Is Autonomy A Real Advantage? Why Some Hotel Owners Opt Against Franchising

Franchise partners in the hotel space offer a proven business model and brand loyalty.  Customers appreciate the consistency and will base their travel around certain brand affiliations.  There is no question the franchise model has and continues to work.  Still, many hotel owners decide to opt for independence and more autonomy in operations.  Hoteliers have the decision to franchise or operate independently in almost every transaction.  This post will explore reasons why a hotel may or may not choose to affiliate with a franchise, including; autonomy, location, branding, and financial considerations that often drive such decisions.

An independent hotel can shape identity, operations, and guest experiences.  There is no need for mandated corporate guidelines. Without brand affiliation, hotels have the flexibility to adapt swiftly to market trends, set their own hours, and cater to the specific needs of their target audience. This autonomy can foster creativity and a sense of community among hotel owners and staff, this will often lead to a more personalized and authentic guest experience.  The franchise model is more predictable and consistent.  Several destinations still benefit from a franchise affiliation.  Independent hotels, generally speaking, are not as profitable in secondary and especially tertiary markets across the United States.  The brand recognition and customer loyalty in these less touristy, often business-driven and bedroom community markets can truly outpace the independent competition. 

The flexibility inherent in the operations of an independent hotel can be critical for the modern hotelier when looking at the bottom line.  Franchise agreements typically come with rigid standards, high fees, and impractical expectations.  Independent hotels enjoy the freedom many franchised properties do not.  They can make decisions swiftly, adjust marketing initiatives and make operational enhancements without oversight.  To adapt, many franchises now offer what is known as a soft brand, a proverbial olive branch to the independent hotelier.  This idea blends the spirit of an independent hotel with the exposure and predictability of franchised properties.  This model is often less expensive and comes with fewer procedures to follow.  A great option for any hotelier vacillating between their choices. 

Branding also plays a pivotal role in the decision-making process of hoteliers contemplating franchise affiliation. While franchises can offer the advantage of instant brand recognition, they tend to dilute and over saturate.  Of the six major hotel franchise companies there are over 140 different franchises to choose from.  Marriott has the most with over 30 brands and no end in sight considering they are launching their new economy brand currently titled Project Mid-T.  Hyatt has 26 different brands, Hilton has 22, IHG has 19, Wyndham has 24 and Choice rounds it out with 22.  I would be remiss if I left out Motel 6, Best Western, Sonesta, Red Roof Inn, Raddison, Accor . . . I think you get the point.  With so many options to choose from, it can be difficult to stand out.  Independent hotels cultivate brand identity organically, leveraging distinctive attributes, premier locations, and custom amenities to create compelling brand narratives.  This independence can create connections that appeal to discerning travelers seeking authentic experiences.

Financial considerations also weigh heavily on the minds of hoteliers evaluating franchise options. While franchises provide access to established reservation systems, marketing support, and loyalty programs, they entail significant initial investment costs, ongoing royalty fees, liquidated damages and habitual property improvement. Independent hotels can allocate resources more strategically, investing in areas that directly contribute to enhancing guest satisfaction and profitability. Moreover, they have the flexibility to negotiate favorable contracts with vendors, retain a larger share of their revenue, and reinvest profits into property enhancements or expansion endeavors.

The competitive landscape of the hospitality industry is evolving rapidly, driven by higher expenses, technological advancements and shifting consumer preferences. Independent hotels are often better positioned to embrace innovation and adapt swiftly to changing market dynamics. They can leverage emerging technologies to streamline operations, enhance guest engagement, and stay ahead of the curve in an increasingly difficult operational landscape.

While franchise opportunities offer certain advantages such as brand recognition and support infrastructure, many hotels especially in heavy tourist destinations and primary markets opt against affiliating with a franchise in favor of autonomy.  For now, the franchise model is still king, no question.  However, as the hospitality industry continues to evolve, the decision to operate independent may emerge as a more strategic choice for some innovative hoteliers.