Brands and Brand Families Matter: A look back 2013–2022

Key Takeaways

• CBRE Hotels Research analyzed ten years of hotel brand performance for six large public hotel companies, encompassing over three million rooms or 60% of US supply as of year-end 2022. A more comprehensive dataset, beginning in 2000, is available for purchase on our website.
• Revenue per available room (RevPAR) growth for only 10 of the 49 brands held by these six companies met or exceeded the 2.9% compound annual growth rate (CAGR) of the Consumer Price Index (CPI) from 2013 to 2022. The remaining 39 brands, or nearly 80% of the sample, had RevPAR growth that either failed to keep pace with inflation or was negative.
• Selecting the wrong brand can have sizable financial consequences. For example, the difference in the RevPAR CAGR between the strongest and weakest luxury brands was 7 percentage points, resulting in an 87% cumulative premium over the examination period.
• Both the brand and the brand family matter. The strongest performing brand family had RevPAR CAGR of 2.9%. This compares with the performance of arguably the weakest-performing brand family, which experienced declining RevPAR CAGR of 0.1%. On a cumulative basis, the strongest brand family outperformed by roughly 30% over the 2013 – 2022 period. As of the starting point in 2013, these two brand families had RevPARs less than $6 apart, so we would not attribute the RevPAR growth difference to a variance in chain scale.
• We also examined the standard deviation in the performance among the brands within a brand family. The greater the standard deviation in brand performance within one family, the less certain you can be that your brand will perform at or above the average. The brand family with the most variability in brand performance had a standard deviation nearly 3x that of the most consistent brand family. Hotel owners, developers and investors should also consider occupancy rates, loyalty programs contributions and fees, and overall performance when selecting a hotel brand.
• Organically grown brands have outperformed acquired brands. Nearly 40% of organically grown brands had above-average room and RevPAR growth compared with just 17% of acquired brands from 2013 to 2022.

Brand proliferation has been concentrated in the upper-price tier

To help hotel developers and investors with their due-diligence process, CBRE Hotels Research collected more than 20 years, and analyzed ten years, worth of hotel key performance indicators (KPIs) disclosed in the SEC filings of six large public companies: Choice, Hilton, Hyatt, IHG Hotels & Resorts, Marriott and Wyndham. Combined, these companies had more than three million rooms or approximately 60% of total U.S. hotel supply at year-end 2022. Underlying data used to conduct this analysis is available for purchase here.

Since 2013, these six companies have increased their brand count by nearly 70% for a CAGR of approximately 6%. The bulk of this growth was in luxury and upper-upscale brands, which nearly doubled to 49. From 2018 through September 2023, these public companies have increased their number of brands at a CAGR of 7.3%.

Luxury has been the fastest-growing chain scale both by number of brands and room count, increasing by a 7% CAGR from 2013 to 2022. Although luxury brands have the fewest overall number of rooms, the segment has the third-highest number of brands.

While the luxury segment room count grew, the economy segment shrank by 5% over the same period, although the number of economy brands remained unchanged at nine. Niche brands may be less important as a driver of economy hotel demand than price and location, as there has been no economy brand growth on a net basis since 2013. The economy segment accounted for the lowest share of total brands owned by the six public hotel companies we analyzed. While these brand families have increasingly added upscale brands, many of their most recent brand announcements have been among the economy and lower mid-scale segments. As higher-priced markets have become more saturated, creating new niche brands in lower-price tiers has become increasingly necessary for unit growth, which is a key driver of profits.

Figure 1: Brand Count by Chain Scale for Publicly Held Hotel Companies, 2013 vs. 2022

Extended stay, all-inclusives and soft brands have been stand outs in terms of growth

Aggregate room count of full-service brands grew fastest since 2013 at 42% vs. 30% for limited-service brands, although on an absolute basis more limited-service rooms were added (roughly 556,000 vs. nearly 387,000).

We expect unit growth to shift decidedly toward extended-stay and limited-service hotels, and all-inclusive conversions over the next few years, given increasingly flexible work patterns, rising leisure travel, high construction costs and the challenging financing environment.

The extended-stay segment has nearly doubled its room count since 2013 as longer stays have become more popular with guests. In addition, the all-inclusive segment has shown the highest annual CAGR since 2013 as larger brand families, particularly Hyatt, have entered this space through organic brand development and acquisitions.

