Freitag said that another key advantage of hotels is their widespread distribution, which opens up opportunities for investors in almost any market in the country. Hotel Management Agreement Advantages and Disadvantages. Being independent allows you to develop your own brand, menus and dining experience for your customers. This is perhaps why hotels have historically outperformed the consumer price index (CPI), Freitag said. Here you can manage your preferences regarding cookies: Essential cookies enable core functionalities of the website such as marking your data inputs, network management and accessibility. It is a type of hotel that does not have an affiliation with any particular chain. All About G Adventures Vs Intrepid Vs Contiki. The decision-making process is longer. Having an independent restaurant means you're on your own and will have to seek your own resources for help when you need it, such as your local chamber of commerce or fellow restaurant owners. We know that every hotelier defines "efficient" and "cost-effective" differently, so this is why some opt to leverage the marketing power of OTAs and others do not. Increase revenue: more direct bookings and less commission. However, affiliation with the brand does not guarantee an improvement in financial performance. Consider both the advantages and disadvantages of hotel ownership as a franchisee to decide if it's right for you. She also has earned a Master of Business Administration degree with a leadership and strategy concentration from Western Governors University along with a bookkeeping certification. By closing this message, you are consenting to our use of cookies. Both studies found that unaffiliated hotels had higher average daily rates (ADR), and affiliated hotels had higher occupancy rates. ), do not possess dedicated reservation and marketing systems and it is hard for them to compete with brands that have larger marketing budgets. A mixed-methods study, Do brands matter? Register a free Taylor & Francis Online account today to boost your research and gain these benefits: Comparing chains versus independent hotels based on international sales: an exploratory study, a University of Bologna, Rimini, Italy;b Horwath HTL, Rome, Italy, c Universidad Internacional de La Rioja, Logroo, La Rioja, Spain, d Universitat Politcnica de Valncia, Valencia, Spain, Social media analytics: A tool for the success of online retail industry, Asymmetric information and deal selection: Evidence from the Italian venture capital market, Global-local trajectories for regional competitiveness: Tourism innovation in the western cape, Catalysts in introducing information technology in small and medium-sized hospitality organisations, A comparison of the performance of brand-affiliated and unaffiliated hotel properties, Expansion strategy of international hotel firms, Hotel chain affiliation as an environmental performance strategy for luxury hotels, Visitor attractions and events: Responding to seasonality, Modal choice in a world of alliances: Analyzing organisational forms in the international hotel sector, How firms relate to their markets: an empirical examination of contemporary marketing practices, Efficiency evaluation of hotel chains: A Spanish case study, Profitability determinants of hotel companies in selected Mediterranean countries, Determinantes en la eleccin del modo de entrada de las hoteleras espaolas en destinos forneos, The eclectic theory of international production: A case study of the international hotel industry, A comparison of the performance of independent and franchise hotels: The first two years of operation, European Hotels and Chains Report, Horwath HTL. Running an independent restaurant can also help you avoid some of the personal and legal risks of running a franchise. What is the advantage of an independent hotel? Samantha Shankman, Skift. Weve seen all of the major hotel companies get into the soft-brand arena, and theyre trying to scale up. Qualitatively, this approach leads to the same results as those reported in the paper, which are omitted to save space. In some cases, the value of affiliation could be negative when the costs associated with the association are higher than the revenues received (Carlbck, 2015). Financial autonomy : independent accommodation does not have financial pressures from a group that demands a certain return. In other words, the unique features of hotel assets are myriad; but dont get overwhelmed. It may be because of the architecture of the place but also because of the services designed for a niche clientele: there is no comparison with a single offer, therefore there is less competition and an economy due to specialization (it reduces costs by not having an extensive offer that pleases everyone ). Independent hotels are more agile and better prepared to adapt to the local market shifts ("Skift Report", 2018), and have the flexibility and opportunity to create unique experiences for the guests (Stone, 2018). Whereas chains are built with the idea of having a standard offer, including standardized design and quality standards no matter where a guest stays in the world, independent hotels pride themselves on their uniqueness. The most obvious advantage of a suite hotel is extra space. Of course, high rewards rarely come to the dance unaccompanied by their less appealing chaperone, high risk. They have the ability to negotiate better room rates for employees who stay there a lot. Because of the time and energy required to manage facilities and staff (including the management team, should you elect to outsource that function), both Barton and Patel advised that it is beneficial to be located proximate to your investment. For Patel, a soft brand is still a brand. of observations (after data cleaning). Cash flow volatility. The resources needed to create a digital presence are significant and ones that not all small, independent hotels have. Independent hotels are more open to change. This leaves little room for creativity for each individual property. Barton also noted that lenders will want to see a clear management plan in place, and will even give particular consideration to investors that choose to literally sleep where they eat, often showing a preference for owner-occupied hotels. There are more constituents in a hotel investment than there might be in many others, and there is no durable revenue stream, as