Franchise model has ‘immense potential’
The franchise model offers owners a reimagined approach to having their asset professionally managed and developed and has been successful in the US, Europe, and Asia.
In the Middle East, it remains a growing proposition; one with immense potential, and owners are curious. One of the main challenges is a need for deeper understanding of the model, allowing owners choice over traditional brand-managed hotel archetype.
The UAE has been at the forefront of hospitality development for over 20 years now, however, Saudi Arabia is the market to watch in terms of new opportunities. Qatar and Oman also bring significant scope as they continue to refine their own distinct hospitality offerings.
The past two decades have seen significant development and transformation of the hospitality industry, and many now turn to the region as a ‘how to’ guide when it comes to developing their own country’s potential. As with any growing market, one of the best ways to establish the destination is to attract and retain global names and opportunities.
The franchise model offers hotel owners more control over their properties, without having to worry about the day-to-day issues
Many real estate owners and developers in the region were well-versed in real estate development, though relatively new to hospitality development. Thus, most owners entered into long term binding contracts with hotel brands without either fully understanding the long-term implications, the complete lifecycle of a hotel property or are unaware of other hotel management options at both upscale and midscale levels. The situation has evolved as owners and developers seek innovation in ways to manage their properties through recent volatilities, ambiguity and complexity.
The franchise model is perfectly positioned to satisfy all parties, owners, brands, investors and operators. The model offers hotel owners more control over their properties, without having to worry about the day-to-day issues, and can look forward to a healthier financial outlook while providing the value and recognition from an international hospitality brand. The franchise model offers owners greater flexibility, more insight on their P&L and the performance of their assets, better decision-making processes, and the ability to adjust their business models in response to market dynamics.
Valor’s Joint Venture with the Hospitality and Leisure division of ICD (Investment Corporation of Dubai, the Government of Dubai’s investment arm) positions us for expansion within the region. With over 90 operating properties in our global portfolio, Valor can offer expertise in areas like site selection, brand selection, conceptual design, project management, procurement and technical services advisory as complementary services to hotel management.
With a boutique approach, Valor is focused on the needs of the hotel owner, working with flexible terms, shorter contract durations and synergies of shared services across key areas with optimized commercial returns. Owners benefit from centralised HR, Sales, Marketing, Revenue, Finance and Procurement teams, amongst others which offers cost-efficient solutions and allow us to streamline the various operations under one umbrella.
Owners have access to key team members within their time zone as well as benefit from local knowledge and experience. They have access to an extensive global team and strong partnerships with brands like Marriott, IHG, Hyatt, Wyndham and Hilton.
• Bergue is Co-founder & Managing Partner, Middle East + CIS at Valor Hospitality