Hotel Franchise Opportunities

What is a hotel franchise?

A hotel franchise is a fee-based agreement between a business owner (the franchisee) and a brand owner (the franchisor). As a franchisee, you can use the franchisor’s brand name, intellectual property, reservation system and operational support tools in exchange for paying a franchise fee. 

Hotel market outlook

The outlook for UK hotel market demand suggests a generally positive picture. While below-average UK GDP growth could dampen UK domestic business and leisure demand, interest rates are predicted to reduce, resulting in a weakening pound. This could boost inbound tourism with the relative affordability of the UK for international travellers. 

In PWC's Hotels Forecast report, real estate and hotels corporate finance partner, Simon Hampton, commented: “The [...] outlook for the UK hotel market is cautiously optimistic. [...] Despite global uncertainties, resilience in travel, especially from the US, Europe and Asia, offers encouraging signs.” 

Robert Alley, BWH Hotels GB brand director, adds: “Even in the years following COVID, hotels have faced operational pressures – attracting and retaining staff, inflationary costs, construction and development finance, it’s been a difficult few years for many people. 

“But now that money is starting to move in the market again, we think there’s a great opportunity for people to put their offer onto that expanded platform that we can offer. We’re keen to have conversations.” 

Types of hotel franchise 

Although all hotels work on basically the same model, there’s a surprising amount of variation within the industry. Hotels come in a huge variety of shapes and sizes, offering entrepreneurs a choice of options for their hotel franchise investment. 

Budget hotel franchise

If people are staying in hotels out of necessity, they’re often only looking for a budget option. As long as the hotel is well situated, clean and comfortable, guests are willing to forgo certain facilities or luxuries.

Looking for a cheap room for the night, customers want to know they’ll get value for money. This is why many will choose to stay in hotels whose name they recognise, rather than taking a gamble on an independent establishment. 

For potential hotel franchisees, budget hotels offer an attractive proposition because they’re often cheaper to set up and to run. You'll need to spend less on decorating and won’t have to pay out for expensive extras like spa facilities, restaurants or swimming pools.  

With more and more people opting for low-cost rooms, consistent demand could help you to turn a profit relatively quickly. Budget hotel franchises for sale include easyHotel and Days Inn.

Business hotel franchises 

Many UK hotels are targeted towards business users. Whether designed to offer comfortable and convenient accommodation close to business centres, or conference facilities to companies who want to hold meetings and events, these specialist hotels are in demand across the country.  

As business franchise hotels generally offer slightly more extensive facilities than budget options, they can be more expensive to set up and to run.

However, with many companies using the same hotels year after year, these types of establishments can build up a loyal and consistent client base. An example of a business hotel franchise is Travelodge.

High-end hotel franchises 

Some of the best-known names in high-end hotels are franchises. Customers staying in these hotels know they’ll get a high-quality service whenever they book a room. Franchisees benefit from the quality reputation of the brand they’re buying into.  

This is one of the main reasons that entrepreneurs choose to invest in a high-end hotel franchise rather than begin a new venture from the ground up.  

At this level of the hotel industry, many customers will deliberately choose to stay with a particular brand over other hotel choices. This gives you a guaranteed revenue stream and a solid customer base on which to build. 

Examples of high-end hotel franchises are Radisson Blu, Curio Collection by Hilton and Hotel Indigo by IHG.

How much does a hotel franchise cost? 

Opening a UK hotel franchise can be a lucrative business opportunity – but it requires careful planning and significant investment. 

• Initial hotel franchise fee – this can range from £10,000 to £50,000 depending on the hotel franchise brand. 
• Total investment – including the hotel franchise fee, property costs, renovations and working capital, this can range from £500,000 to £5,000,000. 
• Ongoing royalties – hotel franchisees are usually required to pay ongoing royalties, which typically range from 3% to 7% of gross revenue. 
• Marketing contributions – typically around 1% to 4% of revenue. 
• Property and renovation costs – these vary greatly depending on location, size and condition of the property. Prime locations may increase costs significantly, while refurbishment might be necessary for older properties. 

(Source: investinbrands.co.uk). 

