How should hotel investors choose a management company?

When some hoteliers choose a management company, they usually only care about whether a particular brand is high-end or level of management fees charged to a particular brand, but ignore many other facts. If owner can find out as much as possible about management company and hotel brand before or during negotiations, this will certainly help in making decisions and facilitate negotiations.

In normal circumstances, owner will contact hotel management company after confirming positioning of their project and other aspects. If hotel owner decides to manage hotel through a trust or franchise, due diligence must be carried out on hotel management company.

Due diligence in strict sense refers to historical facts and status quo (including various data and legal documents), managerial background, market risk, managerial risk, technical risk. Comprehensive and deep understanding and risk analysis. and capital risks mainly arise in corporate listings and corporate mergers and acquisitions. However, reasonable due diligence is also required in process of selecting an international management company for hotel owners.

Some owners generally only care about whether a particular brand is high-end or level of management fees charged on a particular brand, but they ignore many other facts. If owner can find out as much as possible about management company and hotel brand before or during negotiations, this will certainly help in making decisions and facilitate negotiations.

Legitimacy of hotel management companies

First of all, it is necessary to identify authenticity and legitimacy of management company. Find out and determine if hotel management company is an independent legal entity, has been approved and registered by national department of industry and commerce, and request a copy of management company's business license, tax registration or qualification certificate. legal and efficient procedures are followed, enterprise. Then you can cooperate with him with confidence, make a three-chapter agreement, and implement relevant cooperation issues according to the procedures.

Reflecting strength of hotel management

A strong hospitality management company can rely on its deep understanding of market demand, make full use of its strengths, offer new business solutions for hospitality companies with new management and management concepts, and bring new opportunities to company. The driving force revived some businesses that were in trouble in competition in business world.

Successful hotel management companies have a set of well-thought-out and effective implementation plans that can accurately position different hotel companies, conduct detailed analysis and determine appropriate development direction based on their environment and market share. Help enterprises to carry out targeted training and work strengthening, so that enterprises can achieve standardized, procedural and personalized work and management.

A powerful and experienced management company can not only carry out daily operation and management of hotel company, but also make full use of its professional advantages, plan and organize activities such as service skills and technical exchanges in industry, and constantly introduce new ones with some recommended products and services to guide consumer market and further develop and prosper hospitality industry.

The benefits of a hotel management company

A qualified management company, in addition to having certain talents and technological advantages, also has certain research capabilities in various aspects such as products, services and marketing, in order to adapt to requirements of current hotel market for separation. labor and fine-tuning Our own research advantages allow company to get out of a difficult situation in a short time and quickly enter a virtuous circle.

The joint nature of hotel management company

The cooperation between hotel management company and hotel enterprise is a natural combination of two parties, a collaborative relationship with additional benefits, rather than a simple employment relationship. In process of cooperation, they can show style of cooperation and focus on teamwork, and show most sincerity and creditworthiness, and can maximize their respective advantages, so as to jointly strive for original market and attract consumers.

The hotel management company can constantly develop new products to meet needs of original market of customers and meet needs of cooperative enterprises. Continue to make suggestions for partners, continue to charge and support professional chefs, service and management staff, and faithfully perform every task and fulfill all agreements.

Hotel management company recognition in market

The hotel management company uses advanced management concepts, unique planning marketing and high-quality service products in daily work to make more customers become regular customers of company. Acceptance in market depends on actual level of activity of hotel management company.

Today, choice of market is becoming more objective and pragmatic, which is why it is so important to choose a partner that suits your project. First, we need to clearly understand positioning of our own projects, scale investment budget and reasonable return expectations, and then we will see who can support us in achieving our business management goals in a harmonious and orderly manner.

Comparative analysis of quality of work of large hotel management companies and small and medium-sized hotel service agencies, for readers' reference.

