What's in a Brand Name? Assessing the Impact of Rebranding in the Hospitality Industry
Journal of Marketing Research: December 2015, Vol. 52, No. 6, pp. 865-878
45 Pages Posted: 3 Jan 2018
Date Written: August 16, 2014
Using a panel dataset on hotel rebranding over the time period 1994-2012, we quantify the impact of rebranding on the occupancy rate and other performance indicators of the hotel properties. We find that rebranding results, on average, in about a 6.31% increase in occupancy rates with increases in other metrics such as revenues per room. We then decompose this effect into two components. The first is attributable to the brand identities (e.g., Holiday Inn) before and after rebranding (60%); the second component reflects the intrinsic value of rebranding that can arise from better management, more motivated employees or a better match of the brand with the location (40%). The former component allows us to quantify the strength of a hotel brand; and our approach can be used more generally to obtain a measure of brand value. The intrinsic value of rebranding is associated with hotels that (i) move upscale or downscale; (ii) are upscale or luxury hotels prior to rebranding; (iii) switch brand families or umbrellas; (iv) are located in urban areas; and (v) are suites hotels. We assess the robustness of our results to various model assumptions, alternative instruments, as well as to using matching estimators for our analysis and to exploiting rebranding as a consequence of hotel mergers as a means to measuring rebranding effects. Finally, we consider the impact that rebranding might have on competitors’ properties.
Keywords: rebranding, instrumental variable, brand strength, franchise, hotels
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