How does hotel franchise work? ▶️Ribas Hotels Group

A lot of hotels nowadays operate under a franchise system. This format is especially beneficial for those who are going to open their own hotel, but do not know how to do it correctly and cope with a high level of competition and the amount of costs. So, when buying a franchise - the rights to use the brand, the franchisor's business model, and other means that are required to create and run a hotel business, the guarantee of success of your project increases. Why?

The main advantages of the franchise:

Fast and stable business development in different areas with minimal investment.
No risk, as the business is done by the franchisee.
Recognition, which is due to the trust of many guests of the network, which affects the occupancy rate.
An already made business strategy.
Competitive marketing programs.
Well-developed sales systems.

Tools of franchising in the hospitality sector – optimized system of hotel management, global procurement, strategy to marketing, training of employees, etc. Franchising brought to the hotel industry improvement of the quality of service, skilled workers, and the impact on the development of the brand.

The essence of the franchise

These relations imply mutually beneficial cooperation. So, a large well-known brand, that is, a franchisor, provides the franchisee with all its brand developments. In exchange, he receives an additional source of income for the company.

It should be noted that the hotel, that operates under a franchise, sets high standards, both on the part of the guests and the franchisor. After all, well-known operators take a long time to build their reputation in the market and cannot sacrifice it. Therefore, when selling a franchise, one of the conditions of the brand is to maintain corporate standards.

It is also important that the franchisor controls the system of work in the hotel and conducts professional development of all employees. For their good, he has his own requirements – the hotelier who signed the franchise agreement must find the best shots for his object.

In addition, it is in the interests of the franchisor to constantly increase the profitability of the hotel, since this determines his fee, which is determined as a percentage of the monthly revenue of the hotel. So, the higher the brand rating and the more franchises are opened, the higher the fee for registration of cooperation, respectively.

As for the effectiveness of the franchisee, as a rule, it depends on his entrepreneurial skills, as well as assistance from the franchisor.

How much does it cost to buy a franchise?

With a franchise, the commission of the management company is on average 4-6% of the gross income + a lump sum fee for the launch of all hotel systems.

On average, the cost of a franchise starts at $5,000. At the same time, its validity period can vary from 5 to 20 years and can be extended after that. As for royalties, it is from 1.5% to 6% of the profit from occupancy.

The most expensive hotel franchises in the world are Marriott International, Holiday Inn, Hilton Hotels & Resorts.

Hotel franchising by Ribas Hotels Group

The direction of franchising is also being developed by Ribas Hotels Group. We offer a ready-made solution for starting a business that will provide you with an income of $20,000 per month.

After contacting the hotel representative in our development department, we conduct an audit of the hotel (it can be paid or free). Its result is a "road map", in which we describe what needs to be finalized in the object in order for us to work on the terms of the franchise.

The free audit includes a desk study of the hotel (audit of the sales department, analysis of reviews on the Internet, marketing representation and recognition of the hotel). If, based on the results of a free audit, there is not enough information for making decisions, we offer more in-depth processing with the departure of our expert group to the site.

"The management company guarantees that a new or existing hotel will be fully loaded during its franchise operation. We include the hotel in our network, add it to our website, take it under management: we optimize all processes, promote it through all sales channels. For a new hotel, this means installing or implementing software for all departments, developing an online training system for employees based on the company's standards, and connecting the hotel to the quality control department," said Artur Lupashko, founder of the management company Ribas Hotels Group.

It should be noted that according to the new standards of the network, our company considers hotels from 50 rooms with the necessary infrastructure.

We also provide a franchise for developers for an apartment hotel. "We have already signed a franchise agreement with an object in the Transcarpathian region. The developer has the right to advertise the name of our management company (CC) and sell apartments under the guarantee of profitability, which is provided by the company, " said Artur Lupashko. A franchise like this increases sales and improves the image of the apartment hotel under construction.

However, regarding the franchise, it is better for the developer to contact the management company at the design stage of the hotel. In this case, the management company will act as an expert and will declare the brand at the start of sales profitably for the developer.

Ukrainian management companies are more responsive to market changes and are more involved in the design, construction, and operation of the hotel, unlike global brands that communicate with the hotel exclusively through standards.