Brands see conversion opportunities

NATIONAL REPORT—As the COVID-19 pandemic keeps wreaking havoc on the world and the hospitality industry, national hotel brands are reporting that they are seeing more interest from independents to convert or join their soft-brand collections.

Choice Hotels reported 151 new domestic franchise agreements for the first half of the year—80% of which were signed after the pandemic hit. “What you’ll see now and going forward is that two-thirds of those were conversions,” said David Pepper, chief development officer, Choice. “The conversion market has really picked up. People are definitely looking for a brand or better brands to be with… Development is going to be in the conversion game.”

Mike McGeehan, chief development officer at Motel 6 and Studio 6, said that most of the new agreements the company has signed recently are conversions. “Many owners of properties, whether they are independents or other brands, are really cognizant of how a brand is performing,” he said.

Interest has also been good for Trend Hotels & Suites, the recently launched upper-midscale conversion brand from My Place Hotels, according to Terry Kline, EVP, franchise development, My Place Hotels. “We are fielding a lot of calls, particularly from properties that hadn’t been adversely affected and are looking for options. I think that brands are going to be more important than ever because hoteliers are definitely going to be looking for additional support and direction as we come out of this, more so than they ever have.”

With the economy slowing, brands are becoming more attractive to independents. “Business for the last five-plus years has been pretty good for hotels. Many independent hotels in the past felt like they didn’t need a brand,” said McGeehan. “But now that demand has dropped and supply [has increaed]in the last five years, those independent hotels are now looking for a brand to take advantage of their distribution platform, their name, their customer base.”

Chip Ohlsson, chief development officer, Wyndham, agreed. “In good times we can debate whether I need a brand or not,” he said. “In bad times, it is not debatable. You need a brand to weather the storm, whether it is because you need to decrease costs or increase viewership on the websites. I need people to see us and recognize us… Now people are saying, I am going to Florida, I need to know where I am staying, I need to know what it looks like. I need to know what name is on that hotel. Names are important. Brands are important.”

Mark Williams, managing director, franchise development, Extended Stay America, echoed that feeling. “The brand brings the developer the guest because of the relationship, the loyalty. What the developer/owner is looking for is a brand that can bring them the right type of guests at the right type of rate,” he said. “But they are also looking to the brand to help them get through, whether it’s programs or services. Owners are looking to brands to find out what the new breakfast looks like and all of the new procedures, things an independent has to figure out all on their own. The brand is going to help them by giving them the right processes and procedures in order to keep the guest safe, as well as the hotel employees.”

Owners know that guests are looking to brands as well. “A lot of independents relished their freedom, but what is happening right now is guests are seeking things that are familiar to them,” said Harry Sladich, EVP, lodging development and franchise operations, RLH Corporation. “They know a brand name. They associate that brand name with a protocol. All of the brands are showing protocol on cleanliness and how to clean a room and best practices. Independent hotels don’t have that protocol, nor do they have the resources to do it. I think that independents are finding that they don’t have the resources and it is starting to really bite them in their revenue generation.”

Consumers recognize what brands stand for. “They have experience in whatever brand they have stayed in; they have grown accustomed to it,” said Williams. “Even more so now, they are looking for that sense of security of what they get out of that brand. That expectation from the guest is going to be even stronger. The brands have to make sure that they are following suit and giving the guest that extra sense of safety and security. The amount of questions that the consumer is going to have is going to be less at a branded property than an independent hotel.”

“Consumers are going to look for something that is friendly to them,” said Brad LeBlanc, chief development officer, Best Western. “The American consumer over any consumer in the world prefers a brand. It is just lately that the desire for culture and experience popped the brand piece. But I think in a downdraft, when things are in trouble and things are tight, you want someone you know and trust; I know if I go to XYZ brand today, they are going to have a front-desk person, they are going to have security, they are going to have the right locks, and they are going to have the right cleanliness. All of this happens with a brand. If I don’t know the name of what I am staying with, how do I know that?”

Wyndham’s Ohlsson likened guests’ attraction to brands they know as similar to comfort food. “They are going to go to brands they know, that they recognize,” he said. “There was a time when COVID first hit that everybody looked to comfort food. People were craving meatloaf, mac and cheese, pastas—they were all going to that. One thing that we have with our brands is that comfort zone for people. They know Days Inn, they know Howard Johnson. They have traveled to those brands before. They recognize them. We have been through this before and because we have, we have experience to guide you through this. You know that you are in the hands of somebody who has done this before.”

He continued, “That is important to people as they are driving down the road. They want to know that this isn’t their first go-round with something big, whether it is a recession, pandemic, cleanliness, whatever it is. They want to know that there is leadership in place, and the leadership has the experience to weather the storm more than anyone else—and I think that is what we provide.”

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