SPECIAL REPORT : FRANCHISING
strategy outside the United States . In some countries , the company has wholly owned subsidiaries that grow its brands through franchising . In other markets — Scandinavia , Japan and Canada are examples — Choice uses master franchisees to build the business .
According to Mark Pearce , senior vice president of international operations for Choice , the company ’ s main focus is Europe , and the primary vehicle is conversions of existing hotels .
The company is not afraid to get creative to grow both in North America and internationally . It recently signed a deal with U . K . operator Akkeron Hotels Group to rebrand nine hotels with Choice ‘ s Quality and Clarion Collection flags . Choice was able to secure the agreement by providing an undisclosed amount of mezzanine financing to Akkeron .
“ We do see some new-build opportunities [ in Europe ], particularly in mixed-use projects that include offices or shopping ,” Pearce says . “ There are opportunities , but not as strong as the conversion market .”
While Choice does have interest in China and India , Pearce says it ’ s a “ very considered approach because it ’ s not for the faint of heart .” In India , for example , he cites problems with
Marriott ’ s
SpringHill Suites Latrobe , Pennsylvania
infrastructure and bureaucracy as major challenges .
For the most part , though , U . S . brands shy away from master franchise agreements in overseas markets in favor of one-to-one agreements with entrepreneurs and companies . Some brands , such as Hilton and Marriott , will make multi-site agreements with groups that can develop multiple properties within a brand family . In Turkey , for example , Hilton has a deal with a developer to build 12 Hilton Garden Inns in the country .
“ We have a bias toward building relationships with people who can give us broad distribution over a relatively short period of time ,” says Liam Brown , COO of select-service and extended-stay lodging in the Americas for Marriott International . “ We don ’ t do master franchise agreements , but we like to find partners who have an ability and desire to grow rapidly .”
One primary focus for Marriott is South America . Like some other brand companies , Marriott tweaks its product offerings to meet differing customer expectations outside the United States . As for Europe , in early March Marriott announced the launch of the Moxy Hotels brand , the result of a partnership with Nordic
Hospitality and Inter Ikea Group ’ s Inter Hospitality . The economy-tier brand is positioned to appeal to the Millennial Generation with “ cheap and chic ” design and rate structure as well as free Wi-Fi throughout the hotel .
North American travelers may not recognize the company ’ s Courtyard by Marriott product in Asia , which Brown says is a hybrid between traditional Courtyards and full-service hotels . Hilton also has designed new prototypes for some of its brands for different areas of the world , generally with smaller rooms but more F & B .
Conversions can be more difficult in some international markets . Fortier cites South America , Eastern Europe and Asia as spots where it ’ s hard to find suitable properties for conversion . The reason , he says , is often these buildings can ’ t meet the brands ’ fire and life safety standards .
U . S . hotel companies find franchising on the international stage brings some unique challenges . “ It varies market by market ,” says Bob Loewen , CFO and executive vice president of Wyndham Hotel Group , whose franchise pipeline skews internationally ( 56 % of properties in the works ). “ Some of the challenges are financing and lending , differing legal structures in differing countries , varying levels of infrastructure development , cultural differences and language barriers ,” Loewen says .
Rise of soft brands A relatively new wrinkle in the world of franchising is the rise of the soft brand . These hybrid lodging products give independent properties the ability to maintain their uniqueness while plugging into the distribution channels of big-brand companies . Both Choice with its Ascend Hotel Collection and Marriott ’ s Autograph Collection have been very aggressive in signing properties to their networks . And in January , Red Lion Hotels launched Leo as its entry into soft branding .
In January , Choice signed an agreement with Bluegreen Vacations to become the official hotel brand of the timeshare operator . In addition , Bluegreen ’ s 21 resort properties are now part of the Ascend Collection .
“ Travelers are looking for more
24 HOTELS April 2013 www . hotelsmag . com