The Chesapeake Point of View

Maximizing The Franchise Relationship

Maximizing The Franchise Relationship

June 08, 2012

There is a reason why the concept of a brand encompasses so much more than just a company name or a logo. A brand is not just a label, it is an identity. Like the indelible mark left by a literal brand, the impression left by a powerful corporate brand can make an enduring impression. In the hospitality industry, where guest perceptions, brand associations and emotional attachments can have a profound impact on booking decisions, the industry’s iconic brands spend untold resources strengthening and supporting the brand identity they have worked hard to establish.

From a hotel management perspective, leveraging that brand— and taking full advantage of all the associated programs, systems, training and benefits that it provides would seem to be a nobrainer. But, despite the fact that ownership pays significant fees to fly the various brand flags, all too often management professionals take an indifferent or even adversarial position towards franchise management. That approach is not just inefficient, it can be actively counterproductive. Management professionals who fail to embrace their brand identity, and who leave brand resources on the table, are handicapping their hotels and operating with one hand tied behind their back. What follows is a brief overview of some of the ways in which hotel owners and operators can ensure they are optimizing their franchise relationship in ways that improve the guest experience and boost their own bottom line.

In the hotel industry, the very nature of the franchisor/franchisee relationship, with its complex and sometimes colliding interplay of differing goals and objectives, can at times lead to professional disagreement or even conflict between parties.
While hotel ownership routinely confronts and accommodates potentially difficult issues such as franchisor capital requirements or new product impact issues, the management team cannot afford to get caught up in those big-picture issues. It is imperative that hotel management remains focused on their “ground game”: maximizing the owner’s return on investment from the brand. A failure to take advantage of franchise resources and opportunities, or, even worse, a stance that takes a dismissive or antagonistic view towards the brand management team, can create a dynamic that is financially detrimental to the hotel.

In a general sense, hotel managers should serve as good stewards of the brands with which they are affiliated, in order to deliver on both the brand promise and the bottom line. Here are some reminders about how to make that theoretical goal an operational reality:

Communicate effectively
It is important to develop positive relationships with your brand management team. The best way to do that is to establish and maintain clear and concise lines of two-way communication. Be open and honest about your property’s challenges and opportunities, taking a collaborative approach that enables you to work together with brand managers to resolve issues or conflicts. A big piece of the communications puzzle is working together to set goals and guidelines: let your brand management team know what your expectations are from them and what contributions you will need from them so your hotel can be successful. Getting everyone on the same page is the first step toward writing a happy ending.

Use available resources
Franchise fees can be a significant expense. With franchise fees averaging anywhere from 8% to 12% (or even higher in some cases) of your total room revenue, it is reasonable to ask if you are getting a commensurate ROI. Making that ROI
happen is not a passive process—hotel management needs to be a proactive and collaborative participant in the process. Many of the most valuable brand-related opportunities require input and hard work to maximize their value. Make sure you are allocating enough resources to evaluate and take full advantage of the numerous brand-marketing opportunities that are available to hotels. Capitalize on your brand’s customer rewards program, and do not miss out on the opportunity to participate in programs to increase brand contribution share.

Be proactive and productive
Savvy hotel management professionals understand they have to adopt a results-oriented approach in order to maximize brand value. Seek opportunities to promote your hotel to the brand, whether directly through a presentation to central reservations or indirectly through outstanding guest service and positive feedback. The single best way to strengthen your relationship with the brand and open up new opportunities for mutually beneficial added value is simple: Deliver on the brand promise. Hotels that make it a top priority to deliver superior results and consistently provide an outstanding guest experience will find their contributions to the brand identity do not go unnoticed. Conversely, it is also important to understand how and when to rely on franchisor resources when needed. If you have a challenge, do not hesitate to appeal directly to your regional management team to provide the power and resources of the brand.

Think win-win.
Ultimately, the common denominator that binds the franchisor/ franchisee relationship is the customer. Providing a positive guest experience and building guest loyalty is imperative to the success of both parties. A quality management company delivers guest satisfaction with financial results and must be the positive force that bridges the franchisor and franchisee together for their mutual benefit. When executed correctly, it is a collaborative dynamic that builds brand loyalty, provides ROI and creates value for ownership.