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Hilton remains world’s most valuable hotel brand but lead over Marriott shrinks 74%; Premier Inn and Holiday Inn are strongest hotel brands as consumers appreciate value for money; Airbnb’s disruptive presence only set to grow as it targets business travellers

For the third year in a row, Hilton is the world’s most valuable hotel brand, with a brand value of US$6.3 billion. However, recording a 24% fall from last year, Hilton has seen their lead at the top over Marriott shrink from more than US$3.3 billion to just US$865 million, 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.

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.

View the Brand Finance Hotels 50 report here

About Brand Finance

Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.

Contact: Konrad Jagodzinski, Communications Director

k.jagodzinski@brandfinance.com / +44 (0)2073899400

Contact: Sehr Sarwar, Communications Manager

s.sarwar@brandfinance.com / +44 (0)2073899400

Methodology
Definition of Brand

Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.

Brand Strength
Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.

Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach
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.

The steps in this process are as follows:

1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.

2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.

3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.

4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.

5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.

6 Apply the royalty rate to the forecast revenues to derive brand revenues.

7 Brand revenues are discounted post-tax to a net present value which equals the brand value.

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