Choosing a hotel brand is more than just a business choice. It’s a defining factor in the property’s future success, according to experts.
Gregg Forde, president and COO of Island Hospitality, emphasized the critical role of a brand’s identity. He said that a must-have when choosing the right brand is a strong identity that aligns with your vision and values. He said the right brand should not only resonate with the hotel’s ethos but also attract loyal customers who trust the quality and service of the franchise.
Matthew Campbell, COO of My Place Hotels, echoes Forde’s sentiments on the alignment of vision and values. He advised hotel owners to ensure that the brand complements their vision and fits the market’s intended audience. Campbell underscored the necessity of understanding the variety and level of support offered by the brand partner, pointing out that a well-trained and stable staff can significantly impact performance metrics across the board.
“Continue your analysis by understanding the level and variety of support and training programs offered by the brand partner. A properly trained and stabilized staff makes a significant difference in all performance metrics,” he said. “Also, understand the financial terms of the underlying agreement. The brand partner should encompass a competitive fee structure to complement and boost your hotel’s performance.”
Meanwhile, Brian Waldman, chief investment officer at Peachtree Group, focuses on the long-term implications of brand selection. He said that choosing a strong brand is not just about short-term incentives but about securing a sustainable, long-term partnership.
“We want to know how the brand will stand behind our investment and has the depth of resources to bring to the table,” Waldman said. “Opting for a strong brand goes beyond short-term incentives like key money; it's about securing a sustainable, long-term partnership.”
He also touched on the importance of partnering with brands that typically achieve lower exit cap rates and higher pricing when selling the hotel.
Effective Communication is Key
The critical role of effective communication is a common theme in any successful brand partnership, the experts said.
Campbell emphasized the importance of listening to feedback and maintaining clear communication strategies. This approach, he said, leads to continuous improvement and strengthens the bond between franchisees and the brand, ultimately enhancing property success.
“The brand partner relationship is fundamentally designed to promote cumulative value over the full term of a business plan,” he said. “Value systems dictate the integrity and potential of any long-term relationship and investment. Finding a brand and brand partner with [similar] value systems is a significant component in the success and enjoyment of the relationship, everything is better when we enjoy what we do and whom we do it with.”
Waldman said the value of relationships and support goes beyond mere financial considerations. For him, these aspects reflect a brand’s commitment to its partners, which is essential for long-term success.
“Choosing the right brand isn't just about a name; it's about finding the right one for a specific project that will help maximize ROI by driving the right business to that hotel and maximizing revenue coupled with an appropriate cost structure and reinvestment requirements,” he said. “Some brands value relationships and support, which reflects a commitment beyond the bottom line and is crucial for us as we are fiduciaries for our investors.”
Lessons Learned
When it comes to choosing the right brand for an asset, all three sources shared their lessons learned along the way. Forde warned against choosing brands where market saturation could erode a hotel’s economic interests.
Meanwhile, Campbell advised conducting thorough market research to ensure the brand fits the target market’s demographics and needs. He cautioned that failing to perform due diligence can lead to unintended consequences. Again, communication is key.
“Often, effective and recurring communications between the developer and the brand partner can remove misunderstandings and improve clarity on expectations, standards, and responsibilities to reduce conflict,” Campbell said.
It’s clear that selecting the right brand for a hotel asset involves considering various factors: alignment with vision and values, support, financial feasibility, market fit, long-term partnership potential, effective communication and shared values.
The process of selecting a hotel brand is not just a business negotiation but a strategic move toward building a sustainable and profitable future.
“A brand that is business friendly to ownership, understands the economic factors for ownership as much if not more than their own so that ownerships can get true value from the partnership,” Forde said.