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Hotel Franchising in Europe - October 2015

“More than 50% of new, four-star full-service hotel deals taking place over the next five years in Europe will be franchised deals and the use of lease/franchise structures is set to increase in Central Europe because it provides a way for hotel properties that require a lease to acquire a major international brand.”

- Jessica Kelly, Senior Tourism Analyst

This report looks at the following areas:

  • How does franchising work in the hotel industry and how is it distinguished from management agreements and leasing?

  • How much does a franchise cost and how are the fees structured?

  • What are the advantages/disadvantages for both hotels and chains of franchising?

  • Who are the key players in hotel franchising in Europe?

  • Where and in what market segments is hotel franchising likely to expand in Europe?

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Table of contents

  1. Introduction

    • Data Sources

      • Overview

        • Tourism arrivals in Europe
          • Figure 1: Trend in tourism arrivals* in selected countries, 2012-18
        • Outlook for spending on travel and tourism in Europe
          • Figure 2: Spending* on travel & tourism in Europe, 2014 & 2025
        • Spending on domestic travel
          • Figure 3: Trend in real* domestic spending on travel & tourism by top 5 countries, 2014-25
        • Spending on leisure travel
          • Figure 4: Trend in real* spending** on leisure travel & tourism by top 5 countries, 2014-25
        • Spending on business travel
          • Figure 5: Trend in real* spending** on business travel & tourism by top 5 countries, 2014-25
        • Incoming receipts
          • Figure 6: Trend in real* incoming receipts by top 5 countries, 2014-25
      • Major Players in Europe

        • Leading hotel franchisors
          • Figure 7: Leading hotel franchisors worldwide, 2015
        • Top five hotel groups in Europe
          • Figure 8: Top 5 hotel groups in Europe as of 1 January, 2014 & 2015
        • Fastest-growing hotel brands in Europe
          • Figure 9: Fastest-growing hotel brands in Europe, by number of rooms added, in 2014
      • Hotel Franchising in Context

        • Best suited to economy and midscale hotels
          • Luxury hotel brands don’t franchise
            • Franchising is for core markets and reliable partners
            • Structure of Hotel Franchise Contracts

                • Initial fee
                  • Ongoing fees
                    • Royalty fee
                      • Advertising or marketing contribution fee
                        • Reservation fee
                          • Frequent-guest scheme programme fee
                            • Other miscellaneous fees
                              • Cost of hotel franchises
                                • Figure 10: Breakdown of franchising fees by category for major US franchise brand operating in Europe, 2015
                              • European particularities
                                • Figure 11: Penetration of branded hotels* by region, 2014
                            • Revenue Management Packages

                                • AccorHotels’ Revenue on Demand
                                  • IHG’s Revenue Toolkit
                                    • IHG Predictive Demand Intelligence (PDI)
                                      • IHG PERFORM with price optimisation
                                        • IHG Revenue Management for Hire (RMH)
                                          • IHG Way of Sales
                                            • IHG Voice
                                              • Wyndham launches automated revenue management system
                                                • Conclusion
                                                • Major Hotel Franchisors in Europe

