HVS, the leading global hospitality consulting and services firm, has just released the 2013 U.S. Hotel Franchise Fee Guide â€“ a survey of the fees charged by major hotel franchisors in the economy, mid-rate, and first-class market segments. This guide enables hotel owners to easily compare the total cost of one hotel franchise with that of another. “Hotel franchise fees are the compensation paid to the franchises for the use of the chain’s name, logo, identity, image, goodwill, procedures and controls, marketing, and referral and reservation systems,” explains Stephen Rushmore, Jr. CEO and President of HVS. “An affiliation with a franchise creates certain benefits and costs for both the owner and the chain.”
Provided with the information on the relative costs of various franchise fee offerings, an owner can determine the overall cost of an affiliation, and directly compare the estimated costs of different franchises, which can vary dramatically between brands. “The purpose of our guide is to provide a comparative analysis of various hotel brands, based on the fees they charge,” explains Rushmore, who co-authored the study with HVS New York associates Jaimie Choi, Teresa. Lee, and Jeff Mayer. “The selection of an appropriate franchise affiliation affects a property’s ability to compete in the local market, generate profits, achieve a certain image or market orientation, and benefit from referral business.
Because the success of a hotel is based primarily on the cash flows it generates, owners and lenders must weigh the benefits of a brand affiliation against the total cost of such a commitment,” continued Rushmore. A total of 81 franchise groups, including 16 economy, 30 mid-rate, and 33 first-class franchisors, participated in the 2013 analysis. The 2011 U.S. Hotel Franchise Fee Guide also includes upscale hotel consortium’s such as The Leading Hotels of the World.