Since its creation in 2008 with Choice’s Ascend Collection and bolstered in 2010 by Marriott’s Autograph Collection, the soft-brand category has grown nearly sixfold to roughly 149,000 rooms. While soft-brand hotels have distinctive design styles and the regional flair of leading independent properties, their affiliation with a global brand family gives them accesses to wide-ranging marketing channels, customer loyalty rewards programs, dedicated suppliers, staff training models, back-of-house operational standards and new technologies. Although still a small percentage of supply overall, soft brands will be a meaningful driver of growth in the future, particularly in the upper-upscale and luxury segments. Most major hotel companies now have soft brands, including Hilton’s Curio Collection, Hyatt’s Unbound Collection, Marriott’s Autograph collection and Wyndham’s Trademark.

Figure 2: Limited-Service vs. Full-Service Brand Room Count, 2013 & 2022

Figure 3: Extended-Stay, All-Inclusive & Soft Brand Room Count, 2013 & 2022

Chains outperformed on unit growth but underperformed on RevPAR

CBRE Hotels Research gauged the performance of 49 of the 118 brands owned by Choice, Hilton, Wyndham, Marriott, Hyatt and IHG that publicly report RevPAR and room count growth since 2013, many of the other brands' KPI performance are not disclosed in the companies’ SEC filings given they are too small to reach the reporting threshold. The RevPAR growth of the 49 brands examined underperformed the national average, though unit growth was stronger.

RevPAR growth for the analyzed set increased at a 1.4% weighted average CAGR between 2013 and 2022, while room count increased at a 1.9% CAGR. This compares to RevPAR and supply growth of 3.4% and 1.1%, respectively, for the U.S. The higher unit growth and lower RevPAR performance of the major brands examined in this report relative to the national averages suggests that easier access to capital and potentially higher demand, driven by loyalty programs, are supporting stronger unit growth but perhaps contributing to potential RevPAR cannibalization. When overall chain-scale performance is plotted, upscale brands showed the highest weighted average RevPAR growth while upper-midscale properties had the greatest growth in room count. Luxury chains had a decline in RevPAR despite their growth in room count.

Figure 4: Average Chain Scale CAGR Performance RevPAR vs. Rooms CAGR

RevPAR at 39 out of 49 brands lagged inflation

When ranked by RevPAR growth, it is evident that brand selection is critical; consider that RevPAR growth for only 10 brands met or exceeded the 2.9% CAGR for CPI from 2013 through 2022. The remaining 39 brands, or nearly 80% of the sample, had either RevPAR growth that failed to keep pace with inflation or, in some cases, RevPAR contraction. This underperformance was likely influenced by 2022 being the end of our examination period when the industry was still recovering from pandemic-related travel restrictions. However with RevPAR now declining again, it is likely that 2023 RevPAR for many brands will not keep pace with inflation.

Figure 5: Average RevPAR CAGR by Brand

Even within brand families, brand performance can vary materially

To further illustrate that brand selection is critical, consider the standard deviation among the 49 brands analyzed and categorized by chain scale. Even though the economy chain scale has the highest RevPAR CAGR, the standard deviation of performance among the brands is relatively high. This means that performance can vary widely depending on the brand selected within that chain scale. The same is true for organic brands that are developed in-house, which typically have the highest average performance but have the widest variation, indicating that not all brands created by the parent brand outperform.

Figure 6: Average Chain Scale RevPAR CAGR Statistics

In Luxury, variances in RevPAR growth resulted in as much as 87% RevPAR outperformance

For luxury brands, the weighted average CAGR for RevPAR and room count since 2013 was -0.2% and 2.0%, respectively. Those luxury brands that outperformed in RevPAR growth underperformed in unit growth, and those that outperformed in unit growth underperformed in RevPAR growth. We believe there are three possible reasons for this:

1. Brands with lower unit growth saw either closures or rebranding of their assets, leaving only the strongest properties still affiliated with the brand and putting upward pressure on RevPAR growth.
2. Closures are not the driver and there is no survivorship bias; however, there was insufficient demand to keep pace with the strongest unit growth brands, leading to cannibalization at those brands and, thus, RevPAR underperformance.
3. This dynamic is just a result of using 2022 as an end date. It is a snapshot in time at a point when the industry, and particularly the luxury segment, was still recovering from the COVID pandemic.

The spread between the best and worst performing brands in the luxury chain scale demonstrates the significance of these differences in RevPAR performance. The weakest brand recorded a 3.1% drop in RevPAR CAGR. If that brand instead had RevPAR growth commensurate with the top-performing brand (+3.9% CAGR) over the same period, RevPAR would have increased by 7 percentage points compounded annually or an 87% RevPAR premium to its actual performance.

Over the past 9 years, average RevPAR growth for the upper-upscale chain scale was slightly better than the luxury group, up by 0.2%, with slower room growth of 1.3%. However, with a supply base nearly six times the size of the luxury chain scale, the slower supply growth percentage can be expected.

