Hotel brands could lose up to $14bn in value due to Covid-19

The world’s top 50 most valuable hotel brands could lose up to $14bn (£11,4bn) worth of brand value as a result of the Covid-19 pandemic, according to the latest Brand Finance Hotels 50 2020 report.

Brand Finance’s analysis shows that the hotels sector is one of the most heavily impacted industries globally and could face a potential 20% loss in brand value.

It said that as the pandemic is “undoubtedly going to wreak havoc” on the sector in the coming year – both financially, as hotels are forced to close and bookings are cancelled, and reputationally, as brands that do not manage to avoid association with Covid-19 may suffer “lasting reputational damage”.

Brand Finance has assessed the impact of Covid-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector.

The industries then were classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.

Savio D’Souza, director, brand finance, said: “Unsurprisingly, the Covid-19 pandemic is going to hit the hotels sector hard as holidays are cancelled and people work from home.

“While Brand Finance has predicted that hotel brands could face an average 20% loss of brand value, the brands that will be less impacted will be properties with strong brands where social distancing protocols will be easier such as resorts and extended stay properties.”

She added: “Unsurprisingly, brands with a larger exposure to primary markets will be impacted more than secondary and tertiary markets as customers move their preference to properties within “drive-to” markets.”