Hotel franchising will become an increasingly attractive and important business model in the Asia-Pacific region – which is home to a large group of independent hotels – as hoteliers navigate a post-pandemic future.
Joon Aun Ooi, Wyndham Hotels and Resorts president Asia Pacific, said that “the franchising model allows hotels to tap into the power of a global brand to support their recovery while at the same time giving them a strong degree of operational flexibility – whether it is a trusted and established brand that consumers are familiar with or a soft brand that enables them to maintain their individuality”.
“It will enable hoteliers to enjoy the benefit of a global scale and support and provides exclusive benefits through a loyalty programme,” Joon said at the recent ITB Asia.
Having access to brand guidelines on best practices will also give them the peace of mind that they have support to navigate recovery from the pandemic, he added.
C9 Hotelworks managing director Bill Barnett said that Asia lags behind Europe and North America in franchising or white label management, “but Covid-19 has simply accelerated what was going to happen anyway”.
Hotel groups are likely to focus more on their upscale and luxury brands, while pushing their economy and mid-scale brands into white label management or franchises, Barnett told TTG Asia.
“We’ve seen global hotel chains like Accor and IHG resize their Asian business models and downsize regional corporate offices significantly. Something has to give as a result, and for hotel groups, they are likely to focus more on their upscale and luxury brands that produce more fee revenue,” he explained.
“One issue of franchising in Asia, however, is that the cost gap for owners or developers is not enough to push them to franchise so that has to change,” said Barnett.
Loyalty programmes, on the other hand, “matters most in business hotels, and while we see stronger short-term demand in resort or leisure markets, independents can still compete,” he added.
“The question is what will happen to business travel now – with less trips and more business and leisure combined trips, it is (now) a fragmented space that certainly will see the onus on hotel groups to redefine loyalty and make it relevant post-pandemic,” Barnett shared.
