TODAY ’ S
FACE OF
FRANCHISING
AS NEW-BUILDS STRUGGLE , FRANCHISORS LOOK AT CONVERSIONS AND INCREASINGLY AT GLOBAL MARKETS FOR OPPORTUNITIES . contributed by ED WATKINS
As the global hotel industry continues to improve , so does the outlook for lodging franchising . However , in the current market upcycle , the face of franchising differs from the past : Conversions are more prevalent than new construction . Most U . S . -based franchise chains are looking to international markets for growth . And , unlike past cycles , very few new franchised brands have been introduced to the market in the past several years .
While global numbers are difficult to obtain , hotel franchising in the United States will grow this year . According to the International Franchise Association , the number of U . S . franchised hotels will increase 1.5 % in 2013 to 25,911 units , and sales will jump 4.2 % to nearly US $ 80 billion . Several chains reported significant increases in activity in recent months . Choice Hotels International signed 214 franchise agreements in the last quarter of 2012 , up from 128 deals during the same period a year earlier .
Bill Fortier , senior vice present of Americas development for Hilton Worldwide , projects a 10 % to 15 % jump in the number of deals this year . It actually began last summer , he says . “ It was like someone turned on a switch with the lenders ,” Fortier explains . “ Since then , our [ franchise ] approvals far exceeded our budgets , and that has continued into the first quarter of 2013 .”
The past few months have seen some creative musical chairs in the world of hotel branding . In January , FelCor Lodging Trust reached a deal to rebrand eight Holiday Inns to the Wyndham Hotels and Resorts brand . Wyndham , which will mange the properties for FelCor , agreed to guarantee US $ 100 million in ROI on the properties over a 10-year period . A few weeks earlier , Choice and Wyndham agreed to rebrand 102 former Jameson Inns : 56 went to Wyndham under its Baymont , Days Inn and Howard Johnson brands , and 46 became Quality Inns , Comfort Inns or Econo Lodges , all in the Choice brand family .
Like many chains , Accor has favored conversions as its growth model . The company , which opened 38,085 rooms last year — mostly under franchise or management agreements — has a strong focus in Asia ( 48 % of new rooms opened ) and Europe ( 28 % of rooms ). In markets like Latin
www . hotelsmag . com April 2013 HOTELS 21