The hospitality sector is currently going through a profound structural change. The classic asset will be reimagined as guest expectations move towards hyper-personalized experiences that are tech-driven, authentic and local.
Owners and investors are faced with a challenge that goes beyond maintaining buildings. It is about selecting the best operational vehicle for driving value. Consequently,
The future of hospitality is defined by the move from rigid and one-size fits all approaches to three distinct models, including traditional management, franchising and increasingly popular white-label management.
1. The traditional management model
Less involvement with legacy management model Traditionally, traditional management models were the standard in the industry. This arrangement involves a global hotel brand managing the hotel for the owner.
They provide everything, from the name at the front door to the employees on the ground. This arrangement offers the assurance of a powerful brand with deep operational expertise. However, certain brands charge high fees for management that must be justified and limit the flexibility available to the hotel owner. This model is ideal for classic assets like historic hotels or city centers, but it can be difficult to adapt to changing market conditions due to the strict standards of corporate brands. This model is suited to assets with high visibility, or those that are vanilla and require more exposure. It’s also a good fit for groups such as Adani, who want to concentrate on optimizing their assets rather than their operations.
2 – Franchise
A greater commitment is required.
Many owners are now turning to franchising as the markets have matured. The model allows owners to access global distribution networks and license world-class brands while still maintaining full control of their daily operations.
Franchising is also a great option for business owners with their own management team, but who want to have the brand approval and standards of a large brand. The owner is responsible for maintaining the consistency of the brand and meeting all the strict audits. It is therefore a model with high rewards and high responsibilities that demands the owner become an expert operator.
3 – White label management
Modern disruptors. White label management is the most important shift on the landscape today. This scenario involves a hotel being managed by a third party, while the owner has the option to remain independent, or join a franchise. The best of both worlds allows maximum flexibility.
White label operators tend to be leaner, more focused and specialized, than the global brands. They are also much more concerned with profitability, and understand local market dynamics. A white label partner is a better option for an asset owner who wants to modernize their classic assets. They can quickly implement the latest technology, and create a workplace culture that values “everyday respect”.
Models and vision should be matched. The future of hotel management is in the capability to convert classic hardware to modern software.
Owners can breathe new life into their classic properties by selecting the best management model for them based on risk appetite, asset profile and strategic vision. In doing so, owners position themselves to be profitable, sustainable, and relevant within today’s fast-changing landscape.