Location and business aspirations determine independent or branded focus for hoteliers

28-Oct-2013 - Last updated on 26-Apr-2021 at 19:10 GMT

The pros and cons of a hotel being independent or branded were under discussion at the NatWest round table event last month

A hotel's location, it's owner's aspirations for the business and the type of guest it wants to attract are key elements to deciding whether it should be branded or remain independent.

That was the main summary of a round table discussion held by NatWest and BigHospitality last month, where hotel owners and brand development directors were asked to discuss the pros and cons of running a hotel alone compared to aligning with a brand.

Location

Location was one of the strongest factors determining whether an independent hotel should join a brand or not, with Andrew Taylor, national head of leisure for commercial banking at NatWest stating that not all areas of the country were right for brands, particularly if the hotel had a strong leisure focus.

"Working in the mid-market commercial segment of the bank we have a mixed portfolio, we have quite a lot of independent hotels that we fund outside of London in the provinces and we have a number of branded hotels that we fund in central London," he said.

"I did a tour of Cornwall recently and when I think of some of the hotels I saw in far-flung parts there, with the greatest respect, I don't think it would be appropriate for the brands to be in those locations as they are very much more resort destination-type hotels."

"A brand is not just about sticking flags on anything, the brands have got to be strategic and know where they can deliver to, so if you've got an all-leisure destination the branded hotel's probably not right for it," agreed Philip Lassman, development director at InterContinental Hotel Group (IHG).

Brand advantages

While a recent report by hotel industry consultant Melvin Gold suggested that the majority of independent hotels will be branded in the next few years, independent hotel owners within the discussion said there were many benefits to remaining independent, such as having greater control of the business and being able to better adapt it to the market.

However, the overall business strategy would determine whether a hotel remains independent or adopts a brand, said Meher Nawab, director of London-based Euro Hotels Group.

"If your strategy is to be in and out in five years I think you have to look at the business model and see where you'll be if its unbranded in that time and where you'll be if it's branded in that time," he said.

"If you've got a buyout in five years or seven years' time I think the multiple on the EBITDA is a lot higher being branded."

"The brands are there because ultimately owners can make you money by having the brand above the door, depending on the location. The brands bring with them contribution, the loyalty programme, the worldwide pull," emphasised Lassman.

Brand awareness

Meanwhile a survey undertaken by BDRC Continental found that in the UK Hilton and Premier Inn are the most recognised hotel brands among business and leisure travellers, although budget hotel brand Travelodge had the highest score for usage.

The quarterly survey of 2,000 business and leisure guests found that the majority of business guests stay at Premier Inn (33 per cent) with Holiday Inn (27 per cent) and Hilton following (24 per cent) while leisure guests favour Travelodge, Premier Inn and Holiday Inn.

Read the full NatWest Independent vs Branded round table discussion here. 