Figure 7: Nine-Year RevPAR CAGR vs. Nine-Year Room Count CAGR for Luxury Brands

Figure 8: Nine-Year RevPAR CAGR vs. Nine-Year Room Count CAGR for Upper Upscale Brands

The Upscale chain scale shows fewest signs of cannibalization

Given the strong growth in extended-stay and limited-service room counts, the CAGR of rooms for the upscale brands was 4.3%, the highest of any chain scale. RevPAR growth was a more modest 1.1% on average. Nearly half of the upscale brands have had above-average room and RevPAR CAGR since 2013, suggesting that near-term cannibalization may be less of a risk in this chain scale.

Figure 9: Nine-Year RevPAR CAGR vs. Nine-Year Room Count CAGR for Upscale Brands

Upper midscale brands posted the highest RevPAR growth since 2013 at 2.4%, with room count growing 2.3%. However, a closer look at individual brand performance within the chain scale reveals that 43% of the brands posted both below the chain scale average room count and RevPAR growth, suggesting the average performance of the brands in this chain scale is likely benefitting from the strength of a few brands.

Figure 10: Nine-Year RevPAR CAGR vs. Nine-Year Room Count CAGR for Upper Midscale Brands

Economy brands are showing the greatest room count contraction

RevPAR CAGR was primarily positive for midscale brands in our sample. Average RevPAR growth was 1.2% for the group versus a 1.5% CAGR in room count. Economy brand RevPAR was 1.5% on a compound basis, while room growth contracted by 0.7%. Most of the RevPAR performance of the economy brands was above the chain scale average since 2013. This could be because of closures and the positive effects of survivorship bias—only the best hotels continue to operate—or this could be the “snapshot-in-time” effect of using 2022 as the endpoint.

Figure 11: Nine-Year RevPAR CAGR vs. Nine-Year Room Count CAGR for Midscale Brands

The economy chain scale was the first to recover from the pandemic as the need for temporary housing options grew during the pandemic. This trend reversed in 2023, with negative RevPAR growth for economy brands and declining RevPAR growth for midscale brands. However, most of the major hotel companies, including Marriott, Hyatt and Hilton, launched new brands in the midscale and economy space, which should accelerate room growth in the future due to the favorable mix from newer assets opening at the upper end of the traditional chain scale ranges.

Figure 12: Nine-Year RevPAR CAGR vs. Nine-Year Room Count CAGR for Economy Brands

Brands developed and grown in-house outperformed on unit growth

To determine whether it is better for a brand family to buy or build its growth, we considered brand performance in terms of two key metrics: RevPAR and unit growth. While acquiring other companies adds new rooms to a portfolio, it doesn’t always accelerate unit growth. Unit growth for organic brands was more than twice the pace of acquired brands (4.4% CAGR for organic brands vs. 1.7% CAGR for acquired brands) over the past 9 years. While one might suspect that the slower unit growth might be offset by higher RevPAR growth, we found that RevPAR growth of organic and acquired brands was similar at 1.4% and 1.7%, respectively.

Organically grown brands that reach scale do so only after significant due diligence, capital investment, marketing support and research. Some proof-of-concept brands are introduced and stagnate or are closed if the results don’t support the growth.

It might seem counterintuitive that acquired brand room growth has been slower than organically grown brands, since acquired brands already exist (often at scale) and have thus passed the growth and investment litmus test. However, the purpose of hotel merger & acquisition (M&A) activity isn’t solely to grow the number of brands in a portfolio.

Figure 13: Nine-Year RevPAR CAGR vs Nine-Year Room Count CAGR for Original Brands

Figure 14: Nine-Year RevPAR CAGR vs Nine-Year Room Count CAGR for Organic Brands

Key drivers of hotel M&As can include increasing scale, access to loyalty members, distribution, competitive intelligence and increasing geographic presence. Hotel M&As often lead to the elimination of net brands and the de-emphasis of underperforming brands or those with too much overlap. An M&A transaction allows the buyer to grow the best brands in a particular chain scale while eliminating overlap and either reducing the growth of weaker brands or closing them.

Nearly 40% of organically grown brands had above-average room and RevPAR growth compared with just 17% of acquired brands from 2013 to 2022. This could be intentional as acquirers focus on the highest-yielding brands and eliminate duplicative brands. Room counts for nearly 43% of the original hotel brands (Hilton, Marriott, Hyatt, Wyndham, Comfort Inn, Quality Inn and Intercontinental) have declined. In some cases, this has occurred as newer or acquired brands have been developed.

Figure 15: Nine-Year RevPAR CAGR vs Nine-Year Room Count CAGR for Acquired Brands

Selecting a brand family might be just as critical as picking a brand

Brand affiliation requires careful deliberation by hotel developers and investors. Publicly available information is just one of the many data points that can help during a brand selection process. To highlight the range of performance and its potential implications, we provide a snapshot of the companies with the strongest and weakest RevPAR growth among the brands we analyzed.

