Soft brand hotels, also known as soft brand collections or collections of independent hotels, are a relatively recent trend in the hospitality industry. These hotels provide a distinctive blend of autonomy and brand affiliation, enabling individual properties to retain their unique character and identity while leveraging the advantages of a larger hotel brand's resources, marketing capabilities and loyalty programs.
Marriott played a pivotal role in expanding the soft brand hotel concept through its Autograph Collection launched in 2010. Building on this success, Marriott expanded its offerings through acquisition of the Starwood Hotels and Resorts that include other soft brands like The Luxury Collection, Tribute Portfolio and Design Hotels. Other prominent hotel chains have also embraced the concept of soft brand collections, including Best Western with its BW Premier Collection and BW Signature Collection, Choice Hotels with the Ascend Collection, Hilton with its Curio Collection and Tapestry Collection, Hyatt with The Unbound Collection, InterContinental Hotels & Resorts with the Vignette Collection, and Trademark Collection by Wyndham. As of February 2024, the average sizes of the U.S. soft brand hotels by these companies range from 101 to 549 rooms, with 236 rooms being the median average size.
A Promising Future
The future for soft brand hotels appears promising as their popularity and affiliations have experienced consistent growth in recent years. From 2010-2014, there were 15,274 hotel rooms in 74 hotels affiliated with U.S. soft brand hotels. During the period of 2015-2019, this number increased to 44,703 hotel rooms in 264 hotels. The positive trend continued from 2020 to YTD February 2024, with a remarkable rise to 90,006 affiliated rooms in 392 hotels. This steady expansion highlights the increasing interest and success of soft brand hotels in the market.
The growth and evolution of soft brand hotels in the hospitality sector have been influenced by several key factors. These include:
- Flexibility and independence – Independent hotel owners value the flexibility and independence offered by soft brand affiliations, allowing them to maintain control over their property's offerings while benefiting from the resources and support of a larger brand.
- Increasing demand for unique experiences – Modern travelers are increasingly seeking unique and authentic experiences that reflect the local culture and heritage of their destinations. Soft brand hotels, with their focus on individuality and local identity, are well-positioned to fulfill this demand.
- Expansion into new markets – Major hotel brands recognize the potential of soft brand portfolios and are actively expanding them into diverse markets. This strategy enables them to cater to various traveler segments, including luxury, upscale and boutique markets, enhancing the visibility and distribution channels for soft brand hotels.
- Adaptation to market trends – Soft brand hotels are agile and adaptable, allowing them to respond swiftly respond to changing market trends and guest preferences. This flexibility helps them stay relevant and competitive in the dynamic hospitality landscape.
Maximizing Soft Brands' Value
Recognizing the significance of these key growth drivers in the soft brand hotel sector is vital to maximize their value. The following strategies can effectively respond to these factors:
- Differentiated product and market positioning – Hotel developers, owners and operators should leverage the flexibility and autonomy offered by soft brand affiliations to differentiate their properties in the market and cater to niche traveler segments. This approach can command premium pricing, strengthen market positioning, and ultimately lead to higher valuations and investment returns.
- Curate authentic experience to capture demand and increase revenue – Soft brand hotels should prioritize meeting the growing demand for unique and authentic experiences among travelers. This can enhance occupancy rates, revenue per available room, and overall revenue generated from departments like food and beverage, spa and recreational activities. Maintaining exceptional guest experiences and positive reviews contributes to sustained demand and positively impacts property valuations.
- Leverage expanding brand recognition and loyalty – Soft brand hotels that align themselves with parent brands with strong growth strategies and expansion plans can leverage the advantages of increased market presence, economies of scale and wider distribution channels. By affiliating with established parent brands, these hotels gain access to brand recognition and loyalty programs that promote repeat business and possibly higher room rates. A solid brand affiliation contributes to the overall success of the hotel investment.
- Improve operational efficiency and cost savings – Soft brand hotel owners and operators should capitalize on resources and support offered by the parent brand. This includes technology platforms, procurement services, and training programs that enhance operational efficiency and reduce costs. Properties with streamlined operations and strong profitability prospects are valued more favorably by investors.
The soft brand hotel sector has seen significant growth and evolution within the hospitality industry. These properties offer a unique blend of independence and brand affiliation, allowing them to maintain their individual character while benefiting from the resources and support of larger hotel brands. Major players have embraced the concept, expanding their soft brand portfolios and catering to diverse traveler segments. The future for soft brand hotels appears promising, as evidenced by the consistent growth in popularity and affiliations.
With evolving trends and growing interest in the soft brand hotel market, real estate owners could maximize investment returns by differentiating their properties, curating authentic experiences, leveraging brand recognition and loyalty, and improving operational efficiency. By incorporating sound strategies in developing and operating their soft brand hotels, real estate owners can enhance the value and profitability of their portfolio.
Charlotte Kang is the managing director, national practice lead – Hotels & Hospitality, JLL Value & Risk Advisory.