In the hotel industry, hotel groups such as AccorHotels, IHG, Marriott or Hilton are most often Asset Light. This means that these groups do not own the hotels that run their brands. For example, you`ll be surprised to learn that the Holiday Inn across the street is not owned by IHG, that Sheraton, where you stayed for your last vacation, doesn`t belong to Marriott, and AccorHotels doesn`t own the Novotel where you had your last business meeting. Before entering into an agreement, Watson recommends conducting a thorough inspection of the proposed market. “Always start by making sure the market is viable. There are a lot of factors that, in terms of supply/demand, who are the players, what brands there are, how strong the competition is, economic growth and a variety of things,” he says. Brand positioning is also an important area of reflection. “Over the last five years, there`s been a trend in the industry to rebuild, in terms of people who keep pushing, midscale [and] Upper Midscale are becoming very expensive constructions on the market, and they don`t see returns.” In cases of franchise and management, the parties may agree on an additional service. Most hotel groups offer a range of optional services that meet specific needs throughout the hotel`s life cycle.
As might be expected, franchise agreements have hundreds of essential conditions. However, some of the most important terms address themselves: in this scenario, the hotel brand (like Marriott, IHG, Hilton, Accor/SBE) is the manager and the owner of the hotel is the managed owner. They signed a hotel management contract for a specific hotel brand (such as Ritz Carlton, Sofitel). The owner of the hotel bears all the risks of operation. They also require payment of basic fees, brand marks, incentive royalties, marketing, distribution and loyalty fees, IT fees and much more. Hotel management contracts can be long and complex. Christine Ravanat, from AccorHotels, explains how large hotel groups are expanding their network presence through franchise or management agreements, a win-win agreement for hotel groups and owners. This contract also assumes that the hotel meets certain standards or does not comply with certain rules and regulations to comply with the contract.
For example, the franchisor requires the hotel to purchase furniture from its authorized suppliers, the use of the company`s property management system, franchise inspections for the quality of facilities, hotel upgrades every two years or decades, and other mandatory franchise requests. Christine Ravanat is an international specialist with strategic and operational experience in the services and travel sector….