Half of the world’s hotels are now branded, says HVS

More than half of the world’s hotels are now branded properties, with franchising being the operating model of choice for most of the big name chains, according to a new report from hotel consultancy, HVS London.

This highlights the shift away from independently operated hotels around the world, proving that those boutiques that are still independently owned and managed need to shout about it to capture custom.

The results showed that five of the largest branded hotel companies (IHG, Accor, Marriott, Hilton and Starwood) make up 30% of the current global branded room supply and 65% of the development pipeline.

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The report, which examines trends in the way hotels are being operated, identifies the proliferation in the number of players and stakeholders that can be involved in a successful hotel – including brand owners, owners and management companies as well as a combination of operating models and hybrid models.

There is also a geographical difference. Across Europe, where independent hotels are more common, franchises account for 50% of rooms in the large listed hotel companies sampled by HVS, with the owned and leased model making up approximately 30% of room counts, and management contracts around 20%.

This contrasts sharply with the North American market, where 85% of the research sample was franchised, just 13% under management contracts and only 2% were owned and leased properties.

Report co-author Stephen Collins, consulting & valuation analyst with HVS London said: “In the US the franchise sector is highly regulated, making it more transparent and easier to compare the results of one brand against another. In Europe franchise regulations differ from one country to another, making it more difficult to compare like-for-like.”

HVS also identifies the growing use of Third Party Operators (TPOs) to operate franchises, bridging the gap between the owner of the hotel and the franchisors who own the brand.

“While many franchisees are owner-operators and have the management expertise to be successful, there remains a gap between owners that are unable or unwilling to control the daily operations of the hotel and the franchisors that provide the brand,” said HVS director Sophie Perret.



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