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Trend toward franchise-owned branded hotels

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Franchise agreements allow fast expansion in new markets

There will be an increase in franchise-owned branded hotels in Europe, the global hotel consultancy HVS predicts in a new report, Hotel Franchising in Europe.

Lucy Payne, a consultant and valuation analyst who co-authored the report, said the hospitality industry can expect “a significant uplift over the forthcoming years” of branded hotels in the franchise sector.

The change comes after a surge in independent management companies in Europe over the last few years, which gives the opportunity for expansion between franchisors and hotel owners. The option to expand with a franchise comes in the knowledge that hotels can be managed to a successful and high standard.

Previously “hotel operators were keener on management contracts”, but now “franchise contracts are equally as likely to be proposed to owners by the brands”, co-author Sophie Perret said.

Franchise agreements allow rapid expansion into new markets, with extra support from the franchisor who provides the brand name and marketing expertise, and independent management which provides the experience of managing the hotel.

“Independent management companies have a good track record and are an efficient way to grow brands,” Payne said. “Their nimbleness certainly remains a key advantage compared with the heavier corporate structures of established brand operators.”

TTG Digital

[pictured: Holiday Inn Express hotel; photo courtesy IHG]

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