The hotel franchise industry has grown significantly in the last decade. In 2010, about 70% of branded hotels were franchise operations, but by 2019 that figure had jumped to about 80%, according to research by JLL.1
Most brands are recognizable names. Travelodge, Motel 6, Super 8 and Red Roof Inn may come to mind. But did you know that hotel franchises also include premier names like Marriott, Hilton and Wyndham? Just imagine your future. As a franchisee, you could become the owner of a hotel with a sign emblazoned with the logo of one of the biggest hotel brands in the industry.
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In this article, we cover the best hotel franchise choices for individuals thinking about buying a franchise. At the end, we also include helpful pointers for how to choose a hotel franchise in light of current trends.
Best Full Service Hotel Franchises
A full-service hotel is one which provides a variety of guest services and amenities, either included in the price or carrying an additional price tag per service. Services mean things like restaurants, room service, a daily newspaper, conference rooms, turn-down service and more. Other terms for these properties can include upscale, midscale, and luxury or premier brands. Boutique hotels may fit in this definition. Here are the top full-service hotel franchises:
Hilton is a very recognizable brand name in the hotel industry and a leader in the hotel franchise industry. They have offices, hotels, and resorts in the North America, South America, Europe, Africa, the Middle East, and Asia Pacific. This hospitality company has been franchising since 1965. Franchisees offer assistance with design and construction, management, and sales. The brand also has an extensive rewards program to bring in repeat customers.
The franchise fee for this hotel franchise is $75,000. And the total upfront investment ranges from $29,162,700 to $111,963,150.
Wyndham is a hotel brand with more than 9,000 hotels across more than 80 countries. The company offers an innovative tech platform to help franchisees and teams manage operations easily. They also offer marketing assistance, personalized support, and multiple hotel franchise models to choose from. The Wyndham Hotel Group also offers more than 20 hotel brands for those interested.
The fee for Wyndham brand franchises is $150,500. And the initial investment ranges from $42,112,580 to $69,188,897.
Marriott International Inc. is a worldwide franchisor of hotels and lodging. It is also a premier name in the hotel business. There are more than 7,400 properties throughout 135 countries. And the loyalty program has more than 140 million members. The company takes an owner-centric approach to its franchise program. So they customize opportunities to each franchise. And it’s not just the Marriott brand. The Marriott Group offers more than 30 hotel franchise models, from the Ritz-Carlton to Courtyard.
The franchise fee for Marriott resorts is $120,000. And the startup investment for new resorts range from $74,129,490 to $117,209,490.
Hyatt specializes in fully personalized and collaborative relationships with franchisees. The company has been operating since 1957 and has about 700 hotel franchise locations across 56 countries. In addition to the Hyatt brand, the company operates a variety of specialized properties, including Grand Hyatt, Hyatt Place, and Miraval. The brand has a team of development experts to work closely with each new franchise operator as they get new hotel locations up and running.
The franchise fee for new hotels ranges from $60,000 to $100,000. And the initial investment ranges from $13,645,000 to $153,723,000.
Sheraton is a hotel franchise that is actually under the Marriott Group as of 2016. But it’s a recognizable brand that even has its own offshoots like Four Points by Sheraton. The franchisor has actually been around since 1937. So it has built plenty of brand recognition through the years. There are nearly 450 properties in 74 countries around the world. And the brand is part of the luxury tier of resorts, especially popular with international travelers.
The fee for new franchises ranges from $85,000 to $150,000. And startup investment ranges from $53,521,090 to $82,627,590.
Best Economy Hotel Franchise Choices
Economy hotels bring you basic accommodations at budget room rates. You get no-frills rooms and suites to accommodate families. Expect hotel rooms to be clean and comfortable but not luxurious. Also known as limited-service hotels or budget motels, they keep costs low by cutting back on services and keeping the properties smaller. For example, there may be no restaurant, or just a coffee shop or continental breakfast in the morning. Here are the best economy hotel franchises and motel franchises:
6. Hampton by Hilton
Hampton by Hilton operates both Hampton Inn and Hampton Inn and Suites. The latter is a slightly more upscale option. But both are generally great for budget conscious travelers. Part of the Hilton Hotels family, the hotel franchise focuses on basic amenities like cleanliness and free wifi. It’s also popular with practical minded travelers. The hotel chain has been around since 1983 and has more than 2,000 locations around the world.
The fee for new Hampton by Hilton franchises is $75,000. And upfront costs range from $7,662,800 to $14,821,500.
7. Holiday Inn
Holiday Inn is part of the Intercontinental Hotels Group. Holiday Inn has more than 740 open locations in the Americas. There are also Holiday Inn Express, Club Vacations, and Resorts that offer slightly different experiences. The locations are built to be efficient and comfortable. But many also offer extras like restaurants. And since the Intercontinental Hotels Group is one of the largest hotel groups around the world, franchisees also get access to plenty of resources like a popular loyalty program and robust tech platform.
The franchise fee is $50,000. And the total initial investment ranges from $7,544,298 to $24,836,120.
Note: The Intercontinental Hotels Group (IHG) is also the parent of several other hotel brands that may be worth checking out for franchises. Those include: Crowne Plaza, Staybridge Suites, and a boutique hotel called Hotel Indigo.
8. Motel 6
Motel 6 has some of the highest brand recognition in the budget lodging sector. The franchise business has been in operation for more than 55 years and has one of the most active nationwide ad campaigns. Motel 6 currently has target markets available for development across the United States, along with select hotel franchises around the rest of the world.
The fee for new Motel 6 franchises is $35,000. And the initial investment ranges from $2,617,700 to $3,868,600.
