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. By clicking Accept All, you consent to the use of ALL the cookies. A deep dive into operating and branding strategies for hotel owners. The biggest advantage of an independent business or restaurant is that you get full reign over how you run it. LoopNet disclaims any and all representations, warranties, or guarantees of any kind. The most obvious advantage of a suite hotel is extra space. Analytical cookies are used to understand how visitors interact with the website. Most days, you will spend your day walking, running errands for your business, and performing a multitude of tasks. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc. 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.. I dont think the story has been completely told yet as it relates to soft brands, he said. Whats the story behind soft brands?When asked if a soft brand is really just a brand, Horodas said hes not so sure how soft brands will play out in the future as more pop up in the industry. This is partially due to lenders viewing larger, more reputable companies as less of a financial risk, said Ting Phonsanam, founder of Momentum Hospitality Group. Hotels are designed to give you a comfortable and luxurious experience. Cloudflare Ray ID: 7c088146c8c40cf3 Skift Research. This originality is often the deciding factor when it comes to a guest choosing to stay at a smaller, unique property. Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. We apologize, but the feature you are trying to access is currently unavailable. The identity of Independent Hotels is unique. Learn about the advantages and disadvantages of being an independent hotel owner or franchisee of a hotel management company. Retrieved from https://scholarship.sha.cornell.edu/chrpubs/224/, Enz, C. A., & Canina, L. (2011). According to the STR report, from 2003 to 2007which saw more than three dozen hurricanes, in places such as the Gulf and Atlantic coastal regions of the United States1,000 independent hotel properties faced a permanent closure. Smart Meetings 2023 Bright Business Media LLC. According to a 2017 study from Expedia, independent hotels had greater overall average daily rate and faster growth than their branded counterparts. Franchising.com: Weighing the Pros and Cons of Franchising vs. 70.32.113.124 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. All About G Adventures Vs Intrepid Vs Contiki. These things stand there for 30, 40, 50 years, but consumer tastes change, consumer preferences change. The differences in performance indicators were not consistent across market price segments and market types. The insurance market is very unstable, Patel said. But what exactly is the difference between these two types of structures? Roughly 30 years ago, independent hotels accounted for about two-thirds of the properties in the hospitality industry. The volume of passengers is not very high compared to a chain hotel, but it is similar in terms of figures per activity. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. Each of these is important on its own, but even more important to work together seamlessly to provide an enjoyable, attractive, and seamless experience for potential guests. 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. ), do not possess dedicated reservation and marketing systems and it is hard for them to compete with brands that have larger marketing budgets. CONS With fewer staff, working patterns are less flexible and main priority is to ensure that shifts are always covered. 10 Tips to Improve Your Housekeeping Operation, 22 Aug 2022 This cookie is set by GDPR Cookie Consent plugin. The study found no consistent advantages in all segments for either affiliated or unaffiliated properties. (2016) compared key performance indicators of affiliated and unaffiliated hotels over a full 10-year economic cycle. Hotels Magazine. School of Business, Economics, and Law at the University of Gothenburg. Hotel owners might decide that being independent is just too expensive for them and that the high effort that is required for the independent operation could not be justified when help from influential brands and large distribution platforms is available (Stone, 2018). Some of the principal disadvantages of hotels include: Particularly susceptible to economic turbulence. And just two years ago, a study by Expedia found that they had a greater average daily room rate and faster overall growth than their branded counterparts. Being independent allows you to develop your own brand, menus and dining experience for your customers. The capital markets environment for hospitality changes much more quickly than it does for other asset classes, because it more closely mirrors whats going on in the economy, he said. It is essential to know the hotel owner's motivation some hotel owners want to grow the business, and some value harmonious living and stability. What are the benefits of using a data collection application? This means they may fall short in some aspects of the guest experience. Another differentiating factor is the fact that independent hotels focus on the individual guest, seeking to anticipate their needs, and going above and beyond when it comes to service. 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 closing this message, you are consenting to our use of cookies. 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]. For example, in Barcelona you might find a chain on the famous Ramblas Street, whereas a smaller property would look for a more singular location. Make your property remarkable with an ecosystem of hospitality solutions that maximize revenue and enhance the guest experience, The control centre for front office and back office staff with smart automation, A connected guest experience thats memorable as well as modern, Make every payment fast, secure and automatic, Tools for better understanding your business, Hospitalitys biggest marketplace of apps and integrations, The power to easily connect your tech to Mews, One size does not fit all. Short-term tenancy can be both an advantage and a disadvantage for hotel assets, and well dig more deeply into that later in this article, but its also just one of the unique facets that new investors need to be aware of when entering the hotel space. The . The brand would place their flag on the property, subject to many, many requirements on the owner in terms of the design, the quality and the level of service they provide., Lest you think that the brand is doing the majority of the work for you, its important to understand that hotel brands typically do not manage the properties under their umbrella either. They have the ability to negotiate better room rates for employees who stay there a lot. In this two-part series, LoopNet provides an overview of the lodging/hospitality/hotel terms that will be applied interchangeably throughout this series sector. Advantages of an independent restaurant include potentially lower startup costs, full control over operations and avoidance of franchise risks. I will tell you its five to six times harder to open an independent or a soft brand, he said. The Shifting Scene of Independent Hotels in America, Groups360 Adds Choice Hotels to Group Instant Booking Platform, Meeting Profs Travel Report: Air Travel Chaos Looms, Japan Lifts Covid Controls, Smart Meetings Virginia Beach Experience: Lessons in the Future of F2F, Smart Moves at Lark Hotels, Noble House and More. Comparing chains versus independent hote . 