When I was head of strategic planning at Starwood Hotels, Barry Sternlicht said “I don’t think we will ever franchise W hotels.” Today, that is entirely conceivable as hotel brands are increasingly adopting franchising business models around the globe. In the process, brands are placing their fate in the hands of 3rd party management companies and owner-operators who now manage over 90% of the over 52,000 properties in the U.S. alone.
Across the industry, operations executives and brand managers revived their rhetoric about the importance of service, spending considerable resources managing their online reputations on meta search, online travel agencies and their own websites.
Neither the brands or the management companies “walk the talk:” Our review of the franchising agreements and property budgets for over 100 hotel brands found under 2% of the franchise terms and under 5% of brand mandated property budgets focused on recruiting, employee selection, training and customer service related initiatives.
We also performed an informal survey of North American hotel brands and management companies and found that few had dedicated corporate resources or budgets to engage their franchisees or 3rd party management companies in recruiting, employee selection, or customer service initiatives. We were surprised to learn that even large-scale management companies who oversaw as many as 200 hotels had 3 people in corporate HR. Hotel General Managers were bearing the brunt of the pain, spending more than half their time addressing that thing called “human resources.”