AAHOA's Bruce Patel talks about the changing franchise industry

(AAHOA's 2017 convention is in San Antonio)

Bharat (Bruce) Patel will wrap up his final days as chairman of the Asian American Hotel Owners Association at the organization’s 2017 convention, which kicks off today in San Antonio. But before Patel, who also runs Dabu Hotels in Irving, Texas, passes the chairman’s baton to Vice Chairman Bhavesh Patel at the conference’s end, HOTEL MANAGEMENT talked to him about how the franchise industry has changed during his chairmanship and where he sees this segment of the lodging industry headed.

1. How has the franchise business changed in the past several years?

The reality is change is the normal course of business, even in franchising. What is different now is the pace of change. Technology, and social media in particular, drives consumer desires in many cases, along with the greater than ever before access to consumer data. The changing demographic of the guest, namely millennials, is one of the most significant developments. Hoteliers have to respond more quickly to the evolving market to serve the ever-changing guest expectations. A great example is the demand for leisure travel. Hotel owners, even of branded properties, are keenly aware of the consumer’s desire to turn almost any trip into a positive, all-encompassing experience. This, in part, has given rise to nontraditional offerings like those found on Airbnb. Another noticeable change involves the mergers, consolidations and expansions of so many brands over the last two years.  These are having, and will continue to have, a great impact on franchising.

2. Broadly speaking, have you noticed any new trends in franchising?

The combination of more data, better data, and quicker access to data allows franchisors to make and implement decisions at a quicker pace. The explosion of brand names in the lodging sector is evidence of this response to consumer demands based on better information. Many companies have launched a new brand in the last 24 months. We now know so much more about consumers and the result has been to create a brand for almost every type of traveler. The consumer behavior of millennials—on whom perhaps there is the most data—is dictating not only design, but also the guest experience through real-time reviews and the desire for instant gratification. We even see brands that aren’t identified as brands, a testament to how deep we have gone in the effort to reach every consumer.

3. Is there any way in which you feel hotel franchising could be improved? Why?

Franchises still need to find the right balance between mandating certain items and providing the owners with some flexibility, particularly for those items unrelated to a direct guest experience. Brand standards are important for consistency and in gaining customer loyalty. However, there is a solution in which we do not compromise the quality or integrity of the brand and its ability to remain competitive in an ever-changing world, while keeping up with the [return on investment] needs of owners and investors in a more difficult environment to operate a business. 

4. How has AAHOA has responded to the pace of change as far as how it works with its members?

First, because AAHOA hosts over 150 events each year, we are in constant contact with our members. This allows us to remain current on the issues impacting their businesses. AAHOA then responds to these issues through many initiatives. For example, thanks to our partnership with STR, we provide monthly national STAR reports to our members. AAHOA also hosts on average one webinar each week on relevant topics affecting our industry and our members’ businesses specifically. We host in-depth, two-day workshops on issues of high importance. The 20 annual AAHOA regional conferences also dedicate one to two hours to education on current topics affecting hotel owners. Finally, our bimonthly newsletter with updates current industry trends and offers a platform for owners to gain continuous real-time data. 

5. Where does AAHOA stand on online travel agencies and why? 

In many ways, the OTA conversation has been overshadowed by the Airbnb discussion, even though they are two distinct issues. Brands continue to lead OTA negotiations. AAHOA has urged brands, and they have responded, with efforts to push for lower rates and ramping up marketing for direct booking. However, with over 90 percent of online transactions controlled by two companies, there has not been sufficient competition to bring rates down to the level of a traditional travel agent. It is also important that consumers know a direct booking can lead to a better overall experience for the guest. We realize OTAs are an important part of the industry. Yet, we also know that more competition in this area is better for consumers and hotel owners.