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Novotel Melbourne Central Hotel – Image Credit Accor
- Australia’s hospitality industry is on the cusp of a franchising boom, driven by the pandemic’s impact and industry evolution.
- Accor has noted significant growth in franchising, particularly in regional hotels outside major Australian cities.
An article by Tamara Thiessen the growing trend of franchising in Australia’s hospitality industry. Traditionally, property owners in Australia have favored maintaining the independence of their hotels. However, the pandemic and industry evolution are catalyzing a shift towards the franchising model.
Accor, a Paris-based company with the largest franchise footprint in Australia, has observed a steady and considerable franchising growth over the past decade. Notably, this growth is more pronounced in regional hotels outside Australia’s major cities. As Adrian Williams, Accor’s chief operating officer for the Asia-Pacific region, stated, the franchise division has matured alongside the hospitality industry’s growth, now boasting 122 franchised hotel assets and counting.
According to David Simpson, managing director at Melbourne-based business advisory Axsia HTL, his clients are starting to acknowledge the strength of franchise agreements. He asserts that while hotel franchising is a relatively new concept in Australia, its popularity is booming due to its advantages over traditional hotel management agreements.
Matthew Burke, regional director of APAC at STR, CoStar’s hospitality analytics division, confirms that independent properties constitute more than three-quarters of all hotels in Australia. However, the popularity of brand and franchise models is growing steadily. He asserts, “As brands prioritize growth and investors seek returns, franchising emerges as the preferred operational path, especially with third-party management companies offering flexible solutions to owners.”
The key players in the Australian hospitality franchising scene are Accor, Choice Hotels Asia-Pacific, IHG Hotels & Resorts, Marriott International, and Quest Apartment Hotels. These entities are taking advantage of the increasing number of experienced third-party management, strategic expansion by brand management companies, and the growing appeal to hotel owners to exercise greater control over hotel operations.
Yet, the transition to franchising is not without its challenges. For many Australian hotel owners, the fear of losing control over their assets is a significant concern. However, this mindset is gradually changing as they recognize the unprecedented opportunities that franchising offers for expanding their footprint.
While franchising has risks and challenges, the model is poised for continued growth. The separation of brand and management allows owners to negotiate shorter-term operating agreements with white-label operators, unlocking significant potential in the hospitality industry. As Simpson suggests, “Australian owners need to understand, or a large part of the potential is missed.”
