This cookie is set by GDPR Cookie Consent plugin. This personalized touch, of simply just knowing what their guests want, gives them a competitive edge. What are the advantages of chain hotels? The author analyzed the performance of hotels that changed brands and suggested that the effect of the brand itself should be separated from the hotel's fit with the brand. Retrieved from https://gupea.ub.gu.se/handle/2077/53941/, Carvell, S. A., Canina, L., & Sturman, M. C. (2016). Most days, you will spend your day walking, running errands for your business, and performing a multitude of tasks. They have the ability to negotiate better room rates for employees who stay there a lot. Freitag also mentioned that abundant data, including information found in the dSTAR Report produced by STR (which, like LoopNet, is owned by CoStar Group), is an industry attribute that investors can benefit from. Since you don't have a franchisor to whom you need to answer, you only have to worry about yourself and your own employees, and this can reduce conflict from disagreements over operations. Please include what you were doing when this page came up and the Cloudflare Ray ID found at the bottom of this page. Gerry Chase, president and COO of Newcastle Hotels & Resorts, said he likes having creative freedom, but he also likes having the support of a brand as a soft-branded hotel. ), do not possess dedicated reservation and marketing systems and it is hard for them to compete with brands that have larger marketing budgets. Does paying higher franchise fees command higher RevPAR?. The resources needed to create a digital presence are significant and ones that not all small, independent hotels have. Best shoes for different occasions: Work, parties and Outdoor Activities, How to Choose the Right Home Designer for Your Project, Smart ways to style your casual shirt for vacation, Guidelines to start your career in online teaching, Why Local SEO is Essential for Small Business Owners, Five Steps Women Can Take to Improve Their Health. Please try another or click, By clicking the button, you agree to LoopNet's, An Overview of This High-Risk, High-Reward Asset Class, Passwords is too common or does not have at least 8 characters. When you run a franchise, the franchisor is the one who tells you what food you can serve, what your location must look like and what procedures you must follow in your daily operations. The key to getting a competitive advantage is providing a unique experience that cannot be replicated in any other structure. With an independent restaurant, you might run into some hurdles if you want to sell. "Global Brand Expansion: How to Select a Market Entry Strategy." Cornell Hotel and Restaurant Administration Quarterly 48.1 (2007): 13,27,8. Did you know that with a free Taylor & Francis Online account you can gain access to the following benefits? 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. The unique advantage that independent hotels have is autonomy . Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. Franchise Operators Agreement. While all hotels focus on profitability, chains are more focused on getting the most revenue possible out of every hotel room. In some cases, you might end up selling for a much lower price than desired if you do have trouble finding someone to buy the restaurant. Sign up to our monthly newsletter for industry insights, product news, partner updates and more. It is true that a franchise can come with some cost benefits, like allowing you to get group discounts for startup supplies and saving money on initial advertising and lease costs. International Journal of Hospitality Management, 30(3), 515521. 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. The remaining insurance companies are using the situation to their advantage and raising premiums. This is perhaps why hotels have historically outperformed the consumer price index (CPI), Freitag said. Traditional Business, WebstaurantStore: Independent Ownership vs. The cookie is used to store the user consent for the cookies in the category "Other. Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine. I think its far more important in the hospitality sector to consider the downside scenario, because the cash flow is so much more volatile than [it is in] other asset classes, he said. Retrieved from https://research.skift.com/report/a-deep-dive-into-operating- branding-strategies-for-hotel-owners/, Ting, D. (2017). Choose a solution to find out more, Hospitality events, insights and inspiration, Everything from industry trends and hotelier interviews to product releases and events. The staff is similar to those at boutique hotels. All rights reserved. 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. A competitive analysis will help indicate what other hotels in the area and with a similar offer are doing so that you can be sure to be competitive within your comp set. Are independent hotels capable of competing with chain hotels. Independents vs. brands vs. soft brandsPanel moderator Patrick Mayock, senior director of research and development at HNNs parent company STR, asked each panelist to start the debate by explaining the advantages of being an independent, brand or soft brand. What is the difference between independent hotels and 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. Todays consumer is becoming more and more demanding, which has inspired a more personalized and varied offer in the hospitality sector. Hotel Management Companies vs. Franchises - Study.com Patel said that investors should assume that at least 15% to 18% of their operating expenses will go to brand-related costs, and that percentage grows as you climb the brand ladder from economy to luxury. 