2. The main pro of a hotel chain is reliability, meaning that wherever a guest goes they can know what to expect, which is generally a high level of service. It is free of its capabilities and possibilities. Promotion : a marketing and communication office that is in charge of advertising the chain as a whole and the individual recognition of each structure. This is particularly helpful when traveling with two or more people for an extended period of time. They also provide access to customers via their robust loyalty programs. The greatest advantage to me is the ability to be creative, he said. Yield Management : a system that enhances profits by calculating supply and demand (widely used by hotel chains). Disadvantage: Missed marketing opportunities. What is a chain hotel give examples of the chain hotels? On the other hand, Patel noted that in an independent hotel, you dont have someone looking over your shoulder, which offers an investor more flexibility, particularly with regard to reducing expenses; a consideration that becomes particularly critical during turbulent economic periods, such as the one the industry is currently experiencing. This personalized touch, of simply just knowing what their guests want, gives them a competitive edge. Hua, ONeill, Nusair, Singh, and DeFranco (2017) in their analysis of 2,120 properties across the United States over six years (2008 - 2013), concluded that the expected benefits of affiliating with the brand exceeded expected costs. Disadvantages include full accountability, more time needed to become profitable and resale difficulties. A hotel owner needs to assess the benefits and costs of affiliating as well as compare various affiliation alternatives against each other (Carlbck, 2017). This is perhaps why hotels have historically outperformed the consumer price index (CPI), Freitag said. Restaurant Franchising, Forbes: Why Independent Restaurants Are Closing. Independent hotels advantages and competitiveness compared to chains 22 Oct, 2019 These independent hotels now account for 50% of the French hotel pool. Thus, affiliation with the brand could positively affect the performance of the hotel and carries value for the owner. Weve looked at the advantages and disadvantages of these two types of hotels, as well as whether these two hotel types are capable of competing. Business travelers can take advantage of the chain hotel. This potential for high returns is partially owed to the flexibility fostered by hotels unique tenancy model. These cookies allow a website to remember choices you have made in the past, like what language and currency you prefer, remember your name and email and automatically fill forms. Analytical cookies help us improve our website by collecting and reporting information on how you use it. Their ability to offer experiences different than the larger, branded hotels appealed to the younger generation, anxious to have one-of-a-kind experiences. Another disadvantage is that it can take longer for your independent restaurant to gain customers and have a good profit. They have the ability to negotiate better room rates for employees who stay there a lot. Enz and Canina (2011) compared the financial results of 104 newly opened affiliated and unaffiliated hotels in the United Kingdom during the first two years of operation. Kelso commented on the increased complexity of the insurance policies required for hotels, particularly for resort properties in areas prone to hurricanes or other natural disasters. This cookie is set by GDPR Cookie Consent plugin. Thats just my feeling and my personal prediction, but I think once you have 50 or 100 or 200 Autograph or Curio, (properties) or whatever it might be, theyre going to become more homogenous; theyre going to become much more bureaucratic and standardized. Retrieved from https://gupea.ub.gu.se/handle/2077/53941/, Carvell, S. A., Canina, L., & Sturman, M. C. (2016). Pros and cons of independent hotels versus chains, five types of guests and how to appeal to them. There is no independence. The username or password you entered is incorrect. You will have to operate within those limited constraints. The franchise agreement is a legal license agreement between the hotel brand and the hotel owner that . Key advantages of independent hotels over chain properties: More focus on what the guest wants, vs. focus on chain brand standards. According to Sachin Patel, managing principal of Shiv Properties, which is a stakeholder in 11 hotel properties, banks in the last four to six years have been reluctant to finance independent properties. Franchise Direct: How Much Does It Cost to Open a Fast Food Franchise in the United States. Kelso neatly summed up the investment profile of hotels in a single sentence: Its a high-risk, high-reward asset class.. They dont have to worry about maintaining the same quality. Patel said that, if everything goes according to plan, investors can expect annual returns approaching 20%, which is certainly impressive when considered in comparison to other real estate assets. What are the rates of the hotel rooms? (, 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? These lease terms provide investors with a certain degree of security, even if markets take a downward turn. In this article, we took a deep dive into the top 3 disadvantages of hotel CRM and gave you tips on how to overcome these problems. Less bureaucracy and more attention to original guest experience and unique initiatives. We noticed you're using Internet Explorer to view our site properly, please use a more up-to-date browser like Chrome, Firefox or Edge.
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