Chain hotels versus independent hotels : an analysis of branding, room revenue & volatility

Abstract

This thesis analyzes the historical performance of chain-affiliated hotels and independent (non-affiliated) hotels with an emphasis on the volatility of room revenues. The thesis attempts to prove or disprove the hypothesis that chain affiliated hotels are less volatile than independent hotels. The findings of this thesis conclude that chain affiliated hotels have historically been less volatile than independent hotels. The lower volatility exhibited by chain hotels is due primarily to a lower volatility in room rate; the difference in occupancy volatility is not as evident. This thesis also considers the months since September 11th, 2001 and confirms that volatility for both chain and independent hotels has increased. While longterm trends suggest otherwise, data suggests that for a period following September 11th, independent hotels were actually less volatile than chain hotels. This short-term result is expected to revert to long-term trends over time.