Home » How much does a hotel franchise cost in 2024?
How much does a hotel franchise cost in 2024?

How much does a hotel franchise cost in 2024?

Starting your own hotel is undoubtedly a big challenge. This is due to the fact that this business involves many lines to take into account. From the location and facilities to the theme, the services offered or your sales strategy. There are 3 main ways to open your own hotel: Open a hotel from scratch […]

Starting your own hotel is undoubtedly a big challenge. This is due to the fact that this business involves many lines to take into account. From the location and facilities to the theme, the services offered or your sales strategy.

There are 3 main ways to open your own hotel: Open a hotel from scratch with your own brand, operate an existing hotel or acquire a franchise. The latter is a very attractive option, but how much does a hotel franchise cost? What influences its price and what does it include? Here we tell you about it!

What is a franchise?

A franchise is a business model where a company (franchisor) allows a franchisee (person or organisation) to operate under its brand name, processes, standards, etc. This is in exchange for an initial payment, as well as recurring, usually monthly, royalty payments.

For example, in hotels, franchising is the payment for operating your hotel under a certain brand name following their processes, standards, expertise, etc. The franchise fee allows you to make use of their logos, colours, furniture, as well as to take advantage of their alliances with suppliers, travel agencies, airlines, among others.

 

What does buying a franchise include?

Each hotel chain offers its own benefits when buying a franchise as not all offer the same. In addition, how much a hotel franchise costs can influence what you receive. According to experts, here are some examples of what you might receive when paying for a hotel franchise:

  • Rights to use the hotel brand, logo, name and colours.
  • Process manuals and standards for hotel operation.
  • Training and support from the franchisor.
  • Support in the area of marketing and sales, as well as access to advertising material.
  • Advice on the construction or refurbishment of the hotel property.
  • Furniture and equipment on concession or at preferential prices.
  • Access to strategic alliances with suppliers, travel agencies, etc.
  • Brand operation agreement with options to renew it.
  • Systems and software for reservation management, sales, accounting, among others.

It is important to note that there are even brands that can offer support with issues such as the search for real estate or land for the construction of the hotel. Although generally, the issue of the building is usually the responsibility of the person buying the franchise, not the person selling it.

 

How much does a popular hotel franchise cost?

Not all hotel companies and chains operate under the franchise model so you should first start by finding out which ones sell franchises. Here’s how much it costs to franchise a hotel from the most popular chains in the world.

  • City Express: $60,000 average.
  • Hilton Hotels and Resorts: $85,000 average.
  • Hilton Garden Inn: $120,000 average.
  • Wyndham Group: $40,000 to $300,000 average.
  • Best Western: $40,000 average.
  • Crowne Plaza: $75,000 average.
  • Four Points by Sheraton: $60,000 average.
  • Hyatt: $120,000 average.
  • Intercontinental Hotels Group (IHG): $75,000 average.

franquicia de hotel

What factors influence the cost of a hotel franchise?

It is very important to take into account that there are several factors that influence how much a hotel franchise costs. For example, the reputation of the brand and its positioning in the market are perhaps the most important determinant. A well-known hotel such as Hyatt will cost more than a hotel that only operates locally.

In addition to the weight of the brand, the type of hotel also has a strong influence. A 5-star or higher resort franchise will not cost the same as a transient or business hotel. Similarly, what the franchisor offers will also influence how much a hotel franchise costs. The more you get, the higher the cost.

Finally, it is important to consider that location also has a bearing on how much a hotel franchise costs. It is more expensive to own a hotel in a tourist destination than in a small town.

 

What should I consider when buying a hotel franchise?

Before making a decision, consider some things to know before buying a hotel franchise according to our experts:

The market

Consider the size of the market you wish to target to ensure that there is sufficient flow of travellers to make your hotel sustainable. Unless there is potential for growth, a small market may be insufficient for your sales.

The location

The location of the hotel is crucial as it will influence the market, how much a hotel franchise costs and the brand you can purchase. In addition, many franchises place restrictions on the distance between hotels to avoid competing with each other.

What the franchisor offers

It is important that you evaluate what the brand offers for the franchise fee, whether they only give you the brand name, whether they also include real estate, whether they charge royalties, etc. This way you will be able to get much more value and benefits from your investment.

Your budget

The budget is very important when looking at how much a hotel franchise costs as it will help you decide which one to invest in. You should also take into account that many times you will have to make additional investments or expenses in addition to the purchase of the hotel franchise.

The agreement

Finally, an important factor in determining how much a hotel franchise costs is the agreement. This agreement details everything about the franchise, from rights and obligations to payments, royalties, benefits, etc. This is why you should review it carefully and in detail.

 

Hotel franchise or my own brand?

This is one of the most frequently asked questions and also one of the most complex to address. The decision to choose a hotel franchise or your own brand will depend on several factors. From your budget, the destination and the market to be targeted, to your business and personal objectives all influence the decision.

At IHCS our experts will help you decide on the best way to start your own hotel. Together we will decide whether it is worth investing in an established franchise or focus on creating a plan to launch your own hotel.

Rate this post

Do you want to keep up to date with news and advice about the hotel sector?

We help you to develop and optimise your hotel project.

The 1st consultation is free!
Hotel Consulting
We use our own cookies and those of third parties in order to analyse the browsing of users and improve our services. If you continue to browse, we consider that you accept their use. You can obtain more information, or find out how to change the settings, by clicking on more information