Hotels and serviced apartments offer business ownership opportunities around Australia. Here we look at two franchise businesses: the broad portfolio of hotel brands under Accor and the niche market of Quest Serviced Apartments.

ACCOR

Three ownership structures exist in the Accor chain of hotels: a franchise group, a distribution agreement, and a marketing agreement. Dino Mezzatesta, general manager hotel integration at Accor Asia Pacific, says “Our company has one third owned – we own the assets – one third under management contract where we run the hotel on behalf of the owner, and one third franchised, and we provide support.

‘The more successful franchisees have the possibility to take on a management contract,” he adds.

Most independent hotels are regional, and it’s hard for them to distribute and sell their brands, he says. While a hotel might have its own online inventory to get a hotel on the first page of a website such as Expedia is hard.

“We’ll always have preferential relationships,” Mezzatesta says. So there are advantages to joining a franchise network: a large hotel group can offer procurement and pr ad support.

Franchisees pay a franchise fee, a reservations fee for bookings acquired through the Accor system only, and a technical fee.

Accor is also a global business which includes international brands Pullman, Sebel, Mercure, Novotel, Ibis Styles as well as the MGallery boutique name.

“When you join the brand, that means a commitment to delivering standards,” says Mezzatesta.

Franchisees are provided with guidance and tools to manage the brand, “We have the luxury of being branded, all global.

In Australia the latest development is a serviced apartment concept under the Sebel name, which is tapping into a niche market. The first property will be in Melbourne.

QUEST SERVICED APARTMENTS

This is a market well known to the Quest Serviced Apartments business founded by chairman Paul Constantinou [pictured below]. He welcomes the addition of healthy competition, he says.

“What it does is provide another brand in the market. Competition shows you are not a lone pioneer and it challenges you to maintain a relevant proposition to the customer.”

But he adds, “the biggest competition comes from ourselves. There’s a continual focus on what we do.”

For Quest its niche in the market for serviced apartments is in extended business stay.

While travelling for business individuals might like the idea of a five star room with frills, what they really need is to be able to do their work efficiently so they can go home, says Constantinou.

Research has always been critical to the business, he adds, to allow Quest to follow the evolving needs of customers, and define the products customers really need.

“We’re dealing with a new generation and they have different needs.”

Looking ahead

It’s important to understand what accommodation demands will be in five to 10 years, and where customers will be moving for business in 10 to 15 years.

It takes up to five years for a new property to be built and opened for business. “We go to the top 500 corporations and try and build relationships where they are developing and growing,” he says.

Where once businesses were happy to be in a city centre the trend has been for some time to invest in sites in industrial parks.

“We follow government infrastructure spend,” explains Constantinou. Population growth and business are good indices for accommodation, he says.

For franchisees the Quest model has removed the more mundane functions, allowing them to focus on growth, and guests.

The speed of technological change has meant Quest has focused on specific business gains when introducing new systems.

For instance, franchisees gain significant operational benefits in running back office admin and accounts with the use of a cloud-based system.

On the guest front, what’s important is how they pay their bill, and how internet access is provided.

“Good fast broadband provides enormous efficiency for a guest,” says Constantinou. “Younger travellers carry their news and videos and music on their own devices and want to know how to put their content on our TV. We need to be facilitating this.

“We’ve put the customer in control – they can eat out, eat in, cook for themselves. If they are a non-discretionary traveler they just want to get the job done and get home.”

A steady growth of regional and suburban demand is good news for the accommodation sector, and supply now needs to catch up, says Constantinou.