The Dual-Brand Hotel Market…
August 2018 – J. Carter Allen, HVS Managing Director, recently published an excellent article about the Dual-Branded Hotel Market. While many other articles are concept focused, this article analyzes market and operational data to explore how and where this property type is actually successful. Below are some quotes from the article that we found interesting. Read the full article here: Dual-Branded Hotel Market Overview
“Accordingly, the dual-brand model is most widely seen in strong markets with high barriers to entry, as management teams can command a rate premium for the select-service property by leveraging multiple demand sources. In weaker markets with less rate differential, the two products become much more competitive, decreasing the likelihood of success.”
“One of the factors that make dual-branded developments attractive is the relatively high yields that investors can achieve compared to other types of hotel development. For example, a developer is able to build a hotel with a room count comparable to a full-service property, but with the operating ratios of a select-service hotel. The higher profit margins compared to a full-service development make the projects more attractive to both debt and equity investors.”
“The operational benefit for dual-branded hotels is realized primarily when the management company can run both hotels and employ just one person for key positions, such as the General Manager, Director of Sales, and Chief Engineer. This seems to be the typical arrangement; however, every project is looked at independently, and some brands may require multiple positions for the property. While hourly employees are generally brand-specific, the ability to cross-train team members can also lead to operational efficiencies.”