we learned to our chagrin again in 2020. Independent hotels are hotels that are owned and run by themselves. Cornell Hospitality Report, 15(21), 3-11. According to Ford Barton, principal of Lodging Partners, a brokerage and advisory firm focused on the hospitality and lodging sector, OTAs have fostered a commoditization of hotels. This, in turn, has often resulted in less pricing power for the hotels.. International Journal of Contemporary Hospitality Management, 18(5), 398-413. doi: 10.1108/09596110610673538, Hua, N., ONeill, J., Nusair, K., Singh, D., & DeFranco, A. Yield Management : a system that enhances profits by calculating supply and demand (widely used by hotel chains). For example, markets where guests prefer boutique properties (Kwortnik, 2011), unique destinations such as mountain resort area, urban markets with large convention business, and a significant amount of tourism (Stone, 2018). On the other hand, in attempting to be original, independent hotels must be creative in their design, what they offer, their decorational elements, gastronomic proposal and in all aspects of the hotels concept. Jared Kelso, executive managing director of C&W Capital Markets and one of three senior partners in the firms national hospitality capital markets practice group, explained that, Its vastly more complex [than other asset types]. Stone (2018) posited that the operating model that will satisfy all hotel owners did not exist. That email address has already been registered. Every hotel owner needs to decide whether to operate independently or lose some degree of independence to gain a possible competitive advantage by affiliating with the brand. In addition to brands, one of the most potent forces influencing the hotel market are OTAs (online travel advisors), and its important that investors understand the impact theyve had, and continue to have, on the industry. There is a significant difference in the overall experience both kinds of hotels offer. Flexibility : the managers reactivity supposes an almost instantaneous decision-making power that limits monetary losses and increases profitability. With a franchise, it can be easier to find potential buyers since the chain's brand is well known and has a proven value. A comparison of the performance of independent and franchise hotels: The first two years of operation. To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy. A lot of people have made mistakes [and] learned a lot, and you can participate in that learning.. But today, independent hotels account for less than 30 percent of hospitality venues. Editors note: The moderator of the Pros and cons of independence panel asked each participant to specifically take one side: soft brand, brand or independent. Remember passwords are case sensitive. Quality assurance, consulting support and lender comfort are provided by the Hotel Chains. They are important players in the hotel market worldwide. Whereas an independent hotel can be original and adapt their marketing and distribution strategies as they see fit, chains must adhere to the chains overarching strategy. The unique advantage that independent hotels have is autonomy . Your IP: Advantage: Full Control Over Operations Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. But what exactly is the difference between these two types of structures? Business travelers can take advantage of the chain hotel. Retrieved from https://www.hvs.com/article/953-a-case-for-being-independent, Skift Report (2018). Do brand hotels perform better than independent hotels? (3rd ed.). On the flip side, they tend to be more expensive and elite. While independent hotels tend to be singular and not belong to a group, more and more chains are starting to acquire these types of hotels to diversify their portfolios. Trying to maximize the advantages of independent hotels in small accommodation such as B & Bs, hostels, country houses and small hotels is one of the keys to differentiate yourself from the chains and to be successful! Booking platforms, frequent traveler points programs, and the like are offered by them. You must register your contact information to view secure information on this listing. At the same time, you avoid the risk that a franchising company might go bankrupt or find itself in legal trouble, both of which could eventually force your business to close. (, How power distance affects online hotel ratings: The positive moderating roles of hotel chain and reviewers travel experience, Intellectual property rights, complementarity and the firms economic performance, Perceptions of European independent hoteliers: Hard and soft branding choices, Organisational form as a solution to the problem of credible commitment: The evolution of naming strategies among U.S. hotel chains, Star rating and corporate affiliation: Their influence on room price and performance of hotels in Israel, Categorical data analysis: Away from ANOVAs (transformation or not) and towards logit mixed models, Department of Tourism Management Alexander Technological Educational Institute of Thessaloniki, Overcoming the liability of foreignness through lobbying: An examination of franchise systems, Construction of an instrument to evaluate the User eXperience of a group of co-creators in the upstream innovation process, Country-of-operation and brand images: Evidence from the Chinese hotel industry, Managerial academic experience, external monitoring, and financial reporting quality, Competition in the international hotel industry, Maximum likelihood algorithms for generalized linear mixed models, Greening the hospitality industry: How do green human resource management practices influence organizational citizenship behavior in hotels? They dont have to worry about maintaining the same quality. (2011). Youve got hundreds of operating issues; youve got a very different debt market for hospitality assets than you do [for] other asset classes; you have to contend with the brands, you have to contend with the managers, and you have to contend with the third-party OTAs (online travel advisors) such as Expedia, TripAdvisor and Travelocity.. This is particularly helpful when traveling with two or more people for an extended period of time. Disadvantages include full accountability, more time needed to become profitable and resale difficulties. To operate the hotel under a unique brand, hotel owners should have the necessary expertise, understanding of technology and distribution, strong marketing or social reach, and create a resonating brand story (Stone, 2018). For a limited time, new AAdvantage Platinum Select card card holders can earn 75,000 American Airlines AAdvantage bonus miles after spending $3,500 in the first four months of account opening. Its also a sector that has been particularly impacted by the coronavirus, which has produced both distress and opportunities. 