Airbnb gets surprise mention on ‘most valuable hotel brands’ report

AccomNews Monday, February 26, 2018

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Airbnb’s brand value rose by more than 51% to over US$5.5 bn this year, according to a new report by brand valuation and strategy consultancy firm Brand Finance.

Among hotel chains, recording a 24% fall from last year, Hilton has seen their lead at the top over Marriott shrink from more than US$3.3bn to just US$865m, a staggering 74% reduction.

As Hilton’s brand value decreased, Marriott improved its brand value 8% to just under US$5.5 billion on the back of growing group revenues. A driving force behind the increase can be traced to Marriott’s 2016 acquisition of Starwood – their largest ever – which boosted the company’s number of properties by 40%. As part of the restructuring of their Starwood portfolio, the company moved rooms from Sheraton to Marriott, maximising the profitability of their flagship brand. This has however also impacted Sheraton’s brand value, which decreased by 50% to US$1.9 billion this year.

[pro_ad_display_adzone id=”27469″ align=”left”]Marriott’s success is prevalent throughout the 2018 table when comparing its portfolio to Hilton’s. Only five hotel brands from Hilton’s portfolio made the table, compared to 15 from Marriott’s. Additionally, the total value of Hilton’s hotel brands in the Brand Finance Hotels 50 league table fell by 23%, while the total value of Marriott’s portfolio in the ranking rose by 3%.

David Haigh, CEO of Brand Finance, commented:

“The trends in the Brand Finance Hotels 50 league table reflect the success of Marriott’s expansion strategy, which is likely to continue exerting a positive impact on brand value in the future. It will be interesting to see if Marriott overtakes Hilton to claim the top spot for most valuable hotel brand next year.”

Premier Inn remains the strongest hotel brand this year with a Brand Strength Index (BSI) score of 88.7 and a brand rating of AAA, while UK competitor Holiday Inn managed to hold on to its place in second with a score of 85.0, also receiving an AAA brand rating. The results of the top two strongest hotel brands reflect their mass-market appeal, as well as customer appreciation of value for money, which supports higher scores for preference and satisfaction. As these brands continue to maintain brand equity and perform well with their stakeholders, their brand strength can only stand to gain.

Perhaps the biggest threat to the hotels industry is the growth of online community accommodation sites, like Airbnb. Though the brand is not included in the Brand Finance Hotels 50 league table by virtue of not owning properties themselves, Airbnb’s brand value rose by more than 51% to over US$5.5 billion this year.

This marks the first time in which Airbnb’s brand value exceeds that of all but one hotel brand valued in the Hotels 50 – Hilton. Given Hilton’s downward trend, it would not be surprising to see Airbnb surpass all hotel brands in the 2019 table. What is more, Airbnb may soon come into much more direct competition with hotels as it begins to target business travellers through their Airbnb for Business program, which launched in the second half of 2017. Time will show if hotels move to collaborate with Airbnb in the future or try to compete by providing authentic personalised services to consumers, raising the game for guest experience.

You may view the full Brand Finance Hotels 50 report here.

Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.