By Aaron Shepherd, the CEO and Co-Founder of APS (Above Property Services)
For many of us, entrepreneurship is a terrifying pursuit. Breaking away from the traditional mold to create something new or different is, admittedly, the path of more resistance. It takes courage, innovative thinking and creativity, agility, relentless execution and unflappable commitment to make it work – and even then, many ventures will fail. But those ventures that do find success act as a beacon to anyone with an entrepreneurial spirit; a sign that big dreams can, sometimes, glean even bigger results.
Within the world of entrepreneurship, however, exists two primary frameworks: an independent business, or a business franchise. The latter is often an attractive choice, especially in the world of hospitality. At a glance, operating a branded hotel offers many of the rewards associated with business ownership, but with less of the risks (and the upfront investment costs) associated with creating an entirely new brand. Franchise owners gain access to a wealth of resources and are able to leverage existing brand reputation, execute a tried and tested operational blueprint, and rely on the support and security provided by a larger brand name with a proven track record.
At the same, however, when owners of branded hotels gain security and stability, they lose creative freedom and control over their property, the diversification of offerings, and its long-term brand evolution. Branded properties are also on the hook for ongoing franchise fees and royalty payments, and must continuously adhere to the obligations and brand guidelines established by franchisors. And while there are undeniable benefits to either side of the independent/franchised coin, the hospitality industry has seen a notable uptick in formerly branded properties ‘deflagging’ over the last few years, to become an independent brand.
Hotel De-flagging: The ‘Why’
The growing number of independent hotels could be, at least in part, correlated with the disruptive force of Airbnb short-term rentals. For decades, traditional hotels had an undisputed monopoly on the hospitality industry; that is, until Airbnb entered the market, and gave travelers the ability to choose between legacy brands and more unique accommodations. While brand reputation still carries a great deal of weight (especially within certain demographic groups) it has become increasingly obvious that younger travelers – notably millennials and Gen Z guests – have an appetite for non-traditional, boutique properties.
To this effect, the boutique hotel market was estimated at US$ 93.37 Billion in 2022 and is projected to reach US$ 115.80 Billion by 2032. Moreover, in 2017 boutique hotels saw 6.9% higher occupancy and 64.7% higher ADR compared to non-boutiques. From a personalization standpoint, independent properties may also have an easier time forming meaningful relationships with their guests and forging stronger connections with their local communities. Freed from the bureaucracy of rigid brand guidelines, independent properties can also embrace a more creative approach to their marketing campaigns tailored to specific market segments, and can quickly adapt to changing market conditions at a pace that large brands may struggle to match.
Oftentimes, the travelers who prefer independent, boutique properties are craving a more authentic (or otherwise noteworthy) experience than a large hotel brand typically offers – the less “cookie-cutter”, the better. And so, an opportunity for specialized hotels, inns, and bed and breakfasts has presented itself; in today’s market, flagship hospitality brands are no longer the only cool kids on the block. If anything, hotels today are increasingly incentivized to embrace their individuality and leverage the more unique elements of their property and offering in order to appeal to more guests.
Hotel De-flagging: The ‘How’
Transitioning from a branded property to an independent brand has the potential to be a rewarding process – but it can also be a logistically difficult one. The operational ecosystem of hotels has, historically, been fragile and wrought with legacy limitations that made scaling or transitioning to new systems and processes a rather complicated endeavor. But the key to success – whether you’re converting one property or five – is having the right technology. Now, more than ever, independent hotels are leveraging new-age technology to remain competitive in an increasingly competitive marketplace and aid in their transition from a branded to independent property.
Modern hospitality platforms (specifically, those systems built on a microservices architecture) provide the perfect framework to facilitate this transition, with A quick and painless implementation process. While a legacy platform is monolithic and, by design, inflexible, a microservices-based platform is modular, flexible and designed for agility and scalability. Hoteliers can benefit from a ‘plug-and-play’ model while they tailor their technology stack to include the perfect (custom) combination of best-in-class software and applications to align with their independent brand strategy.
The best part? The decoupled design ensures hoteliers can easily update individual services and seamlessly migrate data without affecting the entire system. Moreover, platforms built on a microservices architecture are easy to use, require minimal staff training, and encourage interoperability and integration with third-party applications so hotels can choose best-of-breed solutions for a seemingly endless variety of functions. This means a newly independent hotel can seamlessly connect various systems, such as online booking engines, channel managers, and customer relationship management (CRM) tools, to create a unified technology ecosystem that supports their operations. In simpler terms – hoteliers can quickly implement all the modules they need to successfully run their hotel, drive efficiency, capture savings, and optimize profits while managing both the demand and supply side of hospitality.
In the past, hotel owners had to rely on their franchisor to create and supply the operational framework for their hotel. Today, independent hoteliers can partner with a highly knowledgeable technology vendor to create – and continuously evolve and upgrade – their own operational framework with ease and confidence. By providing flexibility, scalability, customization, and cost efficiency, Above Property Services® hotel solutions are uniquely positioned to help independent hotels thrive and establish their own brand identity while maintaining the highest level of innovation, growth potential, operational efficiency, and, most importantly, guest satisfaction.