Hotel franchising is one of the most popular pathways to hotel ownership in the United States, with most hotels operating under a franchise flag. The appeal is clear: brand recognition, centralized reservation systems, marketing muscle, and operational frameworks. But while the franchise model offers a strong foundation, the decision of which brand to partner with can make or break a hotel’s success. Here’s how to evaluate your options to ensure the brand you choose aligns with your market, traveler demographic, and ownership goals.
Know Your Local Market
Understanding your market is step one. Determine your surroundings and figure out which demand drivers are in your vicinity. For example, universities, hospitals, entertainment venues, and major highways will play a role in determining who stays at your hotel and for how long. A property near a tech hub or corporate park may benefit from an extended-stay brand, while a location along a major travel route may be better suited for an economy hotel that caters to road-trippers.
Additionally, analyzing the competitive landscape is critical. You should understand what other brands are operating in your area and which new hotels are under construction. This will help determine whether your market is oversaturated. Studying seasonality, average occupancy rates, and broader economic indicators such as local job growth or development incentives can also offer clues into long-term performance.
Understand Your Traveler Demographic
Identifying your core audience, whether it’s corporate guests, families, or long-haul truckers, will help determine the right franchise tier. While some brands cater to budget-conscious guests looking for the basics, others offer upscale amenities for travelers who expect more from their stay.
It’s important to align both the price point and the guest experience. For example, younger leisure travelers might value tech-enabled check-in and free breakfast, while business travelers are more likely to prioritize a strong WiFi connection and meeting rooms. Additionally, a franchise with a well-established and strong loyalty program can help you stand out in crowded markets and drive repeat bookings.
Evaluate Brand Performance and Financials
Performance metrics like RevPAR, ADR, and occupancy rates can provide insight into how a franchise performs in markets similar to yours. It’s also beneficial to research historical data using tools like STR reports and review the Franchise Disclosure Document. However, not all franchises perform equally in all markets. Some excel in secondary and tertiary cities, while others are better suited for major metros. Understanding these trends will help you make a financially sound decision that aligns with your revenue goals.
Consider Your Ownership Style
Your level of involvement should influence your franchise decision. Some brands are more hands-on, which makes them more ideal for owner-operators who plan to be highly involved in the day-to-day operations, while others are better structured to support third-party management. You’ll also want to take into consideration the level of support the franchisor is offering in terms of training, marketing, and day-to-day operations.
It’s also important to consider costs such as upfront franchise fees, property improvement plans, and ongoing royalty and marketing fees. These costs should be weighed against expected returns.
Looking Ahead
Lastly, think long-term. Look into resale conditions, territorial rights, and how flexible the brand is when it comes to transferring ownership. Speak with current franchisees to get a real-world perspective on their experience. The best brands foster growth and flexibility without red tape.
Choosing the right hotel franchise isn’t just about the name on the sign. It’s about selecting a property that fits your market, supports your vision, and grows with you.
