A Hotel Chain therefore is an administration company, that manages a number of hotels having the same name but being located in different areas. They can be total or partial owners of the hotel and they manage their administration, marketing and promotion.
The terms of management, the chain provides the same services as a franchise agreement (brand, reservation system etc.) but additionally, there is an agency agreement, meaning the brand operates the hotel, making all the day-to-day decisions on behalf of the owner.
Booking a Chain Hotel gives the guest the benefits of standarised services and quality (he knows exactly what to expect and avoids ‘bad surprises’) as well as loyalty program benefits (points and bonuses).
For the Hotelier, the advantages of belonging to a Chain are:
- Volume: The sales volume of a hotel chain offers a negotiation benefit and lowers cost by bulk purchasing. Chains and affiliation networks provide more resources and access to more customers
- Yield Management: Widely used by chains improves revenue based on calculations of supply and demand
- Promotions: Hotel chains often have their own marketing and PR offices that can handle the advertising and communication of the whole chain, enhancing the recognition and reputation
- Agreements: Larger hotel chains have a better negotiation power against the TOs and OTAs.
Hotel Chains provide reservations support, extensive marketing and advertising campaigns, guest loyalty programs, brand standards (i.e. quality assurance), consulting support and lender comfort.
The biggest disadvantage however is the lack of independency. As a hotelier, you have to follow certain rules and standards and can not react to the market demands as quick and flexible as you wish. The decisionmaking process is longer. Another downside is, with the decision of belonging to a Chain, you decide against uniqueness. Your property, as a part of a chain, will never stand out.