The Third Alternative: Soft Branding Has Emerged as a Compelling Compromise Between Core Branding and Independence
🏨 The hotel market offers three main options: traditional brand affiliation, independent operations, and since around 2000, soft brands. Soft brands blend brand benefits with operational flexibility, pioneered by entities like Morgans Hotel Group and Kimpton Hotels in the 1980s/1990s. Major hotel groups entered the soft-brand space in the 2000s, including IHG's Hotel Indigo (2004) and Marriott's Autograph Collection (2008). Other entrants include Hilton's Curio Collection (2014) and Hyatt's Unbound Collection (2016). A 2023 CBRE analysis found independent hotels in both urban and remote areas enjoyed higher GOP margins due to lack of franchise fees; however, urban independent hotels spent 18.3% more on sales and marketing labor costs compared to their soft-brand counterparts. Conversely, soft-brand hotels had higher EBITDA margins, potentially due to collective purchasing power. Despite higher revenue potential due to brand systems, soft-brand capital costs could be greater than for independents.
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