Coronavirus to Wipe 20% Off Hotels’ Brand Valuations


Source: Skift
by Dan Reed
May 27, 2020

The world’s 50 most valuable hotel brands could see their “brand value” fall by 20% to a combined $70 billion this year due to the near-collapse of travel driven by the COVID-19 pandemic, with expectations for a long and difficult recovery, the consultancy Brand Finance estimates.

“Unsurprisingly, the COVID-19 pandemic is going to hit the hotels sector hard as holidays are cancelled and people work from home,” said Brand Finance Director Savio D’Souza.

Unlike hard assets such as real estate and equipment, the components included in “brand value” largely are intangible elements like so-called “good-will” and the added respect, esteem or market preference accorded by consumers to individual brands. The U.K. firm Brand Finance pioneered the methodology for calculating brand value now widely accepted by accounting standards authorities around the world.

Travelers not only cancelled more than 90% of their already-planned leisure and business trips in just a matter of weeks when the pandemic arrived in the United States, they all-but stopped booking last-minute business trips. Now, though there are early signs that a modest recovering travel demand has begun, both leisure and business travelers are expected to be far more concerned than ever before about health issues, and therefore will be slow to return to public places – like hotels and airplanes – where many believe they are more susceptible to being infected by the coronavirus.

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