Is the case for the Independent Hotel Management Model growing across the UK and South Africa?
The UK, and more so, the South African hotel industry has undergone a remarkable transformation in the last 5 years with the more prominent emergence of independent hotel management companies and 3rd Party collaborations.
“This shift marks a more definite departure from the traditional brand management or brandonly franchised structure and gives the discerning hotel owner or investor a more agile hotel business offering,” says Neil Hughes, Managing Director of Providence Hotels in South Africa.
The Shift to an Independent Hotel Management Brand Mindset
Firstly, without our valued travellers and guests, hotels won’t have a business so the industry was forced to recognize that guest’s preferences have evolved and that there is a growing demand for more personalized and authentic experiences that reflect the local cultures of our fantastic destinations. Hotels need to be dynamic in their understanding of these evolving trends and adjust accordingly.
While there will always be a demand for branded hotels in specific AAA and destination locations, brands are no longer the only option that stakeholders think of when considering a hotel management company. Independent Hotel Management companies are very well positioned to cater to the demand of all hotel types either newly entering the market or where these properties have had sufficient time to stabilize and need to be taken to their next level.
“We’ve had many inquiries from both hotel owners and investors, across South Africa and the UK, who see a unique set of opportunities and benefits under the Independent Hotel Management Model and we will keep educating the market on an alternative to the fully branded options out there,” added Sybrand Engelbrecht, Commercial Director and Head of Business Development for Providence Hotels UK.
Secondly, the proliferation of technology and online platforms has empowered independent hotels to compete very effectively on a global scale. Previously, it was only big brands that could afford the best technology stacks to support hotels and this is no longer the case – the playing fields are now, more than ever, fairly aligned. With the right digital marketing strategies and systems and a strong online presence, independent hotels can reach a wider audience, attract niche markets, and secure more direct bookings more effectively than their branded counterparts.
“The reality is that the Independent Hotel Management business model eliminates the dependency on large hotel chain distribution and opens up new avenues for revenue generation while increasing returns on investment for all stakeholders in the independent space,” Hughes motivated.
Opportunities for Hotel Owners and Stakeholders entering into Independent Hotel Management
Hotel owners globally are presented with a range of opportunities when partnering with hotel management companies, branded or independent. When highlighting the benefits of the independent model we know that unlike branded and franchised agreements that come with strict guidelines and branding requirements, independent hotel management companies offer owners the creative freedom to shape their property’s identity. This autonomy leads to higher guest satisfaction, repeat business and as proven by published white papers, a higher Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR) during the different economic cycles.
“Not only are we passionate about what we do across the independent hotel market but we have researched both branded and independent models extensively and have seen, in most instances, the financial benefits of moving to independent operations,” Hughes added.
It has to be recognised that the independent models have considerably lower operating costs compared to branded or franchised operating models and the ability to source local partners and suppliers by tapping into the communities that these hotels are so intrinsically a part of.
“This does not mean that we are not interested in working with brands as part of 3rd party agreements. We do recognise the value of hotel brands in key locations and have strong relationships with most of them, it is just that we thoroughly investigate whether a specific brand would be the perfect fit for a hotel property given its location, size and offering,” Hughes added.
Independent Hotel Management Model Appeal to Investors
Investors too, stand to gain from this growing trend that is now gaining traction in smaller markets like South Africa. Independent hotels react more quickly to current dynamic market conditions by adapting their commercial offerings faster to seize opportunities.
Furthermore, investors can tap into the unique charm and character of independent hotels to differentiate and enhance their portfolio offering. Diversifying investments by including strategic independent properties can mitigate risks within a developed location while catering to the rising demand for bespoke experiential travel, a trend that is expected to continue to grow.
“The potential for higher returns on capital investment is a major drawcard for investors. The asset management role that Providence Hotels plays [for its global investors] is one of the main reasons our development pipeline is so strong,” says Engelbrecht.
About Providence Hotels
Providence Hotels is a dynamic and innovative full-service hotel management company currently operating more than 20 hotel properties across the UK and South Africa over the full spectrum of hotels, resorts, serviced apartments, lodges, and boutique guest house establishments. Their experienced management teams work in collaboration with individual hotels to develop a bespoke hotel management solution for each of their individual properties. They focus on specifically defined operational approaches, bespoke sales & marketing strategies, and superior hospitality finance advice to ensure sustainable growth of revenues across all guest and stakeholder touchpoints.