Courtyard by Marriott , Amarillo , Texas quarter compared to the year-ago period . “ It ’ s not wide open , but it ’ s better than it was last summer .”
Choice has gone an extra step to help franchisees of its Sleep Inn brand cover the cost of a mandated guestroom renovation program called Design to Dream . Choice has partnered with Connecticut lender Access Point Financial Inc . to provide financing to franchisees , eliminating access to capital as an excuse for failing to move ahead with the two-year-old update initiative . Marriott International has a similar program through its treasury group to provide special financing to franchisees for construction , acquisitions and conversions .
Smaller franchise companies that lack the wherewithal to fund loans are in a more difficult situation . Vimana Franchise Systems , a Floridabased franchisor with 28 properties open under the Key West Inns and Centerstone brands , has seen numerous affiliation deals unravel after applicants failed to secure loans . “ There ’ s still a huge , huge quantity of developers that can ’ t get renovation loans — even on conversions ,” says Vimana CEO Steve Belmonte . “ I ’ m doing deals , but I could be doing so many more deals if these folks could get financing .”
New face of franchise Pre-downturn , investors and companies with little or no experience in the hospitality industry were clamoring to get into hotel real estate because of return potential — both real and perceived . The downturn drove many of these investors to cut and run quickly . The net effect is that the profile of today ’ s hotel franchisee more closely resembles the typical hotelier of a decade ago — families and small companies operating a handful of properties — rather than the flood of equity investors and corporations that dabbled in hotels during the boom years . “ The non-hotel capital has moved out , and it ’ s more of the traditional franchisees that we ’ re working with ,” says Choice CEO Steve Joyce .
That comes as a welcome change for lifelong hoteliers like Hembree , who believes brands primarily comprised of individuals and companies committed to the industry are ultimately stronger . But Hembree does identify a negative component to the flight of equity buyers . “ Your real estate isn ’ t worth as much anymore ,” he says .
Within this consolidating core of classical hoteliers , however , a lot of “ cross-pollination ” is taking place , notes Jim Fisher , chief owner and franchise services officer for Marriott . “ Whereas there used to be an awful lot
“ THE NON-HOTEL CAPITAL HAS MOVED OUT , AND IT ’ S MORE OF THE TRADITIONAL FRANCHISEES THAT WE ’ RE WORKING WITH .”
– Steve Joyce , CEO , Choice Hotels International
of purity on which franchisees owned in the select-service and full-service segments of the business , there ’ s a lot of overlap now between that ,” Fisher says . The ongoing exodus of non-hoteliers from the franchise business is creating opportunities for franchisees to move into different segments , creating a new set of challenges for brand leaders .
These expanding franchisee businesses require broader operational expertise to deal with guest expectations across segments , not to mention the myriad capital expenditure requirements and brand standards . Further complicating the situation is the growing ratio of third-party management groups , as the few inexperienced franchisees that actually succeed in acquiring financing are being required to engage experienced third-party managers as a condition of the loan .
As a result , Marriott has evolved its corporate franchise support structure , transitioning from an account management style to more of an umbrella strategy to stay on top of issues that transcend individual portfolios , Fisher says . Rather than working mostly with representatives at the property level ,
26 HOTELS June 2012 www . hotelsmag . com