While soft brands account for only 86,000 of the 5.5 million hotel rooms in the U.S., this hotel type attracts a lot of attention from owners seeking the unique design of independent hotels along with the wide-ranging distribution networks of major franchise companies.
Prior to the COVID-19 pandemic, soft brands — independent hotels that have affiliated with hotel brand companies — typically reported lower occupancy and higher average daily rate than branded hotels, although neither segment had a significant advantage in revenue per available room.
Demand mix accounted for part of the differences in soft-brand and branded hotel performance. Although soft brands reside primarily in the luxury, upper upscale and upscale chain scales, they are primarily leisure-driven, unlike branded hotels of similar segments.
That leisure demand has served soft brands well over the summer, and preliminary July figures reveal that soft brand occupancy has recovered faster than branded hotel occupancy.
Weekend leisure travel has surged across the U.S. this summer, with both soft brands and branded hotels more than 90% of the way back to 2019 levels. Weekday occupancy, however, has been weaker as midweek groups and business travel have not returned as rapidly as leisure demand.
Shoulder stays and size helped push the soft-brand weekday occupancy index ahead of branded hotels. While the Tuesday-to-Wednesday conference period has been a perennial sore spot for brands, soft brands have relied on leisure travelers after longer vacations to bolster Monday and Tuesday occupancy.
Soft-brand hotels have an average of 50 fewer rooms than branded hotels, which helped drive both business and leisure demand from COVID-19-conscious leisure travelers looking for a quiet, distanced stay and business travelers in search of smaller meeting rooms.
Soft brands and branded hotels have battled for both the highest occupancy and strongest recovery over the course of the pandemic, and while soft brands took the lead in July, the new surge in COVID-19 cases and end of the summer travel season could once again shift the balance in August.
Kelsey Fenerty is a research analyst at STR.
This article represents an interpretation of data collected by STR, CoStar's hospitality analytics firm. Please feel free to contact an editor with any questions or concerns.