Is this the end of the independent hotel model?
As franchising takes over as the world’s most popular operating model for large hotel operators, are we witnessing the death of the independent hotel?
Five of the largest branded hotel companies (IHG, Accor, Marriott, Hilton and Starwood) together account for 30% of the current global branded room supply and 65% of the development pipeline, indicating a shift away from independently operated hotels worldwide.
More than 50 per cent of global hotels are now branded as franchising has become the operating model of choice for the majority of large hotel firms, a new report from hotel consultancy HVS London has said.
According to the report, branded properties account for an estimated 53% of the global hotel market. However, a significant geographical difference was also noted.
“Independent hotels are still much more commonplace in Europe than they are in North America for a variety of cultural and legal reasons. In the USA, the franchise market is highly regulated, and franchisors are required to provide potential franchisees with a franchise disclosure document prior to signing or payment.”
“The increased transparency and ease of comparison between different franchise options increases the franchise model’s attraction to hotel owners. In Europe, the regulations differ country-to-country, creating greater difficulty for the franchisor to roll out its brand.”
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