The strongest performing brand family had a weighted average RevPAR CAGR of 2.9% and a 0.3% room count CAGR. This compares with the performance of the weakest-performing brand family, which experienced declining weighted average RevPAR CAGR of 0.1% and a 0.2% reduction in room. As of the starting point in 2013, these two brand families had RevPARs less than $6 apart, so we would not attribute the RevPAR growth difference to a variance in chain scale.

The expected RevPAR performance of a particular brand is an important consideration during brand selection, although it is not the only criterion. Brand contribution to occupancy, the strength of a brand family's loyalty program and the performance of the other brands in the brand family are also key.

To assess these factors, it is important to consider the occupancy contribution by brand and brand family and the standard deviation in the performance among the brands within a brand family. The greater the standard deviation in brand performance within one family, the less certain it is that the brand will perform at or above the average. The standard deviation in RevPAR performance among the brand families ranges from 0.9% to 2.6%. Although this may not appear to be a big difference, every percentage point of RevPAR growth matters, particularly when compounded over the life of an asset or its holding period.

Figure 16: Average Brand RevPAR CAGR Statistics

Figure 17: Strongest Performing Brands

Figure 18: Weakest Performing Brands

Appendix

• Brands families include Choice, Hilton, Hyatt, IHG Hotels & Resorts, Marriott and Wyndham.
• Brands include: Clarion, Econo Lodge, Mainstay, Quality Inn, Rodeway, Sleep Inn, Suburban Lodge, Cambria Suites, Ascend Collection, Suburban Extended Stay, Comfort, Woodspring Suites, Everhome Suites, Radisson Hotels Americas, Doubletree, Embassy Suites, Hampton Inn, Hilton Garden Inn, Hilton Hotels, Homewood Suites, Conrad, Home2 Suites, Waldorf, Canopy, Curio, Tapestry, Tru, LXR, Motto, Signia, Andaz, Grand Hyatt, Hyatt Place, Hyatt Summerfield Suites, Park Hyatt, Hyatt, Hyatt Regency, Hyatt House, Hyatt Zilara, Hyatt Ziva, Hyatt Centric, Miraval, The Unbound Collection, Alila, Destination by Hyatt, JDV by Hyatt, Thompson Hotels, UrCove, Alua Hotels & Resorts, Breathless Resorts & Spas, Dreams Resorts & Spas, Secrets Resorts & Spas, Sunscape Resorts & Spas, Zoetry Wellness & Spa Resorts, Crowne Plaza, Holiday Inn, Holiday Inn Express, Intercontinental, Candlewood Suites, Hotel Indigo, Kimpton, EVEN, Staybridge, Atwell Suites, voco, avid Hotels, Courtyard, Fairfield Inn & Suites, Renaissance Hotels, Resorts and Suites, Residence Inn, Ritz-Carlton, SpringHill Suites, TownePlace, Marriott Hotels & Resorts, Autograph Collection, EDITION, AC Hotels, Aloft, Element, Four Points, Le Meridien, Renaissance, Sheraton, St. Regis, W Hotels, Westin, Gaylord Hotels, , Delta, JW Marriott, Moxy, Tribute Portfolio, Luxury Collection, Design Hotels, AmeriHost Inn, Days Inn, Howard Johnsons, Knights Inn, Ramada, Super 8, Travelodge, Villager, Wingate, Baymont, Wyndham, Hawthorn, Microtel, Tryp, Dream, Night, Dolce, Dazzler, Esplendor, AmericInn, La Quinta, Ramada Encore, Trademark, Wyndham Garden, Wyndham Grand, Wyndham Alltra, Vienna House.
• Organic brands were initially developed and grown from within the brand family. Acquired brands have been incorporated into the brand family portfolio through strategic partnerships and the acquisition of another brand or portfolio of brands.
• Reporting brands are brands for which the parent company reports key performance data.
• The 2023 STR chain scale list determined the chain scales for each brand.
• RevPAR, ADR, and Occupancy figures are those reported by the major brand families in the fourth quarter earnings release, 10K, or annual report.
• Whenever possible, key performance indicator data and room and property counts represent hotels in the United States or North America; sometimes, KPIs represent comparable systemwide figures.
• The 49 brands used in this analysis include only those that existed in 2013 and 2022. We excluded extreme outliers in room or RevPAR growth from our analysis. Differences in performance can be attributable to many factors, geography, unit growth, closures, capital investment, and ownership, etc.
• Data used to conduct this analysis is available for purchased on our website. https://pip.cbrehotels.com/publications-data-products/hotels-kpi

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