Why invest in an accom franchise?

AccomNews Wednesday, May 29, 2019

1 4 minutes read

Many people come into accom management from completely different careers: entrepreneurial and resourceful, yes, but green when it comes to industry experience.

Learning the ropes as you go can be an intimidating and costly undertaking, but not when you’re backed by a model which offers in-house training, ongoing support and access to cool heads with a wealth of industry knowledge to provide “been there, done that” reassurance.

Franchises are well-oiled machines that, in many cases, have been operating accommodation in Australia for decades.

The management tiers that come with big franchise chains provide a support system for issues from OTA interactions to run-ins with guests or specific property problems.

Being part of a franchise means operators have a network of other operators they can connect with – and those connections cannot be underestimated. Sharing experience, garnering tips or just venting to someone who understands are all very human needs which can help ease the path for accom managers.

The loyalty benefits are also clear: As part of a network, a franchise often offers access to benefits exclusive to guests of the brand, but also to a much wider community of other businesses.

Independent thinking

As a mum-and-dad operator in a regional or rural area, trying to get your product noticed in a world dominated by online travel agency platforms and highly-tailored social media marketing is daunting. And it’s particularly hard if you’re an independent who is not operating in the high-end luxury sphere.

Those choosing to join a franchise often do so because it provides greater access to marketing and booking networks with an extensive reach.

While a franchise must align with what a property has to offer and franchisees should always research carefully before making a switch, there are several models out there which makes matching a property with a like-focussed franchise an easier task.

Teamwork makes the dream work..

Franchise networks frequently boast some sort of loyalty network of scheme. This incentivises guests to stick with a brand and creates repeat business across the group.

Loyalty is key when it comes to attracting business guests – it is almost a prerequisite for any property looking to attract those travelling for work. Accruing points means those business travellers are far more likely to rebook directly and return with their families.

Franchises will also tend to come with a property management system which facilitates the creation and cross-sell of marketing campaigns across all platforms, encouraging guests to book with any of their franchisees.

And lastly there’s the flow-on effect of fellow franchisees create such a memorable experience for guests that it convinces them to book just because properties share the same brand umbrella. The cross-pollination of guests is especially helpful for those in competitive markets, where guests are likely to ‘go with what they know’.

OTA commissions

While the direct booking movement is gaining some momentum, Booking.com and Expedia retain their stranglehold on internet bookings Australia-wide. All the signs are that those OTA monoliths will fight hard to maintain their market dominance. Having said that, it doesn’t take much to realise that losing the business of a company with 100+ hotels is going to matter more to an OTA than the loss of a small boutique hotel.

It makes sense that franchises often have power to negotiate lower commissions on behalf of their franchisees.

Another benefit relating to bookings is that larger accommodation brands often have successful strategies in place for increasing direct bookings. They also tend to have the available resources to experiment with different advertising campaigns and techniques.

While guests might not think to check the website of a niche property to see if there are any benefits to booking direct, most people tend to know that big brands offer free wifi or complimentary items to whoever books direct.

The hurdles are greater when you are going it alone because social media savvy and marketing ingenuity are not things that can always be grown organically, they cost money.

Reputation

Reputation is everything in a world where everyone from Uber drivers to coffee cart owners seems to live and die by their customer ratings. Putting positive feedback in the bank counts – it accrues interest over time.

Where independent properties have to start from scratch when it comes to reputation, franchisees benefit immediately from the reputation of a parent franchise.

And they are required to adhere to a predetermined set of quality standards, so there’s never a doubt about what’s expected when it comes to benchmarks.

Expectations

Which brings me to expectations. With a franchising agreement, guest expectations are preordained and pre-managed. The very specific standards franchisees sign up to ensure those guest expectations should always be met. Of course, anything an accommodation provider does to go above and beyond those expectations will merely enhance their reputation with customers.

Typical guest expectations for a franchised property will involve good mattress quality, free wifi, in-room food options, strong amenity offerings, etc. Some of these are things that can be more difficult for independent properties to provide off their own bat.

Franchisors will often support expectations that are difficult for members to deliver – helping with arrangements for free wifi delivery, for example.

Expectations are not, though, merely about what customers want. While franchisees can reasonably expect that a franchising agreement will deliver greater marketing opportunities and access to networks enabling them to better deliver their product, they are not for everybody.

Certainly, brands expect prospective franchisees to sign up to a lengthy selection process and are careful about the properties they welcome into the fold. Reputation cuts both ways – franchisees can benefit from the reputation of a brand, but that brand need to protect its standing and ensure any new addition will be a positive addition.