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

See all articles by Yi-Lin Tsai

Yi-Lin Tsai

Tulane University - A.B. Freeman School of Business; University of Delaware - Alfred Lerner College of Business and Economics

Chekitan Dev

Cornell University - School of Hotel Administration

Pradeep K. Chintagunta

University of Chicago

Date Written: August 16, 2014

Abstract

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

Suggested Citation

Tsai, Yi-Lin and Dev, Chekitan and Chintagunta, Pradeep K., What's in a Brand Name? Assessing the Impact of Rebranding in the Hospitality Industry (August 16, 2014). Journal of Marketing Research: December 2015, Vol. 52, No. 6, pp. 865-878. Available at SSRN: https://ssrn.com/abstract=2892898

Yi-Lin Tsai (Contact Author)

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

HOME PAGE: http://https://business.tulane.edu/faculty-research/faculty-profile.php?idkey=454

University of Delaware - Alfred Lerner College of Business and Economics ( email )

Newark, DE 19716
United States

HOME PAGE: http://yilint.com

Chekitan Dev

Cornell University - School of Hotel Administration ( email )

435B Statler Hall
Ithaca, NY 14853-6902
United States

Pradeep K. Chintagunta

University of Chicago ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-8015 (Phone)
773-702-0458 (Fax)

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