5 Video Games That Will Boost Your Brain Power And Reduce Stress, Nia Long Finds Success as an Instagram Influencer. You are not the first one. Furthermore, by creating a targeted, highly-segmented offer for a niche audience, it will be easier to capture clients that are not so price sensitive, but instead are looking for that one-of-a-kind experience. Thus, the decision to affiliate or stay independent should be hotel specific as it can benefit one property, and another hotel could perform better without affiliation. Advantages of hotel chains = disadvantages for the independent hotel. Its fair to say that while every commercial real estate (CRE) asset type has its idiosyncratic features, as well as distinctive attributes and challenges, hotels are particularly unique. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". Unpublished manuscript, Gothenburg, Sweden. Advertising cookies for delivering tailored and customized advertising. They aim to provide a unique and authentic experience at every hotel. Other disadvantages of franchise model include loss of flexibility in pricing, promotion, and operation (Dev, 2015), risk of being de-flagged and losing franchise fees for failure to uphold brand standards, reduced ability to be entrepreneurial (Kwortnik, 2011), loss of a certain amount of control and management independence, unequal distribution Part two, presented below, focuses on the long-term strengths, challenges and unique characteristics of the sector. It does not store any personal data. A hotel management contract is an agreement between a hotel owner and a management firm. Volume: hotel chains, due to their standard and extensive offer, benefit from economies of scale due to the expansion of their business and the reduction of costs for bulk purchases and management. The main con is typically over-standardization. Register to receive personalised research and resources by email. Weve looked at the differences between these two structure types, but you may still be wondering if there is any way for them both to compete. By clicking "Log In," I agree to LoopNet's. Ultimately, Patel said that it all comes down to RevPAR (revenue per available room), one of the hotel industrys key metrics. A deep dive into operating and branding strategies for hotel owners. Less bureaucracy and more attention to original guest experience and unique initiatives. He has worked in the commercial real estate industry for more than 15 years, serving in a variety of marketing, content and communications roles for companies that include Newmark Knight Frank and Cushman & Wakefield. This cookie is set by GDPR Cookie Consent plugin. Generally, the independent hotel is managed as if it were a family business, with a limited and versatile team in its activities. The brands offer obvious benefits in terms of their marketing reach and name recognition. There are Associations or Marketing organizations that link together small to medium-sized independent travel agencies. Promotion : a marketing and communication office that is in charge of advertising the chain as a whole and the individual recognition of each structure. Thus, affiliation with the brand could positively affect the performance of the hotel and carries value for the owner. And as large companies continue to grasp more control of the hospitality industry, smaller, independent hotels are suffering. 8 The correlation between chain penetration (in terms of rooms) and foreign arrivals is 0.3 in our data. Carlbck (2017) posited that affiliation is necessary when a business is focused on growth and development. Independent hotels advantages and competitiveness compared to chains 22 Oct, 2019 These independent hotels now account for 50% of the French hotel pool. A hotel franchise is referred to as a referral hotel chain. All hotels under the ensign of a hotel group are referred to as a chain hotel. That is to say, independent hotels might use technology to create a seamless guest journey, enhancing the guest experience and being able to offer service 24/7. These cookies ensure basic functionalities and security features of the website, anonymously. Hotel brand conversions: What works and what doesn't. Chain Hotels Business's typically involve a much greater degree of movement than other lines of work. Independents need a simple-to-use solution that enables easier adoption and employee training. The remaining insurance companies are using the situation to their advantage and raising premiums. 5 Howick Place | London | SW1P 1WG. The objective is to know very well the business that is being managed and to know how to identify (and differentiate) the pros and cons. Independent hotels - independently operated properties. Department of Business Administration. Business travelers can take advantage of the chain hotel. On the other hand, chains, being one of many, seek to offer a standardized experience that will be the same across the brands collection of products. Consumers selecting hotels through those services tend to focus more on price and less on brand loyalty. On the contrary, O'Neill and Carlbck (2011) reported that unaffiliated hotels had higher RevPAR. Soft Brands - Weighing the Risks, Rewards, and Realities. A boutique hotel is a small, upscale, luxury hotel that has a distinct personality, intimate experience, and personalized service. Cornell Hospitality Quarterly, 57(2), 193-201. doi: 10.1177/1938965516631014, Dev, C. S. (2015). We use cookies to improve your website experience. Patel concurred with that assessment. Smart Meetings publishes cutting-edge meetings content in print and digital magazines 12 times per year, hosts world-class networking events, produces CEU-accredited webinars and offers a myriad of digital resources. Did you know that with a free Taylor & Francis Online account you can gain access to the following benefits?
Lexington, Ma Police Scanner,
How To Avoid Sleeping On Ear Piercing,
Articles D
