The impact of brand affiliation on hotel transaction value

While the conventional wisdom holds affiliation to a brand reduces a hotel’s transaction price, this has not been demonstrated within the academic research literature. This is important because the potential trade-offs between the purported operating performance benefits provided by brand affiliation may be unnecessarily sacrificed in order to achieve a potentially higher sales price for the asset. This study investigates the impact of brand on transaction value by using an OLS regression with, importantly, a control for self-selection bias in order to determine if it is in fact the brand, and not the underlying property characteristics, which negatively impact a branded hotel’s sales price. This study found that before controlling for self-selection bias, brand affiliation produced a negative impact on hotel transaction value. However, such affiliation was insignificant after controlling for self-selection bias. These results suggest that it is the characteristics of branded hotels, rather than the fact of being branded, that determine the transaction value