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Hotel Franchising & Propiteer: Where Do We Fit?

It’s a popular misconception that major brands own all their hotels. Over 70% of rooms branded under Hilton are franchised to independent operators and companies, while IHG Group operate over 82% of its branded hotels under franchise agreements. This is where Propiteer fits into the equation: we not only build and develop hotels; we are independent hotel operators in our own right. With franchises from Hilton (Hilton Garden Inn and Hampton by Hilton) and Accor (ibis), as well as investment interests in IHG (Holiday Inn Express), Propiteer are committed to delivering the high levels of customer service that guests are looking for in today’s hotel market.

 

Where Did Hotel Franchising Start?

Almost 80 years ago the formation of a cooperative by seven motor court owners in the USA sought to refer business to each other’s hotels and establish service standards for their properties in order to better meet the needs and expectations of their guests. From this, hotel franchising was born. Setting standards for all the hotels to adhere to, guests would arrive knowing that physical facilities and hotel operations would be standardised. Publishing names of all the hotels on the cooperative, this referral saw an increase of profits to all.

That cooperative known now today as Choice Hotels International has more than 6,500 franchised hotels. Still made up of independent owners of different types of hotels, it evolved to function as the USA’s first hotel chain, becoming a for-profit corporation called Quality Courts Motels, Inc., in 1963, and the largest association of independent motel operators in the world in 1969.

Holiday Inn, now part of InterContinental Hotels Group (IHG), entered the franchise market in 1954 creating a chain of reasonably priced, clean and comfortable motels followed by Wyndham Hotel Groups historic US brand, Howard Johnson, leveraging its reputation for consistent food quality and successful restaurant operation to expand into lodging.

Choice’s Quality Inn led the charge of market segmentation in 1981, dividing its lodging system into three distinctive chains: Quality Royale, a luxury brand; Quality Inn, for the moderately priced three-star market; and Comfort Inn, a budget franchise aimed at the luxury budget two-star market.

Others soon followed; through mergers, acquisitions, and recasting, they too added brands with different services and amenities, and different price points—ranging from limited-service to full-service hotels in the economy, midscale, and upscale segments. Consumers, armed with the power of the internet to shop around, could find a property that met their needs both in terms of what they would pay and what they could expect when they showed up at the property.

 

Umbrella Concept

Having more than a one franchise brand under a group umbrella not only gives guests a choice but the hotel owner too. Historically, hotel owners might have been prohibited from opening a franchise property as one was already in the area, but with a diverse portfolio or umbrella brands, franchisees can enter the space with a hotel aimed at a new guest base.

Holiday Inn Express from IHG is a solid choice of franchise hotel where guests know they are getting a value for money but limited services hotel. Alongside this, IHG also offer Hotel Indigo within their portfolio of umbrella brands, a higher end boutique hotel, where at the owner’s expense the property and the guest experience can be customised to the point that no two properties are alike. These hotels can provide guests with authentic local experiences, modern design, and intimate service.

While originally many hotels were run on a hands-on basis by the owner, operators now look to third-party companies to provide day-to-day operations management – this ultimately brings the benefit of technology, cost savings and bulk buying power to the hotel. Within the Propiteer group we operate both owner managed hotels such as the Hampton by Hilton Exeter and the 3rd party  management company model operated Interstate at the ibis Dublin.

 

Data Driven

Today more than ever hotel management is focused on yield management. Pricing is no longer necessarily pegged at a single rate but is highly dynamic: based upon day of week, time of year, length of stay of the guest, and maybe affiliation or status when booking a reservation—perhaps to access negotiated rates for a particular corporation and its employees. Companies such as STR collect data from hotels worldwide to allow franchisees to make pricing decisions based on real competitor data.

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