Hotel Franchises – Pros and Cons

Here is a quick review of the basic pros and cons of buying a hotel franchise. Every investor is different. Depending on who you are some of the “pros” may really be “cons” and vice versa. Consider this a starting point in your assessment of hotel franchise opportunities.

Starting with the good stuff, let’s look at the Pros:

Reduction of startup risk – you are working with someone who has done this before successfully.

Turnkey operation – again no reinventing the wheel on processes, procedures or procurement. Your franchisor has built the system already.

Standardized systems – backend accounting, IT and financial systems already in place so you aren’t spending your time implementing reservations systems.

Buying power – as part of a larger whole, you get the benefit of volume buying.

Consulting readily available – experience counts and your franchisor has been around the block. Ask for as much help as they are willing to give.

Marketing – the brand image and marketing is out there already. You aren’t chasing one-off travel reviewerers to get your name out.

Financial assistance – some franchisors are willing to help you with funding these high capital projects.

You are your own boss – the glory of that goes without saying!

Now let’s take a look at the downsides:

Less Freedom – You are married to your franchisor – for better or worse!

Royalty Payments – as a franchisee you pay for the supports above.

Costs – Hotels are high capital and operating cost businesses.

Lack of Support – if your franchisor doesn’t help as you expect, you may be out in the cold.

Inflexible Systems – even if you have a better way to manage reservations, you are using their method.

Unbalanced Contract – all franchising contracts, not just for hotels, are tilted toward the franchisor.

Dependent on Franchisor – their performance is your performance.

These are all things to consider as you step toward a decision about buying a franchise or hotel business.