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

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.

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.