Franchisees flex muscle as midscale segment reigns

Craig Mance, Hilton Worldwide’s SVP of development, North America, during a hotel immersion at the Hilton London Metropole.

Craig Mance, Hilton Worldwide’s SVP of development, North America, during a hotel immersion at the Hilton London Metropole.

 

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Craig Mance, SVP of development, North America, Hilton Worldwide
Recent projects:
* Homewood Suites by Hilton Nashville-Downtown, Nashville, Tenn.
* DoubleTree by Hilton Gatineau-Ottawa, Canada

HM: Identify the most important trend that influenced brands and franchising in 2013?
CM: Several trends have influenced our brands and franchising in 2013. One, the availability of construction financing has always had a major effect on new development in our industry and that held true in 2013. New construction is still primarily for our focused-service and extended-stay brands, but we’ve seen a solid number of new-build full-service hotels in 2013 versus 2009-2012.

HM: In terms of brand development/hotel construction, which segment of the industry do you foresee will be most active?
CM: We continued to see growth of dual-branded properties, most of which will include an extended-stay brand, coupled with a transient brand, both of which are focused-service branded hotels.
  
Jessica Junker, CIO, Cobblestone Hotels 
Recent projects:
* Cobblestone Hotel and Suites, Broken Bow, Neb.
* Boarders Inn and Suites by Cobblestone, Marion, Ind.

The Cobblestone Inn & Suites in Marquette, Iowa, is located on the Mississippi River.

The Cobblestone Inn & Suites in Marquette, Iowa, is located on the Mississippi River.

 

HM: Identify the most important trend that influenced brands and franchising in 2013?
JJ: As we see more and more hotel brands being developed this year, the typical franchisee has many more options to choose from. This trend has pushed franchisors to think outside the box. A franchisor in the past had a larger amount of power over the franchisee; now, franchisees have more power to dictate leniencies in the franchisee agreement that they sign. This shift has made for a better and fairer practice in the industry. Shorter contracts, the loosening of fee structures and lessening of property-improvement-plan mandates are all trends that are a benefit to the franchisee as a whole.

HM: What are your industry forecasts overall for 2014?
JJ: Demand has increased; therefore, rates have increased. This trend will keep on a positive path for at least another couple years.

HM: In terms of brand development/hotel construction, which segment of the industry do you foresee will be most active? 
JJ: The entire midscale segment is a win-win. Hoteliers get a high-amenity product in a cost effective manner and the guest gets [great] services for their money.

HM: What if anything worries you in 2014 in terms of the overall hotel industry? 
JJ: If the industry as a whole operated the way it has been in the last five years there would not be a bad time. Low leveraged properties and property improvement plans only when necessary, not when the brand feels like changing their image, are practices that have worked for the last five years and would make franchisees the most money when the economy bounces back. 

Patrick Mullinix, EVP of development, Vantage Hospitality Group 
Recent projects:
* D Las Vegas
* Lexington Inn, Holbrook, Ariz.

HM: Identify the most important trend that influenced brands and franchising in 2013?
PM: For several years, most brands deferred major renovations and mandates due to the financial recession. While the economy has continued to slowly, but steadily, improve in 2012 and 2013, the recovery has still not occurred in all regions and all segments of the lodging industry. However, chains are eager to make up for lost time and are now struggling to cost-effectively implement brand-wide mandates, require renovations, add new amenities and remain competitive while there is still a shortage of capital and funding in many regions. 

HM: What trends will affect brands and franchising in 2014?
PM: Brands are going to continue to push for more brand-wide mandates and amenities so that they can remain competitive; yet owners are going to continue to be challenged to find access to soft capital. It’s a push-pull problem that puts owners right in the middle.

HM: What are your industry forecasts overall for 2014?
PM: As an optimist, I believe that ADR and occupancy, across the board, will continue to rise as the economy keeps moving in the right direction. 

HM: In terms of brand development/hotel construction, which segment of the industry do you foresee will be most active? 
PM: Midscale and upper-midscale hotel construction will outpace economy development/construction because of rising costs and inflationary factors.

HM: What if anything worries you in 2014 in terms of the overall hotel industry? 
PM: Some markets are still overly competitive with old inventory and may not see the increases in ADR and occupancy, forcing them to lag in the overall financial recovery. This can affect new opportunities for brand growth. 

Ron Burgett, EVP of lodging and brand development, Red Lion Hotels Corporation
Recent projects:
* Red Lion Inn & Suites Perris, Calif.
* Red Lion Hotel Ontario Airport, Calif.
* Red Lion Inn & Suites Walla Walla, Wash.

Vantage Hospitality’s Americas Best Value Inn, San Antonio, Texas, eight miles from downtown.

Vantage Hospitality’s Americas Best Value Inn, San Antonio, Texas, eight miles from downtown. 

 

HM: Identify the most important trend that influenced brands and franchising in 2013?
RB: One trend that continues to take hold is guest use of mobile devices for booking and searching for hotels. Mobile marketing is more important than ever. 

HM: What trends will affect brands and franchising in 2014?
RB: We see additional supply coming online as the construction pipeline picks up. As the new supply comes online, there will also be a trickle-down effect of conversions as hotels displaced by major brands are going to need a landing spot. The better performing brands with great reputations will be the benefactor of this trend. Revenue management is more important than ever for both the brand and franchisees. It will be imperative that the industry creatively entices loyal guests to use brand.com websites in order to stem the tide of discount. 

HM: What are your industry forecasts overall for 2014?
RB: The overall economy seems to be improving. Manufacturing orders are rising, unemployment numbers are declining and loans are starting to percolate. These are all good signs.

The pool area at the Red Lion Hotel Anaheim, Calif., located in the heart of Disneyland.

The pool area at the Red Lion Hotel Anaheim, Calif., located in the heart of Disneyland. 

 

HM: What if anything worries you in 2014 in terms of the overall hotel industry? 
RB: Unbridled growth is a cause for concern for all chain scales. All hoteliers need to invest wisely to avoid getting caught up in the momentum of an upward trend. This is a cyclical business. 

It’s been a much better year for brands, particularly those in the select-service segment, where the availability of construction financing has improved, coupled with more capital available toward property renovations and improvements. Another trend: the power of the franchisees, who, with more brand options to choose from than ever before, are better able to dictate the terms of their franchise agreements. Expect more of the same advantageous conditions in 2014, as most in the industry believe that a still-improving economy will translate into better rates, occupancy and revenue per available room.

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