One of the basic decisions for any hotel project can have a major impact on the success of the project, that decision is whether the property should be:
- Branded, and whether that brand should manage the property
- Franchised and managed by a third company or the owning company
- Independent and operated by the owning company or a third party
This ‘branding’ of the hotel industry is a global phenomenon for several reasons, the principal ones being: the customer’s desire for a predictable product and service experience, economies of scale in advertising and distribution, and market power in negotiation with high-volume buyers and suppliers. The hotels that are being branded divide in four main types: new construction, non-hotel buildings being converted to hotels, independent hotels converting to a brand, and branded hotels switching brands.
In Modus & Amplio we recognize that there are many voices in the decision. Lenders or other investors may be more comfortable when a hotel is branded, and may feel that a brand manager will better operate the hotel. Some investors may prefer one brand or another (often based on personal experiences as a guest, rather than an owner), and may have preconceptions of the ability of hotel ownership to operate the property. However, even where these strong voices have input, the owner or developer should consider the pros and cons of brands and brand management.
The decision to brand or not a property, the selection of the brand (if any), and the selection of the manager are all interrelated and essential decisions for the hotel owner. The outcome of the decision will have a lasting impact not only on the current income and success of the hotel, but on the ultimate value of the property.
We use the practical experience of Modus & Amplio gained from helping owners with more than 10 successful branding projects in Greece and many negotiations between owners and Brands, to provide guidance in assessing the relative cost and benefit involved in each such decision. Our clients find it helpful in confidently making their business decisions to be able to tap this virtual database of market terms and solutions from more than 13 years of Branding transactional experience.
