Bay Street Hospitality has operationalized this insight. Using proprietary scoring formulas, the firm incorporates Brand Equity and Repositioning Potential directly into the Bay Score™, AHA™, and BAS™—transforming brand dynamics from soft factors into measurable alpha.

This whitepaper details how the firm assigns value to brand attributes, contract terms, and repositioning levers—providing institutional investors with a risk-adjusted lens on brand impact.

Why Brand Value Matters to Allocators

Well-positioned brands drive:

• ADR premiums over competitors

• Higher conversion rates from direct bookings

• Reflagging upside via repositioning

• Attraction of top operating talent

• Fee efficiency relative to key money and brand obligations

Yet most underwriting fails to quantify this impact—or worse, applies generic assumptions across all flags.

That leaves basis risk hidden in plain sight.

Bay Street’s Brand Scoring Framework

3.1 Brand Equity Score (1–10 Scale)

Metric | Weight | Source

Global Brand Awareness | 20% | STR, Google Trends

RevPAR Premium vs. Comp Set | 25% | CoStar, internal benchmarking

Brand Fee Efficiency | 15% | Underwriting models

Guest Satisfaction & Loyalty | 20% | Review platforms, retention

ESG Alignment / DEI Visibility | 10% | Brand disclosures

Operator Alignment | 10% | Contract terms, incentive links

3.2 Brand Repositioning Flag

Repositioning is toggled when:

• Hotel is underperforming its brand segment

• Market signals demand for brand upgrade or lateral shift

• CapEx supports ADR uplift > 20%

• Reflag leads to RevPAR index > 1.25x

If triggered, this flag boosts AHA™ and IRR models, flows into Bay Score as an additive uplift, and alters exit timing, underwriting assumptions, and capital stack structure.

Case Study: Reflagging from Midscale to Lifestyle

Asset: Urban midscale hotel

Original ADR: $92

Post-reflag ADR: $138 (peer-indexed)

Conversion Cost: $4.5M

CapEx IRR: 22%

Bay Score Uplift: +8.4 points

BAS Adjustment: +0.12

Outcome: Property was reclassified from “watchlist” to “core-plus” in portfolio ranking.

Structuring Around Brand in JV Agreements

Clause | Bay Street Ideal Term

Incentive Fee Waterfall | Paid only after return of capital + pref hurdle

Key Money Clawback | Activated on brand underperformance

Reflag Rights | Bay Street controls flag change at refi or exit

ESG Commitments | Brand KPIs tied to LP sustainability targets

Integration into Bay Score, AHA, and BAS

Input | Scoring Impact

Brand Equity Score | Weighted input to Bay Score™ (7–10%)

Repositioning Toggle | Uplift in AHA™ and IRR forecast

Brand/Operator Contracts | Inputs to Sponsor Quality + ESG subcomponents in BAS™

What LPs Should Ask

• What’s the RevPAR index of the current vs. proposed brand?

• Are brand fees fixed or performance-based?

• Which brand tiers are underrepresented in this submarket?

• How does the flag score in Bay Street’s Brand Equity framework?

Strategic Implications

With cap rate compression and asset scarcity, brand repositioning is one of the last underpriced sources of alpha.

Bay Street quantifies this edge—then contracts around it—ensuring branding becomes a risk-adjusted performance lever, not an anecdotal upside hope.

Brand is not just marketing. It’s margin.

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