Quantifying Impact: The Effect of New Hotels and Brand Conversions on Revenues of Existing Hotels

Abstract

The 1990s, the study described in this report examined eight hotel chains that are mostly franchised and two chains that are mostly company owned. The study finds that when franchisors approve new same-brand hotels in the vicinity of existing hotels, these new hotels do, indeed, cannibalize the incumbents' revenues. Rather than apply a fixed mileage distance, the study looked at new properties that are within ten, fifteen, or twenty chain hotels away from the existing property.