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Brand vs. Independent

September, 2013
Eric Prevette

Our view is that a boutique property is generally more successful operated as an independent hotel rather than as part of a brand. As an independent, a boutique hotel can be more readily identified as part of the community within which it is located, rather than as part of a larger brand family. It is also difficult to achieve the boutique hotel characteristics discussed above when constrained by corporate demands for adherence to strict brand standards, policies and procedures. The unique attributes of a truly boutique hotel do not always fit the systems, marketing, recruiting and training, and other guidelines and programs of a larger brand.

Some of the specific pros and cons of a brand vs. independent are outlined below.

Independent Hotel

PROS

  • No constraints on owners ability to manage property
  • Lower Management Fees
  • No encumbrance in the event of a sale
  • More flexibility in market positioning and rate determination
  • No employee cultural differences
  • Easier for owner to retain key employees
  • Design/branding flexibility
  • Greater ability to tap into local character

CONS

  • Must develop independent reservations and distribution system
  • May require more staffing – particularly in sales & marketing
  • Need to have resource for recruiting qualified management personnel
  • Need to develop training programs to insure consistency of service levels
  • May be more difficult to obtain financing
  • May need to find additional resources for technical support
  • May take longer to stabilize
  • No shared marketing budget

Branded Hotel

PROS

  • Customer Awareness
  • World Wide Distribution
    • Reservations
    • Sales offices
    • Internet site
    • Brand advertising
  • Brand loyalty programs
  • Staffing
    • Can move staff between properties
    • Training programs
    • Benefit programs
    • Growth opportunities
    • Corporate support
  • Technical services & design support
  • Financing may be easier with brand

CONS

  • Rigid Design Standards
  • Expensive
    • Pre-opening fees
    • Management fees
    • Marketing fees
    • Purchasing fees
    • Total could be 8-10% of revenues
  • May set ceiling on rate (based on customer perception of brand)
  • Brand marketing programs may be inconsistent with hotel markets (i.e., bounce back weekends or three nights for the price of two)
  • Long-term agreements are difficult to terminate
  • May encumber possible sale of property
  • Constrains owner’s ability to manage property
  • May create cultural differences

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