The cost of Covid-19 – world’s top 50 hotel brands could lose up to USD14 billion worth of brand value due to the pandemic

The world’s top 50 most valuable hotel brands could lose up to USD14 billion worth of brand value as a result of the Covid-19 pandemic, according to latest research from Brand Finance, which annually evaluates the strength and value of more than 5000 global brands. The ‘Brand Finance Hotels 50 2020 Report’ shows that the hotels sector is one of the most heavily impacted industries globally and could face a potential 20% loss in brand value.

In fact, looking beyond the hotels sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated USD 1 trillion as a result of the Coronavirus outbreak. Hotels are among those industries defined as ‘high risk’ with the aviation sector being the highlighted as the most affected.

“Covid-19 is undoubtedly going to wreak havoc on the sector in the coming year – both financially, as hotels are forced to close and bookings are cancelled, and reputationally, as brands that do not manage to avoid association with Covid-19 may suffer lasting reputational damage,” warns Brand Finance.

It is no surprise that the pandemic is going to hit the hotels sector hard as holidays are cancelled and people work from home. But, which brands have the most to lose? The brands that will be less impacted will be properties “with strong brands where social distancing protocols will be easier such as resorts and extended stay properties,” explains Saviod D’Souza, valuation director at Brand Finance.

“Unsurprisingly, brands with a larger exposure to primary markets will be impacted more than secondary and tertiary markets as customers move their preference to properties within ‘drive-to’ markets,” he adds.

The Brand Finance rankings for 2020 sees Hilton remain the most valuable hotel brand. In fact, it has strengthened its position with an impressive +35.0% year-on-year growth in brand value to USD10.8 billion. The brand’s year-on-year success is due to “strong revenue growth and a solid reputation,” it explains, and although revenues will take a hit from Covid-19, the brand “is consistently elevating its reputation during the crisis,” says Brand Finance.

Marriott remains second with a brand value of USD6.0 billion, up 19.6%, Hyatt rises to third with a value of USD4.5 billion, up 23.3%, Holiday Inn slips to fourth with a value just below USD4.5 billion, up +14.0%, and Hampton Inn by Hilton is fifth with a brand value of over USD3.8 billion, up 21.6%.

With a year-on-year brand value growth of 57% to US$2.3 billion, Mercure is the fastest growing brand in the ranking, jumping up three spots to eighth position. Brand Finance says that while Accor-owned Mercure hotels have ceased operations in many of their locations they “seem to have taken a long-term view approach to their brand’s reputation” and is “likely to benefit from an improved reputation” due to these actions.

The report also highlights Home2 Suites (+45.3%), Four Points (+44.6%), Ibis (+43.0%) and Luxury Collection (+42.0%) as the leaders in brand value growth between 2019 and 2020. At the other end of the spectrum, Autograph Collection Hotels (-22.3%), Melia (-21.4%), Ramada (-20.7%), Days Inn (-20.5%) and Super 8 (-19.5%) have seen the largest decline in brand value over the past year.

In addition to measuring overall brand value, Brand Finance also determines the relative strength of brands through a scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. According to these criteria, it places Premier Inn (with a brand value up 22% to USD1.2 billion) as the world’s strongest hotel brand with a Brand Strength Index (BSI) score of 89.1 out of 100.

It explains that over the last few years Premier Inn has strengthen its reputation as “a reliable hotel option, reinforced by the brand’s humorous advertising campaigns and strong celebrity endorsements”. It add that alongside this “well-executed branding strategy,” Premier Inn’s BSI is driven by its “high customer equity and CSR scores”.

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