Robert Crook joined Interstate Hotels & Resorts in September 2013, becoming the company's managing director for the UK and heading its overall operations management for Interstate-managed hotels in the region. Crook is carrying that expertise with him to this year's International Hotel Investment Forum, March 7-9 in Berlin, where he will be participating in the panel, Top Tips for Negotiating a Franchise Agreement & How to Select a Franchise, alongside Daniel Ruff, president and managing director of EMEA, Wyndham Hotel Group and host Babette Marzheuser-Wood, a partner at Dentons.
Ahead of the conference, IHIF spoke with Crook for his perspective on the current state of operations and franchising.
According to Crook, Interstate's 50-plus years in the hospitality industry has given the company insight into brands that has been instrumental in franchise selection. "Every brand has different drivers, and they are all slight variations on a theme," Crook said. "You have to pair a franchise to a location and the operator."
In Crook's experience, it is best to identify two or three potential brands for a location, and of the available options, determine which will best serve a location. But just deciding on the best name to hang on a door won't help if the cost isn't right. Brand options are often determined by whether it is a new build or not, and an existing property's architecture is often limiting. New builds can be built to specifications, which can be planned in advance, but cost becomes a greater factor in conversions. Crook said Interstate makes decisions based on which brand will drive the best owner returns.
"The best brands aren't immovable, but less flexible," Crook said. "That's for a reason: They've got great value and know what they stand for. But over the last five years, bigger brands are becoming more savvy when it comes to converting hotels."
Crook cited Hilton's DoubleTree brand as a successful conversion brand that offers more development flexibility than a traditional Hilton brand. This is a result of brands adjusting to the market and understanding that flexibility is necessary in order to facilitate more conversions, such as loosening requirements on room size. Building off that, when designing a hotel, Crook said to choose a set of brand specifications and build to them.
"If you are going to sell at a later date, build in such a way that the property can be converted to a branded asset," Crook said. "Don't build 16- or 18-square-meter rooms, go with a minimum of 21 or 24 meters based on location. This creates more value for owners."
Factors for Success
One of the greatest factors in Interstate's calculus for choosing a brand is the level of system delivery. Crook said that the system infrastructure possessed by a brand and its track record in the marketplace means everything.
"Do they deliver historically? You've got to know because you may not be able to get your first choice," Crook said. "They may have a signed agreement in a marketplace for a hotel already, so you need a second and third choice that you can be confident of."
Additionally, choosing the right GM for a property is only becoming more difficult. According to Crook, today's GMs have to be more business savvy than they were 10 years ago: aware of geo-political and economic concerns and well-versed in social media.
"It's increasingly harder to find great GMs. It's something everyone recognizes, they want to hold on to the best they’ve got," Crook said.
In terms of advice for owners entering franchise agreements, Crook said that research is often overlooked. Instead, owners rely on personal recommendations or refuse to switch brands when in unfavorable situations. Things owners should know include franchise rates in their market, what their options are for franchise fees and what it is that differentiates brands.
"Talk to industry people, pay for some advice," Crook said. "A franchise agreement is for life practically. Getting it wrong is one of the most expensive decisions you can make."