The global hospitality industry’s shift from brand managed hotels to franchised hotels has been exponential over the past twenty years as the number one business model for owners across most mature markets including Western Europe and the USA.

Valor’s entry into Africa in 2013 occurred at the same time as the stronger emergence of the franchise model as a serious option for hotel owners, however the push for African hotel owners to embrace it has only occurred over the past decade, and while hotel franchising is happening at a faster pace in certain major African cities like Nairobi, a general sense of hesitancy remains amongst owners unfamiliar with the model.

There is a big difference between a franchised hotel and a brand managed hotel with the misconception that a franchised hotel is a more complicated arrangement because of the different parties involved i.e., the hotel brand, the owner, and a potential third-party operator like Valor. For financiers, there seems to be a sense of nervousness around the franchise model as opposed to a brand managed hotel which is perceived to be a higher yielding business.  

In our recent experience across Africa, the major hotel brands now prefer to go the franchise route as it makes more commercial sense for them to do so and aligns with their global, strategic growth priorities.

As massive global businesses, the major hotel brands do not have the management growth capacity (or ambition) to tune into each and every new market that they sign hotels within, but rather by partnering with an experienced and trusted third-party operator like Valor, who knows the local market(s), and understands the hotel brands deliverables, and are able to successfully expand into these markets, resulting in hotel owners receiving far stronger financial results in the long run.

Valor Hospitality Partners acts as an intermediary between the owner and brand by conducting business on behalf of both parties in an entrepreneurial way. One of the many owner advantages, would be a hotel management agreement that is individualised for an owner, with performance clauses and thresholds, tailored to meet their respective needs.

This is not to say that a brand managed hotel is not an option to consider - there are different solutions for each client and within different countries, but it is strongly evident that there are many advantages for hotel owners who choose the franchise model whether it is because of the flexibility that the model offers or that they will have more say and control within their business. For example, if an owner has three hotels in one area (with different brands), they could opt for Valor Hospitality Partners to operate all three as a cluster under the franchise model, providing cost efficiencies and simplifying management services.  

Often, existing hotel owners and developers whose businesses are struggling, look for the cheapest management solution, which is not always a wise decision over the longer run. At Valor Hospitality Partners, we advise owners to undertake an initial comprehensive business plan review – similar to a business  ‘health check and diagnosis’ to decide the best course of action and likely business outcome for various brand and management scenario’s.

Valors commitment to educating the maturing African market over the past decade is not limited to hotel owners and their financiers, but more recently, architects and property developers who require expert operational advice in creating hotels best suited for today’s lifestyle traveller. Recent projects for Valor have included large mixed-use developments where the major hotel brands are only interested in the hotel component, yet the success of the owners overall development will require a symbiotic view on the entire hospitality and commercial operations, to maximise the overall returns and cost efficiencies.

What is unique to our Valor team in Africa, is that we have now become the preferred third-party operator among the majority of global hotel brands, as the proven deliverables of our team’s strong operating performances, and our expansion across sub-Saharan Africa, has contributed to our credibility by producing case studies on why the hotel franchise model works and how it benefits both hotel owners and the hotel brands.

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