. Owners can change interiors or upgrade amenities when they see fit. Disadvantage: Missed marketing opportunities. On the other hand, chain hotels have extremely high service standards, but they tend to offer a more standard approach to customer service, attending to the needs of their clients as they arise and being sure to offer professionality and quality service across their whole chain. Advantages of hotel chains = disadvantages for the independent hotel. There are disadvantages to staying independent (unbranded). He added that investors just need to be very, very clear on what services you offer, how much staff you need and what your debt service looks like in order to ride out this period of economic uncertainty. Short-term tenancy can be both an advantage and a disadvantage for hotel assets, and well dig more deeply into that later in this article, but its also just one of the unique facets that new investors need to be aware of when entering the hotel space. Retrieved from https://research.skift.com/report/a-deep-dive-into-operating- branding-strategies-for-hotel-owners/, Ting, D. (2017). But hotels dont offer any similar safeguards. Hoboken, NJ: John Wiley & Sons, 388-404. Were seeing a large increase in insurance premiums, on the general liability side and on the property side. He estimated that general liability premiums had increased by approximately 18% to 20%, while property insurance had increased by 10% to 16%, year over year. A lot of people have made mistakes [and] learned a lot, and you can participate in that learning.. Gerry Chase, president and COO of Newcastle Hotels & Resorts, said he likes having creative freedom, but he also likes having the support of a brand as a soft-branded hotel. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. What Are the Advantages & Disadvantages of an Independent Restaurant However, with an independent restaurant, you have the freedom to shop around for an affordable restaurant location and then compare the prices of suppliers, services and equipment to find an arrangement that fits your budget. The LoopNet service and information provided therein, while believed to be accurate, are provided "as is". 5 Video Games That Will Boost Your Brain Power And Reduce Stress, Nia Long Finds Success as an Instagram Influencer. Share. Particularly susceptible to economic turbulence. Pros and cons of independent hotels versus chains, five types of guests and how to appeal to them. Click here for Desk booking system for hot desking. Whereas an independent hotel can be original and adapt their marketing and distribution strategies as they see fit, chains must adhere to the chains overarching strategy. When she's not at work, she's probably surfing, dancing, or exploring the world. The brands offer obvious benefits in terms of their marketing reach and name recognition. Thats what I see.. Analytical cookies are used to understand how visitors interact with the website. What is the difference between independent hotels and chain hotels? Traditional Business, WebstaurantStore: Independent Ownership vs. Hoteliers on the Pros and cons of independence panel at this years Hotel Data Conference in Nashville took a specific side and talked about why they liked their specific affiliation of choice, whether it be independent, branded or soft branded. (With) soft brands, I get the best of both worlds, he said. It's not being weak to need a shoulder to cry on because even the most seemingly strong person may have a break down at some point. According to the STR report, from 2003 to 2007which saw more than three dozen hurricanes, in places such as the Gulf and Atlantic coastal regions of the United States1,000 independent hotel properties faced a permanent closure. Every one of my independent hotels is different from any other hotel; every one of my independent hotels really speaks to the location its in; every one of them has a theme; every one of them creates or provides a different experience to the guest. However, you may visit "Cookie Settings" to provide a controlled consent. Volume: hotel chains, due to their standard and extensive offer, benefit from economies of scale due to the expansion of their business and the reduction of costs for bulk purchases and management. The Shifting Scene of Independent Hotels in America, Groups360 Adds Choice Hotels to Group Instant Booking Platform, Meeting Profs Travel Report: Air Travel Chaos Looms, Japan Lifts Covid Controls, Smart Meetings Virginia Beach Experience: Lessons in the Future of F2F, Smart Moves at Lark Hotels, Noble House and More. As Freitag noted, Theyve been there and done that, right? The volume of passengers is not very high compared to a chain hotel, but it is similar in terms of figures per activity. Quality assurance, consulting support and lender comfort are provided by the Hotel Chains. The study did not find a significant difference in net operating income (NOI) during economic expansions and found significantly higher NOI for branded hotels during recessions. By closing this message, you are consenting to our use of cookies. In this article, we took a deep dive into the top 3 disadvantages of hotel CRM and gave you tips on how to overcome these problems. When the brakes come to a halt in the broader economy, they come to a halt in the hotel industry, he said. (, How power distance affects online hotel ratings: The positive moderating roles of hotel chain and reviewers travel experience, Intellectual property rights, complementarity and the firms economic performance, Perceptions of European independent hoteliers: Hard and soft branding choices, Organisational form as a solution to the problem of credible commitment: The evolution of naming strategies among U.S. hotel chains, Star rating and corporate affiliation: Their influence on room price and performance of hotels in Israel, Categorical data analysis: Away from ANOVAs (transformation or not) and towards logit mixed models, Department of Tourism Management Alexander Technological Educational Institute of Thessaloniki, Overcoming the liability of foreignness through lobbying: An examination of franchise systems, Construction