Celebrity names, like Trump or Ronaldo, don't always assure hotel success

This hotel owners’ association would like the Trump brand to vacate their hotel, but the hotel’s management team isn’t going without a fight. 
Trump International Hotel and Tower Panama's sail-like exterior. Photo credit: Trump Hotels

Celebrity-backed hotels may benefit from name recognition, but if that name is controversial, the benefits may not be worth the partnership.

Consider football (or soccer) star Cristiano Ronaldo and Pestana Hotel Group, which have a Marrakech hotel due to open in 2019, and are planning to double the portfolio in their joint venture over the next three to five years. Ronaldo and Pestana’s latest hotel, under the CR7 brand, will be the fifth for the venture, and the footballer is reported to have invested €37 million in the property. This year will see the opening of two hotels in Madrid and New York joining sites in Madeira and Lisbon among others.

“It is a brand that will grow,” Pestana Hotel Group chief development officer Jose Roquette, said. “In the next three to five years we will quickly double the number of the hotels.” Another 20 hotels are poised to open by the end of the decade, with Ibiza and Milan as potential targets.

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Polarizing Brands

At the same time, Trump Hotels was named as the “most polarizing brand” in the U.S. by survey and research company Morning Consult, raising the question of whether adding a celebrity’s name over the door was more valuable than a hotel brand—or no brand at all.

The study found that Trump Hotels was the most polarizing brand in the U.S., not just in hospitality but across all industries. “The final ranking reflects which brands had the biggest difference in their net favorability score—favorable ratings subtracted by unfavorable ratings—between Democrats and Republicans,” the study claimed.

The disquiet at Trump Hotels was not just along party lines. According to FairFX, association with Trump was also hitting the bottom line, with the average rate of the most expensive rooms in Trump hotels falling by 25 percent since last January, and lower-end rooms dropping by 35 percent. Hotel Management, however, recognizes that the methodology is flawed; so too does the story's author Bloomberg, writing: "While a direct comparison with similar hotels for the same time period is difficult to make, the average daily hotel rate in the U.S. increased 2.3 percent in November from a year earlier." 

In Panama City, the owners of the city’s Trump property, led by Ithaca Capital Management, were suing to try and rid the site of the brand, citing poor performance as a result of mismanagement and damage to the brand since its figurehead became president. Trump International Hotels Management said that the owners lacked the authority to terminate the contract. Occupancy at the hotel is reported to vary between 26 percent and 28 percent. Any brand wishing to replace Trump must consider its own political position carefully.

The Pros and Cons of Celebrity

“What I think we have to remember when discussing celebrity endorsements of any kind is that a hotel’s success becomes tied to that individual,” Imran Hussain, director of THC/ Endeavour, said. “So whatever good or bad that they do becomes a reflection of the hotel brand. Francis Ford Coppola, with his Coppola Resorts, on the other hand, is celeb profiling at its best—and that's down to our perception of him, as an individual, and the product is so representative of him in that way. 

“When faced with this route, compared to a known operator—it is a more challenging question as you’re weighing in what they bring as a staple operator versus what could or might be with a celebrity. But I have to ask myself—would I want to stay at a footballer's house? Probably not, but Francis Ford's? Absolutely.

“Overall, I think this celebrity culture is a lazy form of market penetration, which history shows doesn’t always work.”

By 2024, Donald Trump will no longer be the President of the United States, and the industry will see if his hotel brand can attract a wide swath of travelers or only a niche. Trump Hotels' position in the hospitality sector after the President's career change should settle the question of whether a celebrity brand is a must or a millstone.

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.