Excerpt from CoStar
58% of Soft-Branded Rooms Affiliated With a Management Company
Third-party hotel management companies with a focus on boutique and lifestyle properties are noticing an uptick in soft-branded hotels seeking their services.
According to The Highland Group’s Boutique Hotel Report, soft-brand collection supply has increased 19% over the past decade. Kim Bardoul, partner and consultant at the Highland Group, said out of the 69,500 soft-brand collection rooms in the U.S., there are an estimated 58% affiliated with a management company.
“Whenever these types of properties get together under a management umbrella, it provides them with a larger platform for customized marketing, reservation tools and that identity that makes you different and unique from the traditional hotel,” she said. “The management expertise of these companies are really honing in on what it takes to keep a hotel individual. More and more, I think you’re going to find those soft-brand collections going to those management companies to help them compete.”
Michael Cady, vice president of marketing at Charlestowne Hotels, said almost 50% of requests for proposals in 2021 have been soft-brand related. In 2019, that percentage was 20%.
More often than not, he said, owners are asking his team to run two different performance insights — one for a soft brand and one for an independent.
“They’re wanting that because they want to evaluate all the expenses that signing up with a brand entails,” which also depends on market, segmentation mix and competition, he said.
Even when the market and segmentation mix favors an independent hotel, Cady said owners sometimes feel more secure with a brand.
Thom Geshay, president of Davidson Hospitality Group, said in an email interview that Pivot, a lifestyle operating vertical of Davidson, has underwritten more soft-branded scenarios for acquisitions or management deals over the past several years.
“However, it should be noted that the number of soft-brand options has also grown over this time period as brand companies have moved aggressively to follow the trend of more lifestyle-centric hotels,” he said.
Consistency used to be key for brands; now, the brands seem to understand that consumers are looking for more unique and individual guest experiences, he said. Brand companies have responded to that demand by creating more soft-brand options, leading to more opportunities in the space.
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