Friday, February 10, 2012
Should we build a Franchise or Independent Hotel?
This is a question most people ask themselves when they pay a large percentage of their revenues in fees to Franchises. Its common knowledge that without an great location, being a franchise or an independent would not matter, due to chances of failure are high to begin with. Saying that, if you have a great location, you would need to make a decision on which option to choose. Due to social marketing blowing up in the last decade, Independent hotels have the same marketing medium as Franchise hotels, with access to third party wholesalers and other booking mediums. Independent hotel owners also have the advantage of not being pushed financially by a Franchise - who make you spend money, without taking a peek at your financials to see if it would be affordaeble. Franchises are sort of like teachers who make you do your homework, and independent hotel owners tend to procrastinate and make improvements at a snails pace. Maybe thats why, the independent hotel market, has not gotten a foothold in the industry. Consumer reviews are generally better for franchisees rather than Independent hotels/motels. Also, the ADR you can command on a good brand is far more than a independent can due to its preceeding reputation. I am generally in favor of building an franchise only if the brand is good enough to invest in. I would deter from buying an Wyndham or Choice Property simply because the return is not good nor is their brand awareness. I have years of experience in the hotel industry, and would gladly help anyone who needs help choosing an franchise or conducting market studies for such decisions.