Brand value attributable to affiliation (BVAA) – a method for measurement in a consortium context

Abstract

Hotel affiliation is a debated issue in the hospitality industry. The question is primarily if it adds any financial advantages, and secondly to what extent an intangible asset value is created. Intangibles are per definition difficult both to define and to calculate and the aim with this article is to develop a method, based on earlier studies, to facilitate calculations in a consortium context. This is the least researched affiliation format, but at the same time the preferred option for independent hotel owners seeking strategic advantages for the future. By identifying the contribution associated with an affiliation as well as incremental costs and including the investment for adapting the property in accordance with the stipulated standards for the affiliation, a method to compute the brand value attributable to affiliation (BVAA) is developed. This study, by using a constructive approach, produces an indicative valuation method (the BVAA calculation method) usable both to assess the financial effect of the brand value associated with a specific brand and for separating intangibles (in this case the BVAA) from the market value.