Franchisees on the De-flagging Fence: A Gamble Or A Golden Goose? - Former Franchisees Talk Specifics About Channel Loyalty and How They Leverage VIP International Channel Marketing to Succeed as Independents
As major brands become more expensive with franchise fees and marketing and reservation fees, franchisees are feeling the squeeze. Because of new Internet marketing options, some owners are asking, "Would I make it on my own as an independent hotel? Can I sacrifice the brand identity, but use the Internet to give me the same distribution, revenue management assistance and marketing as before, perhaps more cost-effectively?" The answer for three successful independent operators is "yes;" but not without hard work and marketing savvy.
Reasons for going independent vary. Some owners feel they do not have the capital to make brand-required compliance upgrades; others have seen their revenues flatten or dip while franchise fees and expenses erode profitability forcing them to reexamine brand ROI. For many operators the transition to independent status is a temporary measure while they shift to a different flag. Regardless of their reasons, owners considering independent operation agree they need sales strategies and solutions that will continue to drive reservation volume after they leave their franchise. Listen to three leaders in the de-flagging trend.
HVS Guides Boulder Property to Independence, Increases Revenue 40%
Colorado-based HVS Hotel Management provides independent third-party management services to owners of lodging properties, particularly distressed properties in need of a turn around. Daniel King, President of HVS Management, has good business counsel for operators evaluating independence. "There are plenty of good reasons to go independent," King explains. "Brand value is key, but in many markets the top flags are taken. The options for operators in this situation are to sign with a second- or third-tier flag, or go independent. We took the 160-room Boulder Outlook Inn and Suites independent and we have actually increased revenue by 40 percent and raised rates since going on our own. Internet booking volume is key to the success of independent operators. You need to play the game hard against the big flags, manage your rates and Internet exposure, and pick good partners. It takes real work."
King estimates that of about 187 hotel brands only a handful are strong, although fees are roughly the same. He believes the key to running a profitable independent property is knowledge of your market's demand generators and how to sell to them. "A growing number of people are on the Internet buying rooms through Travelocity, Hotels.com, and others, and they are becoming channel-loyal, rather than brand-loyal," HVS Management's Dan King continued. "If a property has a good presence on the right sites they can compete against the flags; but you cannot do it in a casual way. We partner with VIP International, a reservation channel sales company, to
maximize the Boulder Outlook's eChannel bookings and revenue. The bottomline is that it is important to work with a specialist in on-line marketing and sales, regardless of whether you are franchised or independent."An additional challenge concerning hoteliers evaluating independent operation is their property's loss of brand advertising and priority placement on leading Internet search sites. To reduce the potential loss of position, channel sales partners like VIP International help independent properties compensate for brand neutralization by providing search engine optimization services to give a client hotel's website the most prominent positioning on most Web search engine results. Often this positioning will put a independent property's listing on the first page of search results. This same reservation sales support is valuable in raising property screen ranking when independent properties offer rooms over third party travel sites.
Former Choice Operator Creates Independent Alaska Brand, Pulls 15% Web Reservations
Aspen Hotels, based in Anchorage, is a five-property chain created four years ago by Carol Fraser and her partner to fill a need they saw for an Alaska-focused hotel group. Ms. Fraser operated Choice properties and understands the big-chain dynamic and loyalty. "The Alaska market is competitive; there are a lot of franchises, but none of them focus on helping Alaska. This is why we started an independent chain," Fraser said. "Our goal was to create a niche, not a big flag. Our market here does not respond to flag strength the same as in the lower 48." Aspen Hotel's team recognized the importance of the Internet segment so it shopped for a solid GDS representation company to compete against the big flags in the e-booking environment. Their eChannel strategy was successful; in 2003 over 15 percent of Aspen's reservations came from Internet sources. "How a company markets its properties is crucial. Many small operators think they must have a franchise flag to access the GDS channels. We found an aggressive reservation channel sales company that represents our rooms on the GDSes, and Orbitz, Hotwire and other sites. We also have a frequent flier business agreement with Alaska Airlines, a company with excellent brand loyalty, that, in turn, creates loyalty for our properties."To increase booking efficiency Aspen Hotels is leveraging its channel sales provider's technology to distribute Aspen's availability and rates through a single point of contact with all the third party Internet sites selling its rooms. Carol Fraser explained, "We give our vendor one rate and they sell our brand and rate across the Internet, GDSes, and to TAs. The system works; over half of Aspen's reservations came from the Internet last year." Almost 13 percent of the chain's reservations come through its website, and it is viewed as another key revenue source. Rooms for all five properties are sold from the Aspen site through its channel partner's booking engine, which is invisible to guests. "Revenue management is my specialty, and this is why I like VIP," said Fraser. "They specialize in driving sales for independent operators and make us look like a big franchise to shoppers and travel agents."
Operator Goes Independent with Health & Fitness Focus
Owners of the Krystal Aire Inn and Suites in Springfield, Missouri wanted to have a health and fitness-focused property, but none of the chains they evaluated were ready for the concept - so they took their hotel independent. The property is the first of a proposed new franchise idea managed by Missouri-based Rolling Oaks Hospitality. Rolling Oaks President Lonnie Funk, a former Executive Vice President of Operations for John Q. Hammons, described the reasons behind their decision. "There were simply no flags available in our market that gave us what we wanted in value proposition or price for our residential motif property, so we founded our own. To market our concept on-line and generate reservations fast we knew we needed representation on the GDSes and Internet booking sites, so we partnered with a top reservation sales provider that could represent our property on the most productive electronic channels. We began receiving reservations based on our health and fitness niche the first day we 'turned on' our relationship with a strong channel marketer."
For More Information Contact:
HVS Hotel Management
Dan King, President
777 29th Street, Suite 100, Boulder, CO 80303
Phone: 303.554.9766
Email: [email protected]
Website:www.hvsinternational.com
Aspen Hotels
Carol Fraser, Vice President
108 E. 8th Avenue, Anchorage, AK 99510
Phone: 866.483.7848
Email: [email protected]
Website: http://www.aspenhotelsak.com
Rolling Oaks Hospitality
Lonnie Funk, President
1045 South Farm Road 193, Springfield, MO 65809
Phone: 417.268.5480
Email: [email protected]
Website: www.krystalaire.com
Rick Shaum
Senior Vice President Sales And Marketing
(719) 487-0789
Vantis International Corporation
