324 | Independent But Not Alone: Franchisers’ soft-brand engines drive business to struggling hotels

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GROWTH CAPTURE: The Highland Group Hotel Investment Advisor’s Boutique Hotel Reports 2021 shows the pace of growth from 2000 to 2020 in independent boutique, branded lifestyle and soft-brand hotel categories in the U.S. Kim Bardoul, author of the report, expects soft-brand expansion to continue at its rapid pace post pandemic.

Independents’ affiliation with brands a post-pandemic growth strategy, say experts

The soft-brand sector as we know it today began in 2008 with the Ascend Hotel Collection by Choice Hotels International. Today, Ascend’s portfolio includes more than 200 luxury to upscale properties in the U.S., totaling 28,000 rooms.

Marriott International followed in 2010 with the launch of the Autograph Collection, which has 123 premium hotels or 123,400 rooms.

In 2016, Marriott acquired Starwood Hotels & Resorts and its soft brand, Tribute Portfolio. Today, the portfolio has 26 upscale boutique hotels or 4,500 rooms.

There are 16 soft brand collections in the U.S., says The Highland Group Hotel Investment Advisors in its Boutique Hotel Report 2021, which focuses on independent boutique, branded lifestyle and soft-branded properties in the upper-midscale to luxury price segments.

There are several more soft brands in the upper-midscale, midscale and economy tiers not included in the report.

In 2009, the U.S. had a little more than 5,000 hotel rooms in the soft-brand segments in the report.

More than a decade later, that total nears 70,000 rooms or 455 hotels, reports The Highland Group, which has tracked the boutique hotel sector for *seven years.

(*See editor’s not at bottom of article)

The Boutique Hotel Report 2021 shows not only the resiliency of the independent hotel sector amid the coronavirus crisis, it also reveals the fast growth pace of soft-branded hotels in the U.S. even during the pandemic year 2020.

According to the Boutique Hotel Report, from 2000 to 2020, its soft-brand category grew an average of 19 percent a year.

Compare that to independent boutique hotels that underwent an average growth rate of 5 percent a year. And branded lifestyle, which grew an annual 17 percent.

Kim Bardoul, a partner in The Highland Group and author of the report, said she expects soft brands to undergo a dramatic growth across various price tiers over the next several years as there remains plenty of expansion space in the U.S.

The growth in soft-branded hotels can be attributed to major franchisers following Choice Hotels’ lead and adding soft-brand collections to their portfolios.

But in 2020, growth in soft brands, Bardoul said, was partly driven by the coronavirus crisis.

“You come from a much larger base with the independents,” Bardoul said. “It’s about 93,000 rooms and they’ve been around forever so the growth looks like it’s slow. In 2010, when Autograph it the market, that’s when (soft brands) just really started peaking. From 2014, roughly 7,200 rooms were added per year in the soft-brand collection.”

The coronavirus crisis aided the growth in soft brands as independent owners and operators decided to connect to a larger distribution system and get help from revenue management and marketing experts. For that reason, Bardoul said, existing hotels account for most of the category’s growth.

Bardoul said from 2015 through 2020 an estimated 68 percent of soft-brand collections were conversions and 32 percent were new-builds.

“A lot of the conversions are 100 to 80 rooms and new builds are more like 130 to 150,” she said.

NEW ADDITION: Lincoln Sands Oceanfront Resort, an all-suite hotel in Lincoln City, Oregon, earlier this year joined Ascend Hotel Collection, Choice Hotels International’s soft brand. Choice Hotels said it was the 200th property in the Ascend portfolio. Lincoln Asset Management owns and manages the hotel, its third to join the soft brand.

Search for Business

Positioning a hotel on a global distribution network is the main reason independent hoteliers sign soft-franchising agreements, said Janis Cannon, senior vice president of upscale brands at Choice Hotels.

During the pandemic year 2020, Choice Hotels searched for business throughout the country for its fully franchised and soft-branded hotels.

“Independent hotels really need access to customers. Our Ascend collection held up extremely well. Almost 50 weeks of really difficult days and those independents that were associated and affiliated with soft brands did much better,” Cannon said.

Choice Hotels’ sales and marketing teams looked for business among people who continued to travel during the height of the pandemic, including first responders, health care teams and transportation and construction workers. As leisure travel began to rebound, Choice targeted prospective customers within 200-mile drive markets through stay packages and special promotions.