A large well-known management company

Small and medium-sized organizations providing hospitality management services

Brand Influence

Tall

Medium

Flexibility of collaboration

Low

Tall

Display quality of management team

Don't care

Don't care

Concrete cooperation

Medium

Tall

Single Deployment of Group Resources

Tall

Medium

Interaction Management

Medium

Tall

Managing Intervention Fees

Tall

suitable

Degree of respect for owner

Medium

Tall

Overview of management company

General understanding of management company, including but not limited to:

✦ The history and current status of these management companies (including their brands), are there any cases of litigation or failure? what is reason?

✦ Any recent negative or positive news?

✦ Is it a private family business or a public company?

Is it just management company or does it also own hotel?

It is worth knowing above facts. Example. If a hotel brand has been delisted several times, owner needs to understand why. If main reason is management of company, then owner should proceed with caution. If hotel management company is also owner of hotel, is it reasonable to assume that management company is more inclined to consider matters from owner's point of view than a pure hotel management company? Or, if hotel management company is a private family business, would its expansion strategy be more conservative? And if hotel management company is a listed company, is it reasonable to believe that it insists on a longer management period in management contract? Because a longer tenure in management would certainly increase investor confidence in their earnings expectations.

Introducing hotel brand

(1) Brand Elements

When developing and launching most hotel brands, they try to give certain characteristics to distinguish them from other brands. Brand characteristics can be reflected in many aspects such as hotel class, design style, service characteristics, hotel type, functional positioning, target customers, cultural characteristics, theme style and so on. It is difficult for average consumer or business owner to distinguish nuances of one brand from another. Undoubtedly, in order to choose most suitable brand to position your project, you must first understand its brand characteristics accurately, so owner should pay more attention to this aspect.

(2) Brand Standards

Brand standards are associated with brand characteristics. In a certain sense, brand standards play a significant role in determining investment scale of hotel projects. The management company usually requires owner to make a commitment to uphold hotel's brand standards in their management contract, and this commitment is essentially a financial commitment. Before signing a contract, owner must also understand value of brand's standards in terms of financial costs before deciding whether to commit to such a commitment. Unfortunately, before signing a contract, management companies often offer almost no branding standards. Therefore, in theory, vast majority of owners who sign management contracts take a risk: he takes on an obligation that was not reasonably predicted and therefore cannot know exact result, especially when management company also emphasizes that he has right to unilaterally adjust brand standards. To mitigate risk, owners should, whenever possible, require hotel managers to forecast financial costs of building and equipping their hotel project to their brand standards. It should be noted that such projections of financial costs do not amount to performance guarantees from management companies, which management companies are generally unwilling to provide. It is also alarming that there is a growing tendency for international hotel management companies to arbitrarily raise their brand standards (at least some of their aspects) in Chinese region, which is of course unfair to Chinese owners.

(3) Trademark registration

A trademark is main feature that distinguishes a brand from another brand, as well as main bearer of brand value. The ability of owner to obtain full and impeccable rights to a trademark largely depends on whether trademark is legally registered. especially in Whether it is legally registered in China. The reality is that many famous guestsThe brand names, although registered in their countries of origin, were not registered in time or successfully registered in China for various reasons. The trademark of a hotel brand in China has two forms: a trademark in original language (such as a trademark in English) and a trademark in Chinese translation. At present, Chinese trademarks of many brands are not registered in time or successfully registered, in some cases, their English trademarks are not registered in China. If a trademark not registered in China is issued by owner of license to use in China by hotel management company, this means a big risk for owner: if one day owner cannot use trademark due to third party claims correctly, hotel will be in hotel .Investments in brand advertising and so on will go to waste.

(4) Brand Value Assessment

Most owners choose to work with international property management companies mainly because of value of their hotel brands. Of course, a certain brand has its own overall value, but only a brand that is fully aligned with a certain project can maximize individual value of its brand.

