5 Things To Know When Owning A Hotel Franchise

Managing a hotel can be challenging, but it can also be rewarding. Hotel owners must anticipate guest needs, ensure that all rooms and amenities are well-maintained, and manage staff effectively. At the same time, they can meet new people from various locations. Franchise hotels benefit from a well-known brand, drawing more guests who expect a certain quality of service in that location. But before owning a hotel franchise, it is common to ask yourself, “how do I start?”

The Most Branded Hotel Companies

The five popular hotel companies are Marriott, Hilton, Accor, Hyatt, and IHG. These hotels collectively account for thirty percent of the current global hotel market. This means the market is evolving from independently operated hotels worldwide. As hotel brands grow, independent hotels find it increasingly challenging to compete. However, this also opened new opportunities and franchising potential for the hotel industry. 

1. Marriott

Image Credit: Hospitality ON

Marriott International, Inc. operates, franchises, and licenses hotel, residential, and timeshare properties. It is based in Bethesda, Maryland. The company has 31 brands with 8,100 properties operating in 138 countries and territories worldwide. 

2. Hilton 

American hospitality company Hilton Worldwide Holdings Inc has a broad portfolio of 6,215 properties with 983,465 rooms in 118 countries and territories. Before its December 2013 IPO, Forbes ranked Hilton as the 36th largest private company in the United States.

3. Accor S.A. 

French hospitality company Accor S.A. operates in 5,300 locations in over 110 countries. It is the largest hospitality company in Europe and the sixth-largest hospitality company worldwide. 

4. Hyatt 

With over 1,000 properties in over 70 countries, Hyatt primarily attracts the business and luxury markets. It is ideal if you wish to work for, or learn to deliver, a high-level hospitality experience. 

5. IHG Hotels & Resorts

With 18 hotel brands and IHG One Reward, one of the world’s most extensive hotel loyalty programs, IHG has over 6,000 hotels in over 100 countries and more than 1,900 in the development pipeline.

5 Things to Review Before Owning a Hotel Franchise 

Owning a hotel franchise can be lucrative but requires careful consideration and preparation. Before leaping into franchising, here are some essential things to consider:

1. Brand

One of the most significant factors to consider is to decide on the type of facility and quality you want. Research the reputation of the hotel franchise brand in the market. You should also check customer reviews, ratings, and feedback about the brand’s existing locations. A well-established and respected brand will give your hotel a competitive advantage. Additionally, assess the level of support the franchisor offers regarding training, marketing, and operational assistance.

2. Customer’s Profile

It is vital to review your future customer’s profile. Conduct a comprehensive market analysis of the location where you plan to open the hotel franchise. Evaluate the demand for accommodation, local competition, tourism trends, and the target demographic. Understanding the market dynamics will help you determine if there is a viable opportunity for your hotel to thrive in that specific area.

3. Fees and Costs 

You must understand that the royalty fee is only a part of the cost of affiliating with a hotel chain. You must review all the expenses you will incur for the entire franchise agreement to see if it is feasible. There are many fees and costs you will be charged, such as:

• Initial payment for becoming part of the hotel chain
• The annual cost of the reservation system
• Marketing programs
• Property Improvement Plan (PIP)
• Liquidated damage fees

4. Franchisor’s Profile

Before finalizing your decision, you need to investigate the franchisor. Remember that your success in the business depends much on the franchisor’s actions. It is an excellent strategy to talk to other franchised hotel owners to see how the agreement goes. Find out if any active litigations between the franchiser and hotel owners indicate the problems you can encounter in the future.

5. Profits

The main reason you are considering this affiliate business model is to earn more revenue by increasing occupancy. The franchisor should prove its advantage over the other hotels in your market. Be bold and inquire about existing operating results to see if the deal will be profitable.

Conclusion

Owning a hotel franchise can be promising but requires careful consideration and preparation. Considering the key factors above, you can position yourself for success in the competitive hospitality industry. Remember, a well-executed strategy and strong dedication to excellence will be the keys to thriving as a hotel franchise owner.