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She believes that with the constant mismatch of supply to demand of rooms in the market maintaining Average Room Rate (ARR) has become the greatest challenge for hotels.
With over ten years of experience in the hospitality industry, Deepika Arora, Regional Vice President - Indian Ocean, EMEAI, Wyndham Hotel Group has mixed views on the fast growing hospitality industry. Read on as she talks more on the challenges in the industry and also expansion plans for Wyndham Hotel Group in India.
How has the hotel industry evolved by taking the franchise route for expansion?
Hospitality industry is globally evolving by taking the franchise route for expansion, as it offers benefits not only to the brand but also to the hotel owner with better RoI. It is not just a form of “Asset Light” growth for the brands to grow by taking advantage of the capital and resources of local investors, but also enables the local investor to have access to the blueprint of a strong proven concept with a known brand.
Any prerequisites for franchisees who wish to join hands with you?
The person needs to have a right site with good accessibility and visibility. He must have proper permissions / licenses to build the hotel. Owners/groups must have financial capability to build an internationally branded hotel.
How many hotels do you currently have?
There are over 7,500 hotels with 6,50,000 rooms operating under Wyndham Hotel Group brands worldwide and majority of them are franchise. In the Indian Ocean, there are currently 28 operational hotels with approx. 3000 rooms and all are franchise.
Your expansion plans for 2014-15. Any cities you plan to tap.
In 2014-15, expansion into secondary and tertiary cities is key to our development strategy as we are able to provide global connectivity and brand recognition.
Opportunities for the prospective investors.
Wyndham's franchise model is very owner friendly. Owner gets an advantage of leveraging on to the strength of the international hotel group / brand along with the flexibility and freedom of running the property himself. This model involves owner in decision making and allows financial control, which results in better customer service experience and higher profit margins to owner.
= Lack of skilled labour
= High heat, light and power (HLP) costs
= Maintaining Average Room rate (ARR)
= Oversupplied markets
= Lack of infrastructure
= Cost of land
= Various permits / approvals