Insider: The Rules of Franchising are Changing
By Steven Belmonte, CEO, President, Partner The Lexington Collection, and President, CEO, Hospitality Solutions LLC
Mr. Steve Belmonte
Many of my friends and colleagues in the hospitality industry think that I dislike change. They couldn’t be more wrong. What the past 30 years in lodging has taught me is that change is good . . .change is inevitable . . . and change must be embraced – especially within today’s franchise organizations.
Perhaps what’s changed the franchising world the most is the combination of technology and increased competition from among membership organizations which offer hoteliers low fees, short-term contracts, no liquidated damages, a voice and a vote in the brand’s direction, and a choice of amenities to meet individual market demands.
With the advent of the Internet and integrated property systems, hotel membership brands and new, loosely structured franchises are flourishing. Third-party websites, Global Distribution Systems, and strategic alliances allow these new hotel companies to operate at a fraction of the cost of a typical franchise.
So franchisors beware -- your stodgy, old “our way or the highway” mentality will be a thing of the past. Today there is a huge demand among hotel owners for more independence and it is the flexible membership brands that are giving owners the creative and financial freedom to operate their hotels the way they see fit. Where a hotel owner once only had the choice of which franchise to join, he or she can now choose the fee structure, the length of the contract, and determine amenities based on his or her market and demographic needs – all without having to pay royalties or liquidated damages.
This is not to say that franchising is here today and gone tomorrow. On the contrary – those franchise organizations which have embraced change by revamping their franchise agreements to be more balanced and fair, such as the new Budgetel Franchise System, are growing by leaps and bounds. In addition, organizations such Hospitality Solutions LLC can help owners to renegotiate their contracts and reduce or eliminate liquidated damages to keep the American Dream alive.
Franchising vs. Membership... what’s right for you? Read more in this week's issue of Hotel Business Review in my article "The Rules of Franchising are Changing".
Cordially,
Steve Belmonte
President and CEO
The Lexington Collection and Hospitality Solutions LLC
sbelmonte@lexingtonhotels.com
stevenbelmonte@aol.com
