Bull case for branded hotels w/ successful loyalty programs ( $mar, $hlt )

Airbnb pressures RevPAR at low end, esp. unbranded hotels. These units are dependent on OTAs to drive traffic, & w/ inflating labor/marketing costs, damaged balance sheets, they continue to be squeezed

This increases the relative value of branding hotels. Compared to an independent, your ad, tech, and loyalty spend gets benefits of scale. You tap into the power travelers in loyalty programs, attractive economic splits with OTAs, a great mobile app, streamlined operating model.

Due to benefits of joining a leading brand, lenders give you better terms. Your hotel is a better credit risk and your own project NPV is therefore higher. Credit terms may be more important in life after COVID as hoteliers nurse damaged balance sheets and become more risk averse

Loyalty programs/credit card agreements are important advantages for brands over $abnb / independents. High frequency business travelers earn points at work & spend them on vacation w/ their family. This creates a “flywheel” (buzz) of returning, often lifelong customers.

There is also a very good chance brands emerge from COVID with better margins at comparable RevPAR, benefitting from more use of technology / self-serve in the hotel. Another benefit to their scale over independents.

In summary, I think branded hotels may be set to take share after COVID from weaker, fragmented competition and be stronger than before if RevPAR recovers to 2019 levels. This of course depends on the recovery of commercial travel.