The Rules of Franchising are Changing

By Steven Belmonte CEO, Vimana Franchise Systems LLC | October 28, 2008

Maybe not yet, but I predict soon, the stodgy, old hotel franchises with the "our way or the highway" mentality will be a thing of the past. They will be as useless, and broken-down as the coin-operated vibrating beds that were once popular at hotels and motels across the country.

With the advent of the Internet and advanced technology, 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.

First, let me give kudos to one of my closest friends and hospitality colleagues - Mukesh "Mike" Patel. Mike is widely known throughout the industry for introducing the industry's pioneering "12 Points of Fair Franchising" during his chairmanship of the Asian American Hotel Owners Association (AAHOA) in 1998-1999.

In March 2007, Mike and his brother R.C. Patel, both veteran hoteliers, purchased the Budgetel brand from The Blackstone Group to create a new entity: "Budgetel Franchise System." The new upper-economy brand, which will consist mostly of conversions and new construction since there are no Budgetel properties operating in the United States, will become the hospitality industry's first minority-owned hotel franchisor.

Industry sources say that the new franchise organization was purchased to "spark an evolution for fair franchising throughout North America." The goals for this new entity include franchisee participation in brand development plus responsible, controlled growth to ensure long term value.

In a recent press announcement, Mike was quoted as saying: "Our first and most important step is to implement a superior infrastructure that can properly serve the new franchisees we are now actively pursuing . . . We're going to give franchisees a unique opportunity to control their own destiny - by owning their property and also by being partners with us in owning the brand. In other words, now they can really own their present and their future."

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Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.