There are many factors that determine overall value of a brand, one of which is brand history. Only a brand with a certain history and cultural heritage is valuable. If brand was created for a short time, owner may have reasonable doubts about overall value of brand. Whether a brand's value can be maximized is also influenced by many factors, such as whether brand is relevant to local target customers. Undoubtedly, in a region where there are many German or French companies and clients, introduction of a German or French hotel brand can maximize brand value.

Another example: effectiveness of a brand's marketing channels (that is, how many customers a brand can attract to a particular hotel project) also affects value of a brand's message. In an inner city where not many foreigners travel, effectiveness of marketing channels for international brands can be greatly reduced, while in same city, if there are already several brands of a certain brand family, owner must consider whether there are buyers. source is subject to change because most of time, a certain brand in a certain brand family and related brands share a loyal customer base. Therefore, owners should plan ahead and limit development of same brand or neighboring brands of brand family in a certain geographical area in hotel management contract.

Understand development strategy of the management company and its expansion plan

Understanding current development strategy and expansion plan of hotel management company will help owner to correctly assess weight of his project in eyes of hotel management company. For example, some high-end brands at this stage plan to develop projects only in first-tier cities, so owners in second-tier cities naturally do not need to waste time. The same is true in same city: project owners in suburbs do not need to persuade brands that intend to develop projects only in commercial center of city to pay attention to their projects. An accurate understanding of layout and positioning of a particular brand in a particular area will surely increase owner's bargaining edge. For example, if owner knows that management company intends to develop a certain brand in area where project is located, and project is particularly suitable for brand, owner can trust negotiations more and advocate for better terms. .

Understand management company personnel and their decision-making process

Expansion plans of international hotel management companies in China need tailor-made development staff. Most developers have fairly rich negotiating experience, many of them have been operating, consulting or expanding hotel industry for many years, and some even have double experience both on side of owner and on side of management company. Compared to them, many owners are new to hotel projects and have no relevant experience, so property management developers can easily take advantage of information asymmetries. Actively communicate with development staff of hotel management company and learn more about them, such as their work experience, temperament, hobbies, negotiating style, annual performance indicators, achieved status and performance evaluation methods, etc. Sometimes this can help owner determine or adjust strategies and tactics of negotiations.

Understanding decision making procedures of international hotel management companies is also a job that cannot be ignored. For example, where is decision-making center of management company for Chinese projects? What are general powers of its development staff? How do its various departments, such as legal, development, and technical, interact and distribute work? If decision center is not located in China, it means that design staff in China has lower authority, because contract must be brought to attention of decision maker abroad for approval; if in a hotel management company, its in-house lawyers and development staff are involved in negotiations at same time. This means that there is a strong functional or power system of checks and balances between its in-house lawyers and development staff. An interesting phenomenon is that between hotel management companies that hire external lawyers to participate in negotiations and rely on their in-house lawyers to participate in negotiations, former spend less time on average in project negotiations; negotiations with hotel management companies that employ in-house lawyers abroad are less effective. The main reason for above phenomenon is related to decision-making process and distribution of powers within management company.

Understanding management company contracts

The last and most important point is that owner must have a good knowledge of contracts of international hotel management companies. The series of contracts of international hotel management companies is from 2 to 3 contracts and from 5 to 6 contracts. The obscurity of language, complexity of degree and ingenious layout, ordinary professional lawyers not working in hotels can rarely see way. This is due to fact that most of contracts of international management companies with a long history have been used for decades, and have been amended and supplemented by countless professional lawyers in middle, so protection of interests of management company is almost flawless. Almost all owners were filled with righteous indignation when they first encountered this type of contract, thinking that contract was too harsh and full of dominance clauses. Therefore, after owner receives contract, it is very important to carefully study and understand it. However, softness or rigidity of contract has no positive relation to quality of hotel brand. For owners, a free contract is not always a good thing, and of course a hard contract is not necessarily good, but it is not necessarily bad either. Whether a certain hotel management company or a certain brand should be chosen cannot be judged solely by vagueness or rigidity of the contract.