June 23, 2017

Hotel companies make a hard sell for soft brands


With U.S. hotel room demand expected to level off, hotel companies are trying to sell independent hotel operators on the idea that soft branding will enable those owners to reduce distribution costs via cheaper OTA commissions.

Additionally, hotel companies said their loyalty programs and booking engines will enable independent hotels to cut their percentage of the more expensive OTA bookings and generate more revenue directly via the larger companies' websites and call centers.

Once under a soft brand, OTA commission rates, in the form of wholesale room prices, can fall to about 15% within the larger hotel company's umbrella from as much as 25% as a pure independent, according to Mark VanStekelenburg, New York-based managing director at CBRE Hotels Consulting.

"Anything that's being stewarded by one of the big international hotel companies such as Marriott, Hilton, Hyatt or [InterContinental] has a leg up right now," VanStekelenburg said. "The question is whether these concepts are all set up to stand the test of time."

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