Choice Hotels CEO Patrick Pacious touted Ascend’s RevPAR gains during a May 10th first-quarter earnings call in which he compared the soft brand’s performance against the first quarter of 2019. He noted the soft-branded hotels had RevPAR index gains of 12 percent compared to its local competitors.

Besides finding business for the independent hotels, Cannon said owners and operators could manage their costs through Choice Hotels’ buying power as well as maintain ADR through its revenue management program.

INDEPENDENT BUT NOT ALONE: Wyvern Hotel is an independent luxury property along Florida’s Gulf Coast. Ketan Vora, founding partner at Edgewater, a real estate firm that owns the hotel, said being connected to a major franchiser’s soft brand enabled Wyvern and two other independent assets in its portfolio get back to business amid the coronavirus pandemic. Edgewater’s three independent hotels in Florida are part of the Ascend Hotel Collection by Choice Hotels International. In Episode 324, Lodging Leaders podcast explores how being attached to a brand engine enabled owners and operators of independent properties to regain their financial footing amid the pandemic recession.

‘Good set of resources’

Ketan Vora is a founding partner of Edgewater, a commercial real estate investment company in Paoli, Pennsylvania, that has independent and branded hotels in its portfolio.

Three of Edgewater’s hotels in Florida are members of Ascend and had to close for a short time early in the COVID-19 outbreak.

Vora said being connected to the soft-brand engine enabled the hotels to quickly return to doing business once they re-opened.

“It was very important to have the marketing support of the soft brand through Choice and the Ascend Collection because it accelerated the customer acquisition for us,” he said.

“For us it’s been a good set of resources from not just the sales side, but also the operational side,” Vora said. “The overall cost of ownership during these times are really a key factor for a franchisee and property owner because there are certain costs that are not going to go away and you have to make sure you’re also running operations efficiently. Choice has been very good to partner with that.”

Most independent hotels in the luxury and upper upscale categories are full-service and faced significant challenges in 2020 to offer a full guest experience despite public health restrictions for restaurants and public venues.

Lodging Leaders podcast’s Episode 323 features independent hoteliers who shared how their properties got creative with F&B to eke out revenue from both in-house guests as well as local residents.

F&B is a huge chunk of revenue for Edgewater’s independent hotels, Vora said. Choice Hotels understood its situation and worked with the company on managing its costs as well as aided it in boosting business where it could.

“In one of our properties, the Wyvern in Punta Gorda, it’s a full service. So that obviously brought a whole new dynamic to that equation in March of 2020, but I think it starts with leadership at the Choice level,” he said.

Some of the key moves the franchiser made, including marketing to essential travelers and then to leisure road trippers brought Edgewater’s independent hotels back to life after a two-month shutdown.

Choice Hotels also deferred franchise fees, which enabled Edgewater to pay its employees as it waited for federal relief such as the Paycheck Protection Program to kick in.

The franchiser also provided guidance and support on clean-and-safe messaging for guests at its hotels.

“That ground-level level education was really helpful at the property level for both the guests and the owners, so that everybody understood what the expectation was and that it’s being done to keep everybody safe and have some continuity in business as well as in people’s lives,” Vora said.

*Editor’s Note: The Highland Group Hotel Investment Advisors has tracked and reported on the boutique hotel sector for seven years. In Lodging Leaders podcast, Episode 324, the number of years The Highland Group has reported on the boutique hotel sector was incorrectly stated.

At A Glance

Choice Hotels International’s Ascend Hotel Collection is a soft brand, which means independent hotels can keep their individual identity while connecting to a franchiser’s distribution and marketing channels.

Here are costs and fees posted in Ascend Hotel Collection’s 2021 franchise disclosure document.


80-room new build – $8,000 to $11,000

78-room conversion – $180,000 to $2 million



$525 per room ($45,000 minimum)



5 percent of GRR per month



4.5 percent to 5.5 percent per month of GRR generated by loyalty-member guests



Software license fee – $9,000 to $15,000

Monthly system fee of 3 percent of gross room revenue (GRR)

Monthly support fee of $400 to $700

The independent segment continues to account for the most properties closed but among the lowest percentage of rooms. On May 17th, Kalibri reported that independents accounted for 3.5% of rooms closed, compared to 11% of luxury rooms and 6.5% of upper upscale.

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