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. Ultimately, Patel said that it all comes down to RevPAR (revenue per available room), one of the hotel industrys key metrics. How am I doing compared to the competition? You know, he said. There are Associations or Marketing organizations that link together small to medium-sized independent travel agencies. You must register your contact information to view secure information on this listing. The . Small hotels dont have big-brand financial backing to aid them if they need renovations, expensive repairsor a revamp after a natural disaster, which could put them out of business. In this two-part series, LoopNet provides an overview of the lodging/hospitality/hotel terms that will be applied interchangeably throughout this series sector. I reviewed the literature on the subject, and there is no simple answer. Independent hotels - independently operated properties. As Freitag noted, Theyve been there and done that, right? Dont Expect Hotel Companies to Stop Launching New Soft Brands Anytime Soon. Both parties expectations, responsibilities, and duties should be set in this document. Further details are available upon request. According to Freitag, hotels are also particularly susceptible to the whims of the consumer. If you decide you want to try something new, like adding outdoor dining or offering new desserts, you don't have to worry about getting approval like you would with a franchise. You will have limited resources and budget. Do brand hotels perform better than independent hotels? Los Angeles: JMBM Global Hospitality Group. The decision on whether to affiliate with the brand or not should be made on the property by property basis. It is free of its capabilities and possibilities. What is a unique advantage of an independent hotel - Course Hero Independents need a simple-to-use solution that enables easier adoption and employee training. But opting out of some of these cookies may affect your browsing experience. On the flip side, they tend to be more expensive and elite. 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. ), do not possess dedicated reservation and marketing systems and it is hard for them to compete with brands that have larger marketing budgets. 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. 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.. Kelso said that investors should be prepared for swift changes in financing options. Having the ability to efficiently and cost-effectively market room nights is a goal all independent hotels should work towards. There are no discounts or premiums included in the rack rate for a hotel room. The analysis follows the stages of the affiliation process from the perspective of the individual hotel as elaborated in and Ivanova & Ivanov (2015): 1) evaluation of the option to join a chain. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Bright Business Media LLC. Measuring changes in the relative competitiveness of package tour destinations, Global strategies in the international hotel industry, Structural breaks, international tourism development and economic growth. Learn aboutfive types of guests and how to appeal to them. And there is only so much you can do with a certain physical box until it becomes economically unfeasible, he said. 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. (2011). Running an independent restaurant can also help you avoid some of the personal and legal risks of running a franchise. 4 minute read, The Mews Blog>Pros and cons of independent hotels versus chains. 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. But today, independent hotels account for less than 30 percent of hospitality venues. 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. Advertising cookies for delivering tailored and customized advertising. Consumers increasingly prefer experiences over products, looking for something unique and memorable, and the independent hotel can better cater to this new shift in consumer preferences (Stone, 2018). To tell the truth, the small and medium-sized companies that operate in this sector share similar operations and characteristics that are their own (with their benefits and drawbacks). 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. However, you may visit "Cookie Settings" to provide a controlled consent. To Be or Not to Be - Brand Affiliation in the Hotel Industry. 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. Independent vs chain hotels: advantages and disadvantages This cookie is set by GDPR Cookie Consent plugin. Fixed prices : the established price policy, being little variable, ensures a constant and clear revenue. 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. More space for original design, product creativity and a unique identity. 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. What are the rates of the hotel rooms? Hotels are designed to give you a comfortable and luxurious experience. 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. However, with an independent restaurant, you have the freedom to shop around for an affordable restaurant location and then compare the prices of suppliers, services and equipment to find an arrangement that fits your budget. A boutique hotel is a small, upscale, luxury hotel that has a distinct personality, intimate experience, and personalized service. When she's not at work, she's probably surfing, dancing, or exploring the world. In other words, the unique features of hotel assets are myriad; but dont get overwhelmed. The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. Their ability to offer experiences different than the larger, branded hotels appealed to the younger generation, anxious to have one-of-a-kind experiences. 70.32.113.124 Share. What Is The Difference Between Independent And Chain Hotels? Please try again. Difference Between Hotel Managements Agreements and Franchise Operators 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. Owners can change interiors or upgrade amenities when they see fit. The study found an early advantage in RevPAR driven by occupancy for affiliated full-service hotels that decreased as time went on. 24 Pros & Cons Of Starting A Chain Hotels Business (2023) Independent hotels are more open to change. Analytical cookies are used to understand how visitors interact with the website. Chase said a soft brand might be the same as a brand, but theres still a lot of work that goes into sales and marketing for a soft-branded property to attract guests. Do brands matter? You can email the site owner to let them know you were blocked. Thats what I see.. 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). 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 Retrieved from https://scholarship.sha.cornell.edu/chrpubs/224/, Enz, C. A., & Canina, L. (2011). A comparison of the performance of independent and franchise hotels: The first two years of operation.

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