To chain or not to chain? The ultimate operator dilemma
Op-Ed: Emily Stephens, Founder of The Accommodation Project weighs up the benefits of hotel group affiliation
The decision to remain independent or join a hotel group or chain is a pivotal one for accommodation operators. It’s a bit like deciding whether to stay single or embrace a partnership.
Both options have distinct advantages and drawbacks, and the right choice depends on the operator’s goals and circumstances.
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In Australia and New Zealand, operators have a range of options to consider. Drawing on my experience in both independent and group-affiliated properties, I can see the benefits and challenges of each approach.
One significant advantage of joining a group is the support and sense of community it offers. Independent accommodation operators often find themselves alone and struggling during tough times. Belonging to a group provides camaraderie with fellow operators and access to expert advice, which can be a key motivator in the decision-making process.
Additional exposure through marketing efforts, loyalty programs, and referral schemes is another major benefit. Loyalty programs play a pivotal role in increasing repeat business, while referral networks within a group or chain can drive new guests to a property.
Costs vs. ROI
Membership or franchise fees are critical factors to weigh. The decision will often hinge on whether the group is likely to attract a market segment that suits the property. With numerous options in Australia and New Zealand, there are chains and groups tailored to nearly every sector, making research essential.
Operators must balance the expense of membership against the expected return on investment. For instance, a corporate-focused chain might not suit a property in a high-tourism area, even if it offers extensive benefits.
Different models for different needs
There are also various affiliation models to consider. Some groups operate on a membership basis, while others provide a franchise setup. These models differ in cost and the level of marketing and operational support they offer. Membership or franchise fees often fund marketing and advertising campaigns, giving independent operators access to resources they might otherwise lack.
Brand awareness and recognition are additional drawcards. Many travellers choose their destination based on the accommodation available, and joining a chain can instil guest confidence regarding standards and facilities, making your property a preferred choice.
Challenges and considerations
Independent properties face challenges in adapting to the operational procedures, standards, and software often required by chains. While this can be a hurdle for new operators and their teams, it can also facilitate recruitment. Staff familiar with group standards and procedures can transfer seamlessly between properties within the chain.
Group membership also offers collective buying power, allowing operators access to preferred suppliers and discounted rates. However, flexibility can be limited, as the group’s chosen suppliers may not always align with a property’s unique needs.
Membership fees often fund annual conferences for group members—a valuable opportunity to learn from industry experts, network, and celebrate success. These events also provide a chance for operators to relax and bond with like-minded peers.
The final decision
From my experience with various properties, the decision to affiliate with a group or chain ultimately comes down to the property’s unique characteristics and long-term goals. While affiliation can offer marketing power, brand recognition, and operational support, it also requires financial investment and operational alignment.
Ultimately, the choice should be guided by what aligns best with the property and the operator’s vision.
Emily Stephens, Founder and Managing Director of The Accommodation Project, has been working in accommodation operations for over 20 years. Starting as a receptionist, she has worked her way through the ranks in different types of accommodation both overseas and in Australia to now operate an apartment hotel with her husband in a beautiful coastal town in Victoria. Combining her passion for the industry and wanting to help and support fellow operators, The Accommodation Project was created. Building on the confidence and proficiency of newcomers so that all properties find their place in an ever changing and exciting sector.