Franchising In the Hotel Business

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The hotel business is one of the most difficult areas in the entire franchising industry. It is important that the owner of a well-known hotel brand can only become an entrepreneur who owns an already operating hotel, after rebranding which is launched into work on a franchising network. But not every hotel can enter the world hotel chain by franchising, because this requires the right conditions – the correct location of the hotel, the experience of the hotel manager and a number of rooms meeting certain standards.

According to statistics, in America, from a general hotel fund, about 70% of hotels work under well-known franchise brands. the situation is quite different, only 5-10% work under an international brand. This is due, first of all, to the fact that large international networks do not willingly go to remodel the hotel to international standards. And besides, only hotel units can be summed up to these standards. And secondly, this is due to not very profitable economic conditions. The hotel business is a long business, which begins to pay off only after 10-12 years. And the amount of investment required for development is estimated at billions.Franchising In the Hotel Business

Not all entrepreneurs are ready for this, although many want to work under a well-known brand, because it ensures the increased popularity of the hotel and increases the loading of the hotel itself. And it also provides sales channels and helps to pull staff to the international requirements of the hotel business in matters of customer service. If you look at the other side, then, starting to build your own hotel for 70-100 rooms, entering the business will be equivalent to building a business together with the brand. Because, cooperating with the brand, the entrepreneur immediately avoids the mistakes made by those who build and launch the hotel themselves.

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Higher requirements of consumers to the level of service and service in hotels move the market to the emergence of new hotels of well-known international networks. In order to ensure this level, it is necessary to engage in serious training of personnel to international standards, and this does not require small money. The issue is especially acute in the regions. To provide training for personnel, investment, time and effort are required. And many entrepreneurs do not want to waste time and money on this, they need the business to pay off as soon as possible, preferably for a couple of years, which in principle is impossible in the hotel business.

It is important to note that another deterrent in building a franchise hotel chain is that existing hotels are almost impossible to remodel to international standards. For example, the number in the Soviet hotel is only 14 sq. M., While, adjusting the hotel under the brand, you will have to combine several numbers. It is much more profitable to build new hotels.Franchising In the Hotel Business

Advantages of franchising in the hotel business

Despite the existing difficulties of franchising development in the hotel business, there are a number of advantages that make this market interesting and attractive for investors.

So, what gets the franchisee of the world franchise chain:

  • ·         Clear and well-built concept of the hotel, which, as a rule, has been worked out more than once in other hotels, and all the pros and cons have been studied;
  • ·         A carefully thought out business strategy;
  • ·         Marketing campaigns and PR actions;
  • ·         Assistance and continuous support for business development;
  • ·         Service standards developed by this hotel network;
  • ·         Global channels of the system of sales and distribution, which are guaranteed to provide a flow of guests to the hotel;
  • ·         Standards of security and operational management of the hotel;
  • ·         Discounts and preferential terms provided by international suppliers of hotel equipment of high quality.

Franchising In the Hotel Business

What to consider before buying a franchise in the hospitality segment

Before entering the global franchise network, it is especially important to consider the following points:

  • ·         The concept of the hotel;
  • ·         The history of the hotel operator;
  • ·         Profitability, as well as the financial status of the franchisor;
  • ·         Reviews of other franchises from this hotel chain;
  • ·         Comparative analysis of pricing policy between several hotel chains.

Franchising in the hotel business is not the easiest way to start your own business and requires careful analysis. It’s worth thinking about what the market really needs.Franchising In the Hotel Business

If we look at the development of the situation in the hotel business in the regions, we will see that hotels that are currently entering the market are luxury hotel hotels, and therefore inaccessible for 85% of the population. Since the competition in this segment is quite high, it will be very difficult to recoup such a business, given the crisis situation in the country.

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At the same time, we see the lack of a sufficient number of hotels of category 2 *. More correctly and economically more profitable would be to provide the market with budget and economy options for hotels. And it is this business that is a promising model.

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