Hotel Franchising: Maximising Asset Value In A Shifting Market
Why franchising is rising (and what it means for asset value)
Conversions have become a defining feature of development since 2023 (at some brands, c. 40% of new rooms). Because most conversions enter systems under franchise contracts, franchising’s share has risen – continuing through 2024 and underpinning plans into 2026. A high-profile example: IHG’s 2024 long-term franchise agreement with NOVUM Hospitality to more than double its German footprint by 2028 – clear evidence of conversion-led franchise growth.
Why owners choose franchising
Beyond the appeal of refinancing or lower cash-flow risks, franchising gives owners greater control of operations while leveraging a brand’s distribution, loyalty, training and sales reach. Those advantages come with costs, and the accountability for revenue, GOP and EBITDA sits firmly with your team.
Note: Franchise contracts include fees, potential PIP obligations and performance tests. We’re not covering legal terms here – only the commercial levers that improve flow-through.
Owner economics: where franchising hits the P&L
While the brand sets standards, the on-property team must define the guest journey, lead execution, and establish market positioning. Rebrands following acquisition or disputes add complexity; prior reputation and community perceptions linger, so the asset must prove itself again.
What owners must manage to maximise profitability
Past reputation and re-entry: Closure or contentious transitions damage community trust, client base and team morale – plan a visible re-launch.
OTA reviews and visibility: Refresh imagery and content; legacy reviews are persistent (unless dramatic redevelopment) – set a response cadence with evidence of change.
Positioning in crowded markets: Define distinctive service standards and guest journey; brand SOPs alone won’t suffice to make your asset stand out.
Sales activity & market reputation: The brand opens doors; on-property sales and events win contracts and rebuild trust.
Digital return: Measure brand.com efficiency (conversion, net rate after loyalty/paid media) and ensure paid media beats OTA on a net basis.
Tech stack & integrations: Comply with brand-preferred systems but identify and select the vetted software to supplement your PMS/RMS/CRM/APIs – and maintain data hygiene.
Organisational structure & GOP conversion: The right structure is crucial. Gaps at leadership or departmental levels directly impact revenue and GOP conversion. How efficient is yours?
Underwriting KPIs (owner lens)
Direct Mix % and Net RevPAR (after acquisition costs)
Net ADR by channel (after commissions, loyalty and paid media)
Cost of distribution and TRevPAR
Repeat guest ratio and GOP flow-through (∆GOP/∆Total Revenue)
RGI/MPI/ARI vs comp set, redemption share and net rate on loyalty
Top moves to optimise a franchised hotel
Engage the local base: Local civic partners, venues, universities drive events, weddings, restaurant covers and unique activity - it’s also about cultural and human connections.
Work proactively with OTAs: Refresh OTA profiles with new photos (or CGIs initially) and accurate engaging content, clear policies, rate integrity and need-date strategy first.
Design the guest journey end-to-end: From discovery to post-stay, curate moments that differentiate and motivate the team.
Build a clear commercial strategy: Use brand support but set TRevPAR targets for sales/events and supplement with representation where mix justifies it.
Local marketing with brand lift: Complement brand spend; specialists can lead PR, social media, partnerships and content to elevate visibility and positioning.
In-house revenue management: Brand RM support helps; a dedicated expert aligned with your P&L and commercial strategy often outperforms in complex markets.
Align structure to strategy and complexity: Resource to property complexity and mid-/long-term plan, streamline processes, optimise tech, leverage data.
Unfold Consulting’s 12-week audit & implementation
We run a 12-week commercial audit and implementation to lift direct mix and improve GOP flow-through.
Diagnose (weeks 1-3): Channel mix, pricing architecture, cost of acquisition, market positioning, tech integration (PMS/RMS/CRM/APIs), KPI baseline; guest journey audit.
Design (weeks 4-6): Direct-mix plan, OTA strategy, MICE/segment plan, KPI dashboard, upsells and pre-arrival journeys.
Deliver (weeks 7-12): Rate/packaging tests, brand.com content and paid media tuning, TRevPAR tactics, sales cadence reset, team training; weekly performance reviews.
Outcome for owners
A GOP-centred business mix, lower distribution costs and stronger GOP flow-through - incremental revenue that becomes incremental profit. Owning a franchise hotel is a constant balance between brand support and local execution; address the levers above to unlock the asset’s full potential.
Conclusion: balance the brand platform with local execution
What matters most is what you keep. Track brand.com conversion and net rate (after loyalty/paid media), watch your OTA share and check flow-through by initiative. A short, disciplined push – fix the obvious leaks and defend the booking window – often turns more revenue into profit. When platform and property pull together, franchising quietly raises NOI and strengthens the asset.
Unfold Consulting
With over 15 years’ experience delivering measurable results for owners across 15+ countries, Unfold Consulting helps franchised hotels improve TRevPAR, reduce costs of acquisition, and increase GOP flow-through – across city-centre, resort, leisure, MICE, and corporate-focused assets. Our approach aligns operational excellence with ownership objectives to maximise returns.
If this perspective resonates, contact us to start a conversation.
Request a call back HERE
Glossary:
COS – Cost of Sales
EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortisation
GOP – Gross Operating Profit
NOI – Net Operating Income
RevPAR – Revenue Per Available Room
TRevPAR – Total Revenue Per Available
