FranchiseGrade.com Publishes 2014 Lodging Franchise Sector Report. Sector Remains Strong and Stable.

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The United States Lodging Franchise Sector held strong over the last four years coming out of the recession. Results show that 69% of franchised lodging systems had positive growth in outlets between 2010 and 2013. Franchise systems with solid outlet growth are also propelled forward by increasing occupancy rates and RevPAR, as a gap emerges in the race to recover.

"Our data for 2010 to 2013 has been analyzed alongside specific lodging and hospitality metrics to provide us with a number of correlations between franchised outlet growth, occupancy rates, ADR and RevPAR. "

The FranchiseGrade.com 2014 Lodging Franchise Report, an Analysis of Lodging Franchise Systems within the United States is available as a PDF download. This analytical study of 90 Franchise Disclosure Documents (FDDs) along with franchisee surveys and franchise performance benchmarks was compared to FranchiseGrade.com’s overall franchise industry data.

The lodging franchise sector consists of the largest franchisee investments within the franchise industry. As more sophisticated franchisee investors enter the sector, the demand for proven, successful systems increases.

The study sample of 90 lodging franchise systems, which includes nine publicly traded franchises, clearly shows that the sector has seen franchised outlets increase by 3.1% since 2010. However, franchised outlet growth is almost offset by the decline in franchisor owned outlets.

Key Findings:

  •     The U.S. hospitality industry is dominated by the franchise business model.
  •     Occupancy and RevPAR rates can vary by as much as 25% between franchised brands.
  •     Franchisee Turnover Rates (FTR) are lower than franchise industry averages.
  •     The predominant driver behind Lodging FTR are Transfers.
  •     The top 25% of franchise systems account for 86% of all positive growth.
  •     Publicly traded hospitality companies account for 70%+ of the franchise sector.

Jeff Lefler, founder and CEO of FranchiseGrade.com commented "Our data for 2010 to 2013 has been analyzed alongside specific lodging and hospitality metrics to provide us with a number of correlations between franchised outlet growth, occupancy rates, ADR and RevPAR. Given that most brands are looking to increase their Capital Expenditures over the coming years, we are interested to see if those franchised brands that are currently losing ground can turn the tide and catch up to the more successful brands?"

The franchise lodging sector is dominated by large publicly traded chains like: Choice Hotels International, InterContinental Hotels Group, Red Lion Hotels Corporation, Marriott International, Hyatt Hotels Corporation, Wyndham Worldwide Corporation, La Quinta Holdings, and Starwood Hotels & Resorts Worldwide. These lodging companies are highly dependent on their franchised networks to support growth in locations and revenue.

Jeff Lefler continues “A number of publicly traded companies are dependent on franchisee investors so we look closely at critical predictors for future success for both franchisee investors and stockholders. We see marked differences between these particular brands."

The 2014 Lodging Franchise Sector Report can be purchased directly or sampled here.

About FranchiseGrade.com

FranchiseGrade.com is the leader in competitive market research and objective analysis for the franchise industry. Their franchise assessment, grading and standardized reporting tools provide industry stakeholders with critical data driven metrics to support the growth of successful franchise systems. FranchiseGrade.com works to raise the bar for market research in the franchise industry to build a stronger franchise community.

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