Executive Summary

• Major hotel companies added brands at a 7% compound annual growth rate (CAGR) and loyalty program members at a 15% CAGR over the past 10 years. However, since 2019, our analysis suggests additional brands do not necessarily result in stronger RevPAR performance. For example, the fastest growing brand family by number of brands (+15% CAGR) had the slowest median RevPAR CAGR at just 0.3%.
• Inflation has fully eroded RevPAR gains over the past five years. While RevPAR for the brand families included in our analysis is nominally up 9.3% since 2019, it is down 10.9% in inflation-adjusted terms. This suggests that shadow supply from alternative lodging sources and growth in traditional lodging supply are more than offsetting the demand recovery, resulting in reduced pricing power.
• The gap between the best and worst performing brands is widening, as the percentage of those that have outperformed the 50-brand sample average has fallen to 28% since 2019 from 52% between 2014 and 2019.
• The strongest brand family posted a 2.1% RevPAR CAGR from 2014 to 2024, while the weakest contracted by 0.2%. Cumulatively, this 26% spread can significantly affect long-term investment returns and, depending on leverage levels, be the difference between profits and losses.
• The upper-midscale segment has consistently been the best performer both before and after the COVID pandemic, offering more predictable returns. The segment benefits from wide brand recognition, a flexible customer base and simplified operations, while guests prefer its offer of free breakfasts and lack of resort fees.
• Midscale and economy chains that are facing both RevPAR declines and closures posted the slowest RevPAR growth between 2019 and 2024. The reduction in room count should ultimately bring supply and demand into balance, setting newer economy and midscale prototypes up for improving topline and profits.

Key Findings

Early in the COVID recovery period, it was hard to separate pandemic-era shifts from a new normal. Five years after the pandemic’s start, the reasons why, how and where people travel, as well as where they stay, has changed due to the proliferation of hybrid work, greater availability of short-term rentals and the growth in hotel brands and their loyalty program members.

This has led to a widening divergence in hotel brand performance, making it more difficult than ever to pick a winning brand. CBRE Hotels Research publishes the longest standing and most comprehensive database of publicly disclosed hotel brand key performance indicators (KPIs) in the industry. Following are key findings from this year’s update to the data set, with a particular focus on the past 10 years.

Adding more brands may mean broader reach, but doesn’t necessarily result in faster RevPAR growth

Major brand families have doubled their portfolios since 2014 to an average of 24 brands each in 2024. Loyalty program membership has increased at a 15% CAGR over the same period. However, since 2019, the fastest growing brand family by number of brands (15% CAGR) posted the slowest median RevPAR CAGR of just 0.3%. Although brand proliferation may drive loyalty member growth, our analysis suggests a negative correlation between brands and RevPAR growth within the same brand family.

Digging deeper, not all brand additions perform equally. Some, like glamping or all-inclusive resorts, may attract new customers and give loyalty members less traditional locations and experiences where they can redeem the more than $12 billion worth of loyalty points they’ve stored. Other brands, like middle-tier conversion or extended-stay brands, which increased by more than 40% over the past five years, are the most likely to fuel unit growth for franchisors at the risk of cannibalizing existing hotels.

Figure 1: Growth in the Number of Brands per Brand Family vs. RevPAR CAGR

 — Source: Choice, Hilton, Hyatt, IHG Hotels & Resorts, Marriott, Wyndham public filings.

RevPAR growth is muted, and it doesn’t appear to be timing

Over the past five years, RevPAR has increased by a 1.8% CAGR, up by 20 basis points (bps) from the prior five-year period. However, this negligible growth is less than the rise in inflation, which increased by a 4.2% CAGR from 1.6% over the same two time periods. The net result is that despite nominal RevPAR increasing by 9.3% cumulatively, real RevPAR is 10.9% below 2019 levels after inflation. This suggests that shadow supply from alternative lodging sources and growth in traditional hotel supply are more than offsetting the demand recovery, resulting in reduced pricing power.

The gap between best- and worst- performing brands is widening

Between 2014 and 2019, 52% of brands posted RevPAR gains above the sample CAGR average of 1.6%; since 2019, that share has dropped to 28% of brands above the sample CAGR average of 1.8%. This means that brand selection is even more critical to profitability. The same is true even when controlling for chain scales. For example, the spread between the top- and bottom-performing luxury brands widened to nearly 7 percentage points between 2019 and 2024 from 5 points between 2014 and 2019. Over time, this divergence resulted in a 41% cumulative RevPAR premium for the strongest brand versus 29% in the earlier period.

Figure 2: Percentage of Hotel Brands With Above- & Below-Average RevPAR Growth

Brand Family Matters

RevPAR performance varies significantly by brand family. The strongest brand family posted a 2.1% RevPAR CAGR from 2014 to 2024, while the weakest contracted by 0.2%. This 26% cumulative spread can significantly affect long-term investment returns and, depending on leverage levels, be the difference between profits and losses.

The difference is material no matter whether attributing it to the strength of the loyalty program, marketing efficiencies, standard operating procedures, the brand family’s halo effect or the quality of leadership.

