15 years. Upper-upscale hotels hold a brand, on average, for just fewer than 15 years, while upscale hotels are affiliated around 10 years on average.
Our data seems to suggest that owners of independent hotels like to stay independent. The average length of an independent affiliation lasts nearly twice as long as a chain affiliation at almost 23 years.
The average number of affiliation changes by scale also shows hotels change flags less than two times in their existence. The notable outlier is the economy chain scale, where properties change more than two times.
Affiliation length by number of affiliations
Given that more than half of hotels stick with their original affiliation and given further that independent hotels are normally affiliated longer than branded hotels, it should come as no surprise that the average length of the current affiliation of properties that never switched brands is almost 25 years.
As properties switch brands, the average time associated with such a brand goes down. It is almost as if once the owner decides to switch, they become less brand loyal the more they switch.
The affiliation change also might result from an owner switching back and forth between brand and independent status. Another reason might be that the hotel brand companies decide a property no longer fits the brand standard and initiates the brand change from their end.
For properties that already have switched affiliations seven times, the average length of the current affiliation is only 3.3 years. For these “heavy brand switchers,” the average length of affiliation with their last five affiliations is always less than five years. Keep in mind that only 404 hotels out of 50,000 hotels switched brands seven times.
Overall, hotel owners in the U.S. hotel industry are remarkably loyal to their original affiliation, be it a brand or no brand at all. Despite a steady influx of new chains and ongoing ownership changes that are heavily publicized in the media, the amount of flag changes is relatively small.
Franchise sales officers must like this idea. After all, it speaks to the power of their brands.
That said, once owners decide to make a change, they are much more susceptible to change again (and again), which is likely music to the ears of the competing franchise sales staff.
It will be interesting to note if the current upturn in the industry, with its strong financial results, makes owners more or less brand loyal as time goes by.