Does Affiliation to a Hotel Brand Work?

Brands are becoming bigger by the day - be it in designer clothes, consumer products or any industry for that matter. Hotel and hospitality industry is no exception. Hotel brands such as Hilton and Holiday Inn are famous in their own right and known for their own niche visitors. Big hotel brands enjoy the loyalty of most of their patrons, which stand alone establishments seldom have the benefit of.

Small stand alone hotels that are yet to become brands unto themselves have started acknowledging the importance of getting attached with a big hotel chain to earn profits without having to give up the reins. From being responsible for all nitty-gritties of the business to chugging along with the extravagant marketing budgets of the hotel chains, becoming a franchisee is the best way to start on a journey to financial welfare. This is the best option when you want to retain the ownership, and not completely lose control of the operations, along with reaping intangible benefits of a central reservation system, marketing, and rigid operational procedures. Not to mention the strong backing of the parent brand that will make your hotel's presence felt in markets that matter , drive up occupancy rates and in turn skyrocket profits.

Though the world over, hotel markets do not show a trend of getting affiliated to a brand, with meager 30% affiliations, the hotel market in the United States shows an exactly opposite trend. A survey reveals that more than 70% of hotels in the United States are affiliated to chains. And other markets are surely catching up.  But, acquiring a hotel franchise is easier said than done. There is already a beeline for getting affiliated to big brands. This has resulted in the brands getting to pick and choose from an array of stand alone establishments that suit their needs and gel well enough with their existing image. Most of the times, the process of selecting a hotel to confer their franchise upon, is a complex one, involving a lot of number crunching and analysis. Costs versus benefits are thoroughly examined before any substantial move is made.  Hence, for hotels wanting to get affiliated, the following considerations might prove helpful.

Analyze the cost:  Reading between the lines to gauge the total cost of being affiliated is essential. The royalty fee might be just the tip of the iceberg. Additional charges include the annual fee for reservation system, joining fee, a liquidated damage fee in case of termination of affiliation before end of the term, and marketing program prices. Calculate all expenses incurred during the agreement tenure while comparing prices.

Be sure of the brand image:  Each brand has a niche of its own. One brand could be renowned as a business hotel while the other could be known to cater to leisure travelers. Their focus on entirely different traveler markets makes it important for you to check which one would find your present status more attractive for its own brand.  Getting acquainted with the franchisers either directly or indirectly is necessary, because it is they who can decide the fate of your hotel in the years to come. Find out more about their working style by directly interacting with them. Also try to speak to franchisees and find out if they are satisfied enough with the franchisers. Speaking to ex-franchisees, who for some reason might have terminated the affiliation, might also prove to be helpful. Analyze the franchiser's views on issues like giving franchise affiliations to other hotels in your market.

Define Market Segment:  Focus on the market that draws you visitors. Hotel chains that already have franchisees in your market can provide a better recognition. Moreover, the image of the existing franchisees might benefit you in a way that you will be spared the burden of establishing your image in these markets. Also consider the demography where the brand is more popular and steer clear of a brand that your market might be new to.  Usually, hotel franchises are valid for a period of 20 years. The franchisor will need to control the image of the chain during this tenure by regularly performing property inspections and terminating franchises that do not comply with standards. Also, if you are looking at a long term relationship with the brand, analyze if it will continue to grow or will start stagnating within a few years. Try to take a peek at marketing initiatives and brand enhancements. Is the brand technology savvy and ready to spend money on improved reservation system or internet connections in rooms? Knowing the position of the brand in the years to come will save you the trouble of terminating the affiliation before it expires.

All in all, making a thought out decision about getting attached to a hotel brand is crucial to your business, while a hasty choice could spell doomsday for the hotel.