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  • Hotel Franchising in Europe The Push Continues For New Ways To Expand 8

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    Franchising continues to be an attractive option for hotel brands to expand as it requires less support than managing properties directly. More hotels are joining soft brands through franchising agreements or hybrid models like "manchising" where owners engage an operator for a trial period before switching to a franchise contract. As brands grow larger through acquisitions, they will increasingly rely on franchising to achieve further growth while controlling costs. Owners also have more brand options than ever before and are more interested in franchising their properties for the extensive support brands now provide.

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    Hotel-Franchising-in-Europe-The-Push-Continues-for-New-Ways-to-Expand-8

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    Franchising continues to be an attractive option for hotel brands to expand as it requires less support than managing properties directly. More hotels are joining soft brands through franchising agreements or hybrid models like "manchising" where owners engage an operator for a trial period before switching to a franchise contract. As brands grow larger through acquisitions, they will increasingly rely on franchising to achieve further growth while controlling costs. Owners also have more brand options than ever before and are more interested in franchising their properties for the extensive support brands now provide.

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    6 views1 page

    Hotel Franchising in Europe The Push Continues For New Ways To Expand 8

    Uploaded by

    wloghunt
    Franchising continues to be an attractive option for hotel brands to expand as it requires less support than managing properties directly. More hotels are joining soft brands through franchising agreements or hybrid models like "manchising" where owners engage an operator for a trial period before switching to a franchise contract. As brands grow larger through acquisitions, they will increasingly rely on franchising to achieve further growth while controlling costs. Owners also have more brand options than ever before and are more interested in franchising their properties for the extensive support brands now provide.

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    © All Rights Reserved
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    of 1

    Conversely, brands have aimed at cutting expenses must be adept at understanding these as well as the

    through a shift to franchising, which required a less expectations of local owners in order to remain
    intensive level of support than managed hotels. Going competitive.
    forward, it is likely that this model will continue to be
    an attractive option for brand companies. Clearly, franchise agreements have become more
    established in most markets across Europe and
    The trend of independent hotels joining soft brands continue to gain in popularity and acceptance. The
    may continue to accelerate as well. An increasingly consolidation and acquisition of hotel chains have led to
    popular model is ‘manchising’, a hybrid agreement a sharp rise in the proportion of franchised properties
    whereby hotel owners engage a hotel operating in the portfolio of the top chains and, as they are now
    company for an initial period, say three to five years, larger than ever, they will need to continue to rely on
    after which the contract transfers to a franchise franchises to achieve the desired growth and remain
    contract. Another type of model is a short-term or ahead of their competition. Throughout the pandemic,
    flexible franchise contract, which is less frequent but brands have restructured to find cost efficiencies and,
    occasionally used by brands for existing hotels that do as franchising requires less support and infrastructure
    not meet the brand requirements. For example, the than managing properties, the region is seeing an
    hotel could become affiliated with the brand for say five increasing number of brands willing to franchise.
    years, undergo a property improvement programme
    (PIP) to meet the brand standards, say two years, and On the other side of the negotiating table, owners have
    followed by a long-term franchise contract, say 15 more brands than ever to choose from. Although this
    years. These two operating models are becoming increases the likelihood of finding a brand and chain
    increasingly mainstream, and are expected to continue that is a good fit for any one property, it also means that
    to attract independent hoteliers to brand their owners must truly do their research and understand the
    properties, probably often through franchising. cost and commitment of their choices. With brands
    providing more extensive support to their franchisees
    Overall, interest in franchising continues to grow. over the last few years, independent hoteliers are
    Owners in regions where franchising has been increasingly more interested in branding their
    prevalent for some time have gained considerable properties and many have already switched.
    experience of the model and a better understanding of
    what terms they can and cannot negotiate. Taking on a franchise is a complicated investment.
    Selecting the appropriate franchise for the property
    entails exhaustive research and investigation. The
    Conclusion information presented in this report provides some
    general insight into franchise fee structures that should
    As discussed, a one-size-fits-all approach to franchise only be relied upon as a preliminary resource.
    agreements is not possible in Europe owing to the
    independent nature of countries in the region, and even © HVS October 2022
    within the EU. Different countries impose different
    regulations and disclosure obligations, and hotel chains

    HOTEL FRANCHISING IN EUROPE – THE PUSH CONTINUES FOR NEW WAYS TO EXPAND | PAGE 8

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