Purpose This study aims to examine the mechanism of how hotel executive brand identity influences physical facility quality, customer-based brand equity (CBBE) and employee-based brand equity (EBBE). Design/methodology/approach The study introduces a multilevel model and collects 925 executive and 1,978 employee responses from 62 upscale hotels in China. Findings Executive brand identity positively affects employee brand internalization, which leads to positive EBBE. Meanwhile, executive brand identity positively influences the physical facility quality, which leads to positive CBBE. Originality/value This study considers the tangible (physical facilities) and intangible (employees) elements of hotel services to comprehensively investigate the brand equity formation. By applying multilevel structural equation modeling, the study examines the bidirectional relationship between organizations and employees in the brand value transformation process.

Hotel performance is one of the core concerns for managers and investors. However, a clear pathway from investment in branding to hotel performance is scarce. To fill this research gap, the study aims to explore the effects of brand identity, physical facility quality, and brand equity on hotel performance; and to examine the moderating effect of social capital in the brand–performance transformation model in both international and domestic brand hotel settings. Data were collected from 1,201 hotel managers in China, with 757 from international and 444 from domestic brand hotels. Theoretically, this study represents a first attempt to reveal the indirect roles that social capital plays in the hotel financial performance formation. The identified brand–performance pathway also provides implications for hotel practitioners regarding how to boost desirable hotel performance through both internal and external resources.