It is a known fact that management and ownership is not the same thing when one is in hotel industry. The hotel industry has changed significantly in the last decade as a growing number of companies have sold off their assets to focus on managing and franchising their operations; or have sold them only to lease them back and use the capital to fund their expansion into other markets.
The move from owned to asset- light began in the 1990s as ‘traditional’ hotel companies looked to dispose of their asset intensive portfolios for a lighter portfolio of managed/leased and franchised hotels.
Publicly quoted hotel operating companies began divesting of owned real estate and focused on management as they were unrewarded for ownership stakes in hotels. Asset-light strategies enabled them to release capital, lighten their balance sheets and execute share buybacks, consequently increasing their share price. Practically speaking, hotel owners were focusing on building a base of long-term management contracts and stronger brand footprint in order to attract new capital sources and develop more predictable revenue streams.
Here are the major benefits of incorporating a management contract with experienced hospitality brands:
- Strong brand name and a experienced guidance of hospitality professionals is the first distinct feature of hotel managed by a brand.
- Travelers prefer to stay with brands they recognize.
- Consistent & established product and level of service.
- National central reservation system helps a deeper market penetration
- Strong marketing and hotel branding practices, benefit individual hotels under the banner
- Management training programs help with internal stakeholder growth & in turn create a loyal workforce
- Advanced technology can be implemented across the brand for a fraction of the cost that a standalone hotel would have incurred.
- Central procurement bring down costs considerably and have a better negotiating stand with vendors
- Architectural, construction and interior design consulting help eliminating major teething problems a new hotel faces independently.
A lot many advantages attached with a brand hotels become available to standalone hotel owners with the prospect of better business and a professional level of hospitality services, that are the identity of a good hotel irrespective of its ownership. At the end of the day, a guest’s experience be it from value for his / her money spent or the comfort and consistency of hospitality services provided are what matter the most.
Reach out to us to find out how your hotel can be a part of the Essentia brand.