Hotel deflagging occurs when a hotel owner or operator decides to become independent, ending an agreement with their brand franchiser.
Sometimes it’s the brand that decides to cut the cord, when owners don’t or can’t deliver on brand expectations. But there are times when it’s a hotel owner who seeks to “break the chains” with their chain. Here we examine top reasons why hotel deflagging may benefit your property.
More Control Over Decisions
Brands require owners to deliver a uniform experience across all their franchisees. Owners who are asking themselves, “Should I consider deflagging my hotel?” typically have a clear understanding of what their customers want. They may feel shackled by brand standards and frustrated by an inability to satisfy their guests’ expectations. Some franchise regulations may even prevent owners from making improvements that exceed brand standards, such as upgraded bedding or window coverings. Hotel owners in these situations crave the freedom to call the shots, preferring to avoid all the red tape that brands may require.
Potential for Better ROI
A number of hotel owners who are considering deflagging, recognize that they no longer need to be part of a large chain to be competitive. Hoteliers may be frustrated by rate ceilings or higher acquisition costs that come through the brand. And deflagging brings with it the ability to change a property’s name. By including a popular destination in your new hotel name, you may bring in more customers due to the boost you’ll experience in search engine results.
Benefit from Going Boutique
The big chain era dominated the hotel industry for a long time. But this year, hotel real estate firm CBRE Hotels predicts that boutique and lifestyle properties will enjoy great gains in revenue per available room (RevPAR) and average daily rate (ADR). And the boutique hotel industry is expected to experience robust growth over the next several years.
Today’s hotel guests are moving away from the cookie-cutter brand settings, desiring more than just a room to stay in. Millennials in particular want hotels that offer distinctive, locally inspired décor, along with curated experiences that are uniquely local to the market they’re visiting. Hoteliers looking to deflag want the ability to capitalize on this trend. As an independent hotel, there are no more brand-wide initiatives to conform to. Hotel operators savor the freedom to innovate and experiment, and provide those authentic experiences their guests are seeking.
Benefit from Changing Channels
For deflagged hotels, the winds of change are stirring when it comes to online hotel distribution as well. Independents, boutiques, and B&B owners who deflag their hotels will find new distribution opportunities opening up, such as with Airbnb. The sharing economy giant is tempting smaller hotel operators away from sites such as Booking.com and Expedia, with promises of no long-term contracts, and lower fees ranging from 3 to 5 percent. Music to the ears of many hoteliers who are accustomed to paying online travel agency commission rates of up to 30 percent.
Contact us for a free assessment to see whether deflagging may be right for you!