Figure 3: RevPAR Growth by Brand Family

Implications for Owners & Developers

This analysis underscores the importance of thorough due diligence when selecting a brand or brand family. While brand affiliation can offer access to loyalty programs, favorable financing terms and operational efficiencies, the RevPAR performance of individual brands—and the consistency of that performance within a brand family—can meaningfully affect asset value over time.

With performance gaps widening and new brands continuing to launch, it is more important than ever to assess whether a brand’s positioning, fee structure and customer mix are well aligned to generate profits across cycles and throughout the franchise agreement.

Winning Strategies

• Analyze five- and 10-year RevPAR growth and indices by brand.
• Analyze dispersion among brands.
• Focus on proven performers within brand families.
• Align incentives. Negotiate performance-based franchise terms.
• Don’t just consider the brand’s performance, consider the brand family’s performance
• Where possible, be agile. The era of 20-year flag commitments may be at an end.
• Consider a soft brand affiliation. Over the past 10 years, soft brand room growth has been nearly 10 times the growth in room count for the traditional brands in our sample, growing by 42% in the past year alone.

Chain Scale Trends: Upper-Midscale Outperforms

The upper-midscale segment continues to demonstrate resilience and was the top performer during both the pre-pandemic and post-pandemic five-year periods. Upper-midscale brands posted the highest RevPAR CAGR of any chain scale at 2.2% from 2014 to 2019 and 2.3% from 2019 to 2024. These properties benefit from strong brand recognition and simplified operations. Guests are attracted by the segment’s lack of resort fees, which have increased at a 5.8% CAGR since 2015, according to CBRE’s Trends® in the Hotel Industry data.

Upper-midscale properties also attract a flexible customer base that trades up or down in response to economic conditions, contributing to steady demand. Upper-midscale hotels have offered more predictable returns in uncertain times.

Figure 4: RevPAR Growth by Chain Scale

Guests Love Free Breakfast

In the mid-tier segment, brands that offer complimentary breakfast consistently have occupancy rates that are 2 to 3 percentage points higher than those that don’t and had more than double the RevPAR growth over the past five- and 10-year periods. Based on data from CBRE’s Trends® in the Hotel Industry, brands that offer complimentary breakfast had higher margins and less downside during the pandemic-induced contraction.

Although the data suggests that consumers value complimentary breakfast, it is less clear that the higher occupancies and higher RevPAR growth equate to higher gross operating profits, as guests who pay for breakfast drive higher overall ancillary revenues.

Figure 5: RevPAR Growth & GOP Margins: by Complimentary Breakfast vs No Complimentary Breakfast

A Contrarian Opportunity: Low-tier Segments Aren’t Overbuilt, They’re Under-bulldozed

Midscale and economy chains are facing both RevPAR declines and closures. These two chain scales posted the slowest RevPAR growth between 2019 and 2024 and continued to decline recently, down by 1.9% in May for economy chains and 3.2% in April for midscale chains.

RevPAR declines in the midscale and economy chain scales are leading to hotel closures, which should ultimately bring supply and demand back in balance as non-performing properties are razed or converted to other uses. This will set up newer lean and efficient prototypes in these chain scales for improving topline and profitability.

Figure 6: Room Growth by Chain Scale

Appendix

Brand families included in this analysis are Choice, Hilton, Hyatt, IHG Hotels & Resorts, Marriott, and Wyndham. KPI data was gathered from publicly available documents from each company.

For this study, we compared the compound annual RevPAR and rooms growth rates for fifty brands that reported KPIs in 2014 through 2024 for six large publicly traded hotel companies. We considered two time periods (2014-2019) and (2019-2024).

Differences in performance can be attributable to many factors, including geography, unit growth, closures, capital investment and ownership.

The 50 same store brands include Andaz, Ascend Collection, Baymont, Candlewood Suites, Clarion, Comfort, Conrad, Courtyard, Crowne Plaza, Days Inn, Doubletree, Econo Lodge, Embassy Suites, Fairfield Inn & Suites, Grand Hyatt, Hampton Inn, Hawthorn, Hilton Garden Inn, Hilton Hotels, Holiday Inn, Holiday Inn Express, Home2 Suites, Homewood Suites, Hotel Indigo, Howard Johnsons, Hyatt House, Hyatt Place, Hyatt Regency, Intercontinental, Mainstay, Marriott, Microtel, Park Hyatt, Quality Inn, Ramada, Residence Inn, Ritz-Carlton, Rodeway, Sheraton, Sleep Inn, Staybridge Suites, Suburban Lodge, Super 8, Travelodge, Tryp, W Hotels, Waldorf, Westin, Wingate, Wyndham.

We also considered 15 brands that have reported separate KPIs since 2019 including: AmericInn, Cambria Suites, Curio, Dolce, EVEN, Hyatt Centric, Kimpton, La Quinta, Ramada Encore, Trademark, Tru, Woodspring Suites, Wyndham Garden, Wyndham Grand, and JW Marriott. (Marriott began reporting JW Marriott KPIs separately in 2016).

Data used to conduct this analysis is available for purchase on our website: https://pip.cbrehotels.com/publications-data-products/hotel-kpis

CBRE’s Trends® in the Hotel Industry is available for purchase on our website as well: https://pip.cbrehotels.com/publications-data-products/trends/us-trends

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.