9. Super 8
Super 8 is a budget lodging brand owned by the Wyndham Hotels Group. Known for being authentic and dependable, Super 8 operates more than 2,900 hotel franchise locations across four continents. This makes it one of the largest hotel chains in the economy sector. In addition to rooms and suites, many of these locations also offer meeting rooms and breakfast options.
The franchise fee starts at $25,000. And the startup costs range from $169,270 to $3,572,460.
10. Days Inn
Days Inn is another popular Wyndham brand. The Days Inn hotel franchise focuses on clean, comfortable accommodations. There are nearly 1,700 properties around the world. And the rising sun logo is one of the most recognizable in the hotel industry. The company has more than 40 years of experience franchising. So they provide new franchisees with plenty of training and resources to get up and running successfully.
The fee for a new Days Inn hotel franchise is $36,000. And the total initial investment ranges from $292,634 to $8,281,441.
11. Econo Lodge
Econo Lodge is part of the Choice Hotels International brand. It has more than 890 hotel franchise locations open or under development around the world, with most of those located in the United States. This makes it one of the most prominent economy lodging options in the country, with plenty of room for growth internationally. The hotel franchise chain has been in operation for more than 30 years and franchising for more than 20. The company has an extensive tech and reservations platform to make operations easy on new franchise operators, along with personalized training and support.
The fee for new franchises is $25,000. And the total initial investment ranges from $126,150 to $767,599.
12. La Quinta
La Quinta is a hotel franchise chain owned and operated by Wyndham Resorts. It’s part of the midscale hotels sector. So it offers a few more amenities than some economy hotels on the list. The franchise business offers both new construction options and conversions of existing hotels and resorts. With more than 50 years in business, the hotel chain has more than 900 hotels across the United States, Canada, and Latin America. It’s popular with both business and leisure travelers.
The franchise fee for La Quinta resorts is about $55,000. And the initial investment for new hotel franchise locations ranges from $452,400 to $11,052,800.
How Do You Choose Hotel Franchise Opportunities?
As an aspiring business owner, start by reading how a franchise works and the pros and cons of franchising. Research individual hotel franchises in more depth using the hotel brand links above. Get a feel for each hotel chain and what it offers.
Once you’ve narrowed it down to a few choices, next request and receive a hotel franchise disclosure document (FDD) for each. Read over the FDD carefully, as it could be hundreds of pages long. You will find details a prospective franchise owner needs.
Don’t stop at the documents. Ask franchisors probing questions for more information. Start looking into franchise financing options to know how much money you can raise.
If the hospitality company invites you to franchise discovery day and you attend it, you’re very close to becoming a new franchisee in hotel ownership. When you reach the contract stage, seek help from an attorney to protect your rights in the hotel franchise agreement.
What Factors Should You Consider for a Hotel Franchise?
Consider the following special features which are specifically relevant to motel or hotel franchises:
Strong Financials – Look for a hotel group with great financials. Hotels are capital intensive. Franchisees will need to invest more money compared with many other types of franchises to achieve success. Think about your investment in real estate, furniture, linens, fixtures, more. Protect that investment and maximize profits by aligning with a strong “partner”.
Quality of Stay – People are more sensitive to their experiences with a hotel than many other types of franchises. Be sure to stay in the hotels you are considering. Book a room and not just for a single night — stay a few days in each hotel. Eat in the restaurant. Use facilities like the business center. Experience the management practices first hand. Ask yourself: would you love to stay in that hotel? Would you choose it versus a competitor chain?
Cleanliness – Choose a brand that emphasizes sanitization. Clean guest rooms will be of top importance to guests for the foreseeable future. Does cleanliness figure into the franchisor’s national marketing? Does the hotel’s style feature furnishings and floor coverings that are easy to clean? If you are renovating an existing older property, can it be made pristine at a reasonable cost?
Support and Technology – Find franchisors that offer excellent support to franchisees and add value with technology. For example, evaluate the quality of the national reservations phone line and booking system. A strong loyalty and newsletter program can give the hotel a memorable personality and drive new business.
Site Location Support – How good is the franchisor at helping choose locations? How much site selection assistance can you expect? Is site location one of the hotel’s strengths? Access to airports, interstates or nearby destinations can make or break a property. Safety and security of the area are also important, especially for women travelers.
How Has Covid-19 Affected Hotel Franchises?
The COVID-19 pandemic of 2020 hit the hospitality industry hard as people curtailed travel and conferences. However, downturns are great times to snap up bargains and take advantage of trends.
Aspiring hotel owners should carefully assess the future. Try to gauge when conditions are turning around and point toward an upswing. A return to normal presents opportunities to jump on pent-up demand by travel lovers, business travelers and conference goers. In light of the pandemic and resulting economic conditions, it’s more important than ever to make wise choices:
Identify the best-performing business model. Economy and extended-stay hotels seemed to have weathered the impact better, according to a mid-2020 survey by JLL. Urban hotels are struggling the most, according to a report by the American Hotel and Lodging Association. 2
Evaluate financial support. Find franchisors willing to offer discounts or go the extra mile to address temporary financial pressures. Were they willing to allow franchisees to temporarily relax brand standards such as cutting back on amenities or switching to carryout food versus sit-down restaurants? What other aid did the franchising team give?
Anticipate trends. Recovery depends on the willingness of guests to travel, and why they travel, says Daniel Fenton, Director of Global Tourism and Destination Development Services, Hotels & Hospitality Group, JLL. “The first round of leisure travelers will be inclined to drive rather than fly. After that, individual business travel will start to grow, followed by group business travel. It will take longer for group leisure travel.” 3
Bottom line: the opportunity for a franchise can be found even during the most difficult of times, if you are smart.
1 JLL, Why More Hotels are Owned by Franchisees
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This article, “12 Best Hotel Franchise Choices” was first published on Small Business Trends
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