Why Hotel Owners Might Decide Against Franchise Affiliation

If you're considering entering the hotel industry or have been in the business for some time, you've likely heard about franchise affiliations. Franchisors offer a set of guidelines, branding, and marketing support to ensure consistent quality and customer satisfaction. However, not all hotel owners choose to affiliate. In this article, we'll explore the reasons behind why some hotel owners might decide against franchise affiliation.

The Drawbacks of Franchise Affiliation

Upon joining a franchise, hotel owners must adhere to the franchise’s established guidelines. This often means giving up a degree of independence in running the hotel, which can be a significant downside for those who prefer more control over their business operations. Here are the primary reasons why some hoteliers choose to remain independent:

Lack of Independence

One of the main reasons why hotel owners opt out of franchise affiliation is the lack of independence they will experience. When a hotel joins a franchise, it has to follow a set of rules and guidelines dictated by the franchisor. These rules can vary widely and may not always align with what works best for the specific market the hotel operates in.

Consistency vs. Flexibility

Franchises often require a high level of consistency across all its properties to maintain brand strength and customer trust. This can sometimes mean overriding local preferences and adapting to national standards, even if it may not be the most effective approach for a particular location. On the other hand, independent hotels have the flexibility to tailor their operations to fit the local market, which can enhance their appeal and customer retention.

Market Research and ROI

Before deciding to affiliate with a franchise, a hotel owner must conduct thorough market research to determine if the investment in the franchise will yield a return on investment. In some cases, especially in smaller markets, the costs associated with bringing the hotel up to the franchise standards may outweigh any potential benefits. If the hotel is unable to meet the franchise’s requirements or if the franchise affiliation is too expensive, it might be more cost-effective to remain independent.

Specific Reasons for Non-Affiliation

There are two primary reasons why hotel owners might choose not to affiliate with a franchise brand:

Cost and Quality Issues

One reason is that the hotel or motel is no longer able to meet the requirements set by the franchise. For example, if a hotel has slipped from a 3-star to a 2-star or even 1-star rating, the cost of bringing it back to the required standard may be too high for the owner. Additionally, if the hotel owner is concerned about maintaining the quality and customer satisfaction levels, they might opt to remain independent, even if it means giving up some of the benefits of a franchise affiliation such as marketing support and brand recognition.

High Affiliation Costs

The cost of affiliation can also be a major deterrent for some hotel owners. The financial burden imposed by joining a franchise must be offset by an increase in revenue or service quality. If the hotel is unable to achieve either of these, the affiliation might lead to a decrease in service quality or an increase in daily rates. In many cases, raising rates might not be feasible, especially if the location faces strong competition. Therefore, some hotels choose to remain independent to maintain the current levels of service and customer satisfaction.

Closing Thoughts

While franchising can bring numerous benefits, it's not the right choice for every hotel. The decision to affiliate or remain independent ultimately depends on the specific circumstances of the hotel, including its location, market research findings, and the ability to meet franchise standards. If you're considering affiliating with a franchise, it's important to carefully evaluate the potential costs and benefits before making a decision. For many hotel owners, the flexibility and control offered by being independent can make it a more appealing option.