Page 10

CHLA Spring 2014

Average Price per Room California 2013 Costs Hotel franchise fees are the costs to the franchisee for the use of a brand’s name, logo, marketing and reservation system. They normally include an initial fee with the franchise application, plus continuing fees that can include the following: • ROYALTY Use of the brand name • ADVERTiSinG Marketing the brand • RESERVATiOn Costs of operating a central system • FREQUEnT TRAVELER PROGRAM Incentive program • OTHER Training programs, national conferences, etc. Value 8 California Hotel & Lodging Association SPRIng 2014 Buyers and REITs (real estate investment trusts) in particular, are willing to pay a premium for certain brands. In the limited-service segment, there is tremendous demand for Marriott and Hilton brands such as Courtyard by Marriott, Residence Inn, Hampton Inn & Suites and Hilton Garden Inn. The demand for quality brands often outweighs supply, which can lead to multiple competing offers and bidding wars. There has been relatively little sales activity for California Marriott product over the last 12 to 24 months in California, as owners like to hold on to these properties. Atlas Hospitality Group recently published its 2013 California Hotel Sales Survey; a review of the average price per room gives some insight on the perceived “value” of some of the brands. (See table above.) As the hotel market continues to improve, we are now seeing a lot more interest in hotel development. In the vast majority of cases, the price a buyer is willing to pay for a hotel site is determined largely by the brands that are available. For example, Anaheim has 16 new hotels on the drawing board. New sites that become available in the Anaheim market are finding it extremely difficult, as most brands are already represented.    In the decision to franchise, the franchisee has to evaluate the fee structure and project the total cost of initial and continuing franchise fees and then determine if the cost to benefit ratio is worthwhile. It is important for the hotel owner/developer to carefully research the market and select the brand that will add the most value. Choosing the right brand is an important decision, one that may ultimately determine whether or not the hotel is a success.  1901 Main St, Ste 175, Irvine, CA 92614 Telephone: (949) 622-3400 • Fax: (949) 622-3410 info@atlashospitality.com • www.atlashospitality.com CA BRE: 01216856 Franchise Fee Allocation Mid-Rate Brands Source: HVS initial 1.3% Misc. 7.1% Frequent Traveler 7.8% Marketing 24.2% Reservation 19.2% Royalty 42.1% Source: Atlas Hospitality Group FRANCHISE HOTELS BRAnD PRICE Hampton Inn & Suites $ 117,644 Hilton Garden Inn $ 107,781 Holiday Inn Express $ 105,967 Best Western $ 103,452 Comfort Inn/Suites $ 82,224 Quality Inn $ 73,225 Americas Best Value Inn $ 48,753 Days Inn $ 39,137 


CHLA Spring 2014
To see the actual publication please follow the link above