While most hotel executives have long been bullish on robust brand expansion, many are singing a different tune during the pandemic.

When asked about the health of hospitalitys brand ecosystem during a June panel hosted by New York University, Hilton president and CEO Christopher Nassetta was quick to acknowledge that the sector probably will have fewer brands, given the sheer depth and breadth of negative impact from Covid-19.

I do think that when you wake up in two or three or four years, some things will be different, Nassetta said. Not every brand is going to make it to the other side. Im not necessarily saying big brands, but there are thousands of brands of all sizes around the world, and this is a global crisis. There are going to be winners and losers.

Nassetta didnt go so far as to say any of Hiltons 18 brands are at risk of going bust.

But analysts are certainly wondering which flags industry-wide, if any, could be jettisoned.

Ask every major hotel company, and theyre all predicting their peers will lose some brands, said Bjorn Hanson, a hospitality consultant and adjunct professor at New York Universitys Tisch Center for Hospitality, Tourism and Sports Management. But when you ask them if their brands will be affected, they all say, absolutely not. And they say that for two reasons. One, because its really hard to shut down a brand, and two, to eliminate one would mean that theyd have to go to the franchisees of that brand and, especially in this environment, provide financing for them to convert. Shutting down is an admission of defeat.

While Hanson predicts that very few brands may ultimately end up on the chopping block, he does view the current downturn as a potential opportunity for companies looking to do some light pruning.

Some people are saying that during this pandemic, these companies may actually have a window to terminate a brand, without having to admit it was unsuccessful, added Hanson. They can put the blame instead on the current environment.

Of course, some brand segments may be better positioned to survive than others in the immediate aftermath of the crisis. According to Makarand Mody, assistant professor of hospitality marketing at the Boston University School of Hospitality Administration, the economy and midscale sectors will likely come out of the pandemic a little bit stronger than other chain scales.

Based on some of the early reports were seeing, hotels that are in those economy and midscale segment categories seem to be holding up much better than others, said Mody. Weve been seeing occupancies of between 30% and 40% in those categories, which is much higher than luxury, for example, which has been averaging at about 5% occupancy.

Iconic luxury brands, however, tend to have a valuable halo effect on a companys overall portfolio. Therefore, the weakest link for many hospitality giants will likely be their brands in the upscale and upper upscale segments, said Mody.

Brands [in those segments] will be challenged because they arent generating as much top-line revenue right now, but there are high costs associated with operating those kinds of properties, he said.

From Hansons perspective, any hotel brand launched within the past five years, especially one that has been slow to build a pipeline, could be on shaky ground. Additionally, he believes some of the millennial-targeted brands that have crowded into the space in recent years may also miss the mark.

There are some brands that may have been somewhat ill-conceived; maybe the research was bad, or the launch was not well-managed, said Hanson. If I had to guess, I think its within this category of newbuild, millennial-oriented brands that there could be some losses.

According to Chekitan Dev, a professor of marketing at Cornell Universitys School of Hotel Administration, a hospitality brand shakeout is inevitable.

Customers are going to be looking for meaningful and identifiable differences between brands, said Dev. Those brands that are not able to establish clear and distinct swim lanes are going to perish. I fully expect a few brands to be phased out or consolidated.

Here is the original post:

Focus on hotels: Brand new world - Travel Weekly