of an instrument to evaluate the User eXperience of a group of co-creators in the upstream innovation process, Country-of-operation and brand images: Evidence from the Chinese hotel industry, Managerial academic experience, external monitoring, and financial reporting quality, Competition in the international hotel industry, Maximum likelihood algorithms for generalized linear mixed models, Greening the hospitality industry: How do green human resource management practices influence organizational citizenship behavior in hotels? There are more constituents in a hotel investment than there might be in many others, and there is no durable revenue stream, as we learned to our chagrin again in 2020. In The Shifting Scene of Independent Hotels in America, a research report by STR, a systems and tech research company, various reasons were unveiled, such as independent hotels lack of funding in comparison to larger brands, such as Marriott and Hilton; the steady absorption of these independent hotels by larger brands; and smaller hotels difficulty in keeping up with the ceaselessly changing industry. Jared Kelso, executive managing director, C&W Capital Markets. Cornell Hospitality Quarterly, 57(2), 193-201. doi: 10.1177/1938965516631014, Dev, C. S. (2015). 5 Howick Place | London | SW1P 1WG. The hospitality sector is vast and made up of a multitude of accommodation offerings. We apologize, but the feature you are trying to access is currently unavailable. Literature review and research hypothesis formulation, 6. International hotel companies can help independent hotels create higher revenue streams and give owners access to a global network of resources to help sustain their business. Freitag observed that underfunding the equity portion of a purchase is whats putting a lot of people into jeopardy right now their monthly mortgage payment is just so high., Further, because of the unique, daily revenue stream that hotels provide, Barton advocated for the benefits of securing financing with a smaller, local institution. Another key difference between chains and independent hotels is that the latter focus on originality across all aspects of their hotel, whereas the former focuses on uniformity. That email address has already been registered. In some instances, the owner and the management may be the same, but its very common that the brand is a third party.. Barton also noted that lenders will want to see a clear management plan in place, and will even give particular consideration to investors that choose to literally sleep where they eat, often showing a preference for owner-occupied hotels. Department of Business Administration. Want more coverage of the Hotel Data Conference? It is established that everything that is not related to a hotel chain is considered an independent hotel . The hotel management agreements and franchise agreement handbook. Retrieved from https://scholarship.sha.cornell.edu/chrpubs/224/, Enz, C. A., & Canina, L. (2011). A competitive analysis will help indicate what other hotels in the area and with a similar offer are doing so that you can be sure to be competitive within your comp set. As Jan Freitag, national director of hospitality market analytics at CoStar, pithily observed, a hotels lease terms are just one night.. They like to see the corporate or franchise model in financing these deals.. The main con is typically over-standardization. To tell the truth, the small and medium-sized companies that operate in this sector share similar operations and characteristics that are their own (with their benefits and drawbacks). The study found an early advantage in RevPAR driven by occupancy for affiliated full-service hotels that decreased as time went on. Comparing The Benefits of Boutique vs. Chain Hotels - Social Tables Most commercial assets, whether youre considering office, retail or industrial product, operate with long-term leases, anywhere from three- to 15-years in duration. Unpublished manuscript, Gothenburg, Sweden. LoopNets sources also noted the uniquely enjoyable and exciting nature of the hotel industry. That being said, chains tend to have a less personal touch, focusing on their brand standards rather than what each individual guest wants. Beautiful Design. So when it comes to staffing models, when it comes to building new assets, architectural plans, you name it, there is a step-by-step playbook to follow, and we see our profitability is substantially higher at branded hotels than they are in the independent and soft-branded hotels.. Learn about the advantages and disadvantages of being an independent hotel owner or franchisee of a hotel management company. of observations (after data cleaning). Retrieved from https://skift.com/2017/06/27/dont-expect-hotel- companies-to-stop-launching-new-soft-brands-anytime-soon/. Learn aboutfive types of guests and how to appeal to them. It is a type of hotel that does not have an affiliation with any particular chain. So, lets get started. According to Patel, in addition to greater complexity, insurance for hotels comes with increased costs, and those expenses are growing. This website is using a security service to protect itself from online attacks. 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Business travelers can take advantage of the chain hotel. Best shoes for different occasions: Work, parties and Outdoor Activities, How to Choose the Right Home Designer for Your Project, Smart ways to style your casual shirt for vacation, Guidelines to start your career in online teaching, Why Local SEO is Essential for Small Business Owners, Five Steps Women Can Take to Improve Their Health. Building and managing your brand. The good news is, if you can buy today, youre buying at the trough. These banks often like hotel loans because they also get all the daily deposits and theres more to their relationship than just a loan.. Weve looked at the differences between these two structure types, but you may still be wondering if there is any way for them both to compete. Investing in Hotels: Advantages, Disadvantages and Unique - LoopNet
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