March 31, 2011: HVS, the leading global hospitality consulting and services firm, has just released the 2011 U.S. Hotel Franchise Fee Guide – 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 Steve Rushmore, president and founder 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 Michael Mele and Chu Xu. “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 89 franchise groups, including 21 economy, 27 mid-rate, and 41 first-class brands, participated in the 2011 analysis. This year’s survey also encompassed some of the recently launched brands, such as Home2 Suites by Hilton, NYLO, and XP by NYLO. The 2011 U.S. Hotel Franchise Fee Guide also includes upscale hotel consortiums such as The Leading Hotels of the World, Preferred Hotels & Resorts, Preferred Boutique, Summit Hotels & Resorts, and Sterling Hotels.
HVS is a full-service hospitality consulting and services firm providing industry skill and knowledge worldwide. Since the launching of the firm in 1980, our clients have relied on our specialized industry knowledge and expertise for advice and services geared to enhancing economic returns and asset value. HVS offers asset management and strategic planning, market and financial feasibility studies, valuations, strategic analyses, development planning, and litigation support. Additionally, HVS specialists provide unique knowledge in the areas of executive search, investment banking and consulting, brokerage, management contracts, risk management consulting, environmental sustainability, shared ownership services, food and beverage operations and restaurant appraisal, interior design, gaming, convention facilities consulting, sales and marketing services, and property tax appeals. Since 2000, HVS has provided hospitality services to more than 20,000 hotels throughout the world. Principals and associates of the firm have written textbooks and thousands of articles regarding all aspects of the hospitality industry, and literally ‘wrote the book’ on how hotels should be valued.
For a limited time only you can download a complimentary copy of the 2011 Franchise Fee Guide, click here.
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