Arnie WeissmannMy inbox has filled lately with press releases from disgruntled hotel owners.

The investors behind the Edition Waikiki are suing Marriott and boutique pioneer Ian Schrager, saying the brand didn't receive proper support and attention.

The president of Apple Core Hotels held a press conference to explain why the company will deflag its three branded hotels.

And an ex-Ramada CEO is launching a chain that focuses on a "fair franchising" proposition, presumably tapping into discontent among franchise owners.

What's going on here?

Most travelers are unaware that many nationally branded hotels are not actually owned by the company whose name is on the welcome mat but more likely by investors who signed management contracts or franchise agreements with the brand.

There's always a certain tension between owners and brands, whether in hospitality, fast food, gasoline or, closer to home, travel agencies. Agreements are signed with the expectation that brands will provide support services and customers while owners will deliver on the brand expectations.

But it's not always so simple. I attended the Apple Core press conference, and afterward I interviewed its president, Vijay Dandapani.

Apple Core has five hotels with a total of 800 rooms, all within walking distance of Times Square. Two are independent but were formerly a Super 8 and a Red Roof Inn. The company also operates a La Quinta, a Ramada and a Comfort Inn.

After he deflagged the Super 8, he renamed it the Hotel @ Times Square. He not only saved the franchise fee, he said, but revenue per available room went up 20%. He said the name of the property more than offsets the loss of brand recognition: It comes up first whenever someone types "hotel Times Square" into Google.

His list of grievances about franchisers included mandates that prevented him from making improvements above brand standards, a de facto rate ceiling and the relatively high acquisition cost for reservations that came through the brand.

He felt shackled by rigid standards. "If the guy across the street is offering free coffee, I have to offer free coffee, too," he said. But if he did, a franchisee in Texas would complain that he was independently raising the brand standards.

It particularly galled him when he had to remove upgraded bedspreads and curtains because they exceeded Comfort Inn's standards. "Outrageous!" he said.

(Choice Hotels spokeswoman Heather Soule responded, "At Choice, our goal is always to build success for our franchisees and provide the best accommodations for our guests.")

Dandapani concedes that the Manhattan market is "singular" and that his ability to go independent is aided by high room rates in New York that motivate travelers to seek unbranded value properties.

He nonetheless says the hotel franchise model is broken. "They don't want to admit that their customer is the owner rather than the guest," he said. "Owners have a much better understanding of what the customer wants."

At times, Dandapani sounded to me like a McDonald's franchisee who wanted to offer Stilton on cheeseburgers because a restaurant across the street did. But perhaps a better analogy would be the franchisee who owns the McDonald's near Times Square and wants to put up a big, flashy sign because it's in keeping with the neighborhood.

In fact, the McDonald's on West 42nd Street has just such a sign, and I doubt travelers returning to Enid, Okla., subsequently wonder why their McDonald's sign is so understated.

Brands require owners to adhere to standards, but the best brands understand there's a difference between delivering a uniform experience and satisfying a customer's expectations.

Expectations have greater elasticity. No two W or Kimpton hotels, for example, look alike, and if they did, your expectations for these brands would not be met.

The challenge for hotel brands, particularly at the value end, is to figure out how to give franchisees some flexibility without affecting their own cost structure. Rigid standards may have downsides for owners, but they're an efficient form of oversight.

Importantly, brands have also seen erosion in one of their great strengths: distribution. If Dandapani is correct, brand strength can be diluted by a property owner savvy enough to rise near the top of hotel searches.

My guess is that the brands will respond to this apparent dissatisfaction. The winds of change are stirring, and it's a defining characteristic of flags to respond to wind.

Email Arnie Weissmann at [email protected] and follow him on Twitter


From Our Partners

From Our Partners

2021 Club Med Webinar
Club Med: Rebounding with Worldwide All-Inclusives
Register Now
Hawaiian Airlines Airplane
Hawaiian Airlines
Read More
2021 Alaska Webinar Series
Learn How You Can SELL Alaska This Summer
Register Now

JDS Travel News JDS Viewpoints JDS Africa/MI