Future franchising

The power of a brand has been the subject of many conversations over the past few years, especially during an age of inflation. Travellers are more sensitive to price and the hotel experience, whereas owners and investors are prioritising decisions with the strongest financial returns. For stakeholders, franchising offers shared risk and resources during uncertain economic challenges whilst allowing for quick scalability, and the model has proven successful for many of the major hotel chains – and Accor is one of them.

Since 2018, Adagio has quadrupled its franchised network from five aparthotels to 28 today, representing around 20 per cent of its portfolio. As a result, Adagio will target two-thirds of future openings to be carried out using the franchised model. Before 2030, the brand aims to increase its proportion of franchised properties to 35 per cent.

It’s an ambitious strategy. CBRE published an article last year which highlighted that the fees owners pay to franchise companies have typically grown at a pace greater than the rise in rooms revenue. Guest loyalty program fees in particular increased 9.5 percentage points more than the growth in rooms revenue during 2022 for US hotels, indicating a growth in demand from an expanding membership base. While franchise-related fees may have increased, the major hotel chains could be currently sitting on the largest customer database in history. This could signal good news for Accor as it aims to roll out Adagio across Europe, capitalising on brand recognition for both owners and travellers alike.