Deflagging: Is going independent the right decision for you?

A growing number of hoteliers who signed up to be part of a large hotel group are now taking a step back and asking: Is the brand affiliation worth it?

While there are many benefits to having the backing of a major brand-such as having the prestige of their name on your property-being a franchisee often comes with significant drawbacks. These can include high fees, strict brand guidelines and limited flexibility, all of which can cut into your bottom line and make it harder to stand out from the competition. In the wake of the pandemic, which has disrupted costs, staffing and traveler expectations, many hoteliers are reevaluating their business models, guest acquisition strategies and spending priorities. For some, the solution lies in deflagging.

Key takeaways

• At first glance, aligning your property with a well-known brand may seem like an ideal choice. You gain access to benefits such as loyalty programs, global marketing resources, and a centralized reservation system. However, these benefits often come at a price - royalty fees that typically range from 4-6% of gross revenue;
• Operating as an independent property gives you more control over your business. You can set and adjust your average daily rate (ADR), quickly create and launch special packages, and experiment with dynamic pricing models to adapt to changing market demands;
• Independence also allows you to choose the revenue management system (RMS) and property management system (PMS) that best suits your needs. This flexibility allows you to track booking trends, forecast occupancy, and fine-tune pricing strategies in real time, ultimately optimizing your operations and profitability.

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