                                                  • AccorHotels
                                                    • Figure 12: AccorHotel’s franchised French & European portfolio, year-end 2014
                                                  • A change of strategy
                                                    • Best Western
                                                      • Figure 13: Best Western minimum requirements for affiliates, 2015
                                                    • A viable alternative for European hotels
                                                      • Sub-brand breakdown
                                                        • Geographical spread
                                                          • Figure 14: Best Western hotels by European country, 2015
                                                        • Partnership with Expedia
                                                          • Best Western France
                                                            • Hotel owner profile
                                                              • Figure 15: Best Western’s French hotels by sub-brand, 2014
                                                            • Technology for an improved guest experience
                                                              • Upgraded Property Management Systems (PMS)
                                                                • Distribution
                                                                  • Best Western Germany
                                                                    • Figure 16: Key figures for Best Western Germany, 2013-14
                                                                  • B & B Hotels
                                                                    • Cost to become a B & B franchisee
                                                                      • Choice Hotels
                                                                        • Ascend
                                                                          • Comfort Inn
                                                                            • Comfort Suites
                                                                              • Clarion
                                                                                • Quality
                                                                                  • Choice’s international franchising operations
                                                                                    • Master franchises less profitable
                                                                                      • Choice’s European portfolio
                                                                                        • Figure 17: Choice’s European hotel portfolio by brand, country & franchise structure, 2015
                                                                                      • Continental Europe
                                                                                        • Ireland
                                                                                          • Scandinavia
                                                                                            • UK
                                                                                              • Hilton Hotels
                                                                                                • Conrad Hotels & Resorts
                                                                                                  • Hilton Hotels & Resorts
                                                                                                    • DoubleTree by Hilton
                                                                                                      • Hilton Garden Inn
                                                                                                        • Hampton Hotels
                                                                                                          • Hilton’s franchised portfolio in Europe
                                                                                                            • Figure 18: Hilton franchised hotels in Europe by brand, 30 June 2015
                                                                                                            • Figure 19: Hilton franchised hotels in Europe by country, 30 June 2015
                                                                                                          • Pipeline
                                                                                                            • 20 Hamptons for Germany, Austria
                                                                                                              • IHG
                                                                                                                • Figure 20: IHG’s European franchised portfolio by brand, 31 March 2015
                                                                                                              • Louvre Hotels
                                                                                                                • Louvre has been acquired by the Chinese
                                                                                                                  • More Chinese tourists
                                                                                                                    • Geographical spread and expansion
                                                                                                                      • Figure 21: Geographical breakdown of Louvre's hotel portfolio, 2015
                                                                                                                    • Brands
                                                                                                                        • Figure 22: Louvre Hotel Group’s portfolio by brand, 2015
                                                                                                                      • Three new Golden Tulip franchises in France during 2014
                                                                                                                        • Première Classe expands in Germany
                                                                                                                          • Chinese bank extends a €2.5-billion credit line to Louvre
                                                                                                                            • Marriott International
                                                                                                                              • Figure 23: Marriott’s European portfolio of franchised hotels by brand, 2015
                                                                                                                            • Pipeline
                                                                                                                              • Figure 24: Marriott’s European pipeline of franchised hotels by brand, 2015
                                                                                                                              • Figure 25: Marriott’s existing portfolio of franchised hotels in Europe plus pipeline by country, 2015
                                                                                                                            • Rezidor
                                                                                                                              • Franchised portfolio
                                                                                                                                • Figure 26: Rezidor’s European franchised portfolio & pipeline by country & brand, 2015
                                                                                                                              • Wyndham Hotels Group
                                                                                                                                • Days Inn
                                                                                                                                  • Howard Johnson
                                                                                                                                    • Ramada
                                                                                                                                      • TRYP by Wyndham
                                                                                                                                        • Wyndham Hotels & Resorts
                                                                                                                                          • Wyndham’s European portfolio
                                                                                                                                            • Figure 27: Wyndham’s European franchise portfolio by brand & country (hotels), 2015
                                                                                                                                            • Figure 28: Wyndham's European franchise portfolio by brand & country (rooms), 2015
                                                                                                                                        • Franchisee Groups

                                                                                                                                            • Interstate Hotels & Resorts
                                                                                                                                              • European portfolio
                                                                                                                                                • Figure 29: Interstate’s European portfolio, 2015
                                                                                                                                              • By country
                                                                                                                                                • Figure 30: Interstate’s European portfolio by country & brand, 2015
                                                                                                                                              • Grand City Hotels (GCH)
                                                                                                                                                • Grand City/Wyndham Strategic Alliance
                                                                                                                                                • Industry Insight: Interview with Melvin Gold

                                                                                                                                                  • What Next?

                                                                                                                                                      • More upscale franchising in Europe
                                                                                                                                                        • ‘Unencumbered’ assets are worth more
                                                                                                                                                          • Substantial new limited-service capacity coming
                                                                                                                                                            • AccorHotels favours franchising for future expansion
                                                                                                                                                              • Louvre set to grow franchise network
                                                                                                                                                                • Lease/franchise structure to increase
                                                                                                                                                                  • Union Investment
                                                                                                                                                                    • Bierwirth & Kluth

                                                                                                                                                                    Companies Covered

                                                                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                                                                    Hotel Franchising in Europe - October 2015

                                                                                                                                                                    £295.00 (Excl.Tax)