REPORT FROM THE U.S.—The evolving independent hotel landscape can keep developers and owners on their toes about which is the better business model—branded or independent.
An expert panel at the upcoming Hotel Data Conference will address the question and its many answers on Wednesday, 4 August at the Gaylord Opryland.
Bobby Bowers, senior VP of operations for STR, the parent company of HotelNewsNow.com, will come prepared to tell the branded and independent story using data.
Among the facts and figures, STR data shows a general trend that branded hotels perform better than independent hotels. However, convention hotels seem to perform better as independents.
And it is unclear if the top-line revenue premium is enough to make up the franchise fees in all instances, an issue upon which the panelists agree and plan to address during the 4 August discussion.
“Banks are trying to look at that,” said Bill Hanley, group president of Lexington Collection by Vantage, a membership organization. “They will look at, in the cases of independents or membership, if I take out the brand fees and insert membership, what is the effect on (gross operating profit)?”
One of the panelists asked that question of his company’s portfolio.
“We’re looking at this from a unique perspective, having both independent and branded properties, and most of our independents in major markets,” said Scott Pusillo, corporate director of revenue management and ecommerce for Crestline Hotels & Resorts. “We’ve started to put together our own data. … We’ve been able to incorporate our house-profit percentages.”
Hanley said for discussion’s sake you can look at the investment community in two categories, and both motives are entirely different. “You can divide it into two categories: buy and hold or buy and flip in three to five years.”
“It’s a very valid point—what is the short-term goal versus the long-term goal and being able to speak to the impact of fees. It really comes down to what the owner’s interest is,” Pusillo said. “As we begin to return to the good old days, independents seem to do better because of flexibility and the lack of fees, but the branded hotels are more stable and more comforting to an owner because of the stability in the long run,” Pusillo said.
The panel also will explore the topic of collection brands—the hotels that have access to the distribution of the major hotel companies, but don’t have strict brand standards.
View more information about the Hotel Data Conference.