Key factors affecting the hotel franchise cost include: 

• Brand choice – major international hotel brands (such as Hilton, Marriott, or InterContinental) will likely require higher investments compared to smaller or regional chains. 
• Location – hotels in high-demand areas, such as central London or popular tourist destinations, tend to be more expensive to establish. 
• Size of property – a larger hotel, with more rooms, will require a higher initial investment and operating costs. 
• Renovations and customisation – if the property requires significant renovations to meet the brand’s standards, this can add to the total cost. 

The benefits of hotel franchises 

Hotel franchises offer entrepreneurs several advantages over other business models. The brand recognition offered by a franchise can have a huge impact on your chances of success, especially in the first few months of operations.

Customers searching online for a room will be much more likely to choose a hotel whose name they recognise. Working with other hotels around the country can also help you to drive business at your own premises and attract guests throughout the year. 

David Schollenberger, senior legal counsel international at Bally’s Interactive has many years’ experience acting for hotel franchisors and hotel franchisees throughout his career in-house and in private practice. 

He describes the attraction of hotel franchises: “Franchising hotel brands from the major hotel companies offers a prospective franchisee a tried and tested system for hotel development, use of worldwide recognised trademark, brand, know-how, operating standards, and processes and reservations delivery. 

“This allows a franchisee to develop and operate its hotel business more efficiently and with less risk using the valuable assistance and know-how of a hotel company that has decades of experience in the business."

More things to consider 

• Hotel ownership can be expensive so ensure your decision is based on information provided by the hotel franchisor and not what you imagine running a hotel to be like.  
• Attend franchisor discovery days. These will help you find out more about how the hotel is run and, most importantly, the training and support offered to you as a hotel franchisee. 
• Hotel franchises not only have large license fees but also large running costs. Consider this when making your decision. How much will it cost you to run and operate the hotel for the first six months?
• Owning a hotel franchise may seem glamorous, but it’s a 24/7 job. You need to be aware of the personal commitment you are making as well as the financial.  

Top hotel franchises in the UK to consider right now

With all this information in mind, you might be ready to make the leap. Which brings us to the all-important question: which hotel franchise for sale is within your interests and budget? Should you consider a boutique hotel or a branded hotel? If so, do you want to invest in a luxury brand hotel or a motel?

The answer is up to you. In the meantime, take a look at the following options to get an idea of the current offerings.

The Longcroft Luxury Cat Hotel

You read that correctly! When we mentioned niche hotel brands, this is one that we had in mind.

The Longcroft Luxury Cat Hotel is a place for felines to relax, sans owners. If their human counterparts need a break or a vacation, this is where their cats can stay.

With five-star accommodations, gorgeous suites, and a garden and play area to boot, this option is perfect for those who want to embark on a franchise that’s a little more unique and creative.

There are designer beds for the four-legged friends, as well as gourmet food and the option to enjoy a kitty spa. What more could cats ask for? Call it a cattery, a cat hotel, or a place for cat boarding – whatever the moniker, it’s sure to be a memorable experience.

Best Western

Okay, let’s get down to business here. Best Western is one of the world’s most well-known hotel chains, operating in over 4,200 locations with a variety of names under its belt. Each site is independently, privately owned (by someone just like you!).

Earlier, we mentioned that many hotel franchises come with a loyalty programme that basically guarantees you’ll get visitors. Best Western is one such hotel, boasting 60 million rewards members.

Best Western also provides several benefits to franchisees, including:

• Brand contribution of 25% of total room nights
• A total average partnering cost of 4% GPR
• 12% direct website growth year on year

Holiday Inn and Holiday Inn Express

The Holiday Inn is another notable name in the hotel franchise business, having been established back in 1952. Their franchising efforts started not long after, in 1954.

While a majority of Holiday Inn franchises are located in the US, a significant portion are located in other countries. Holiday Inn cites that it’s currently seeking new franchise units worldwide, leaving the UK a viable option on its radar.

Travelodge

Another well-known hotel franchise in the UK is Travelodge – the second-largest, in fact, when considering the number of locations and rooms available. It currently has over 595 hotels providing an astonishing 46,000 rooms throughout Spain, Ireland and the UK.

The UK represents the largest part of Travelodge’s market, or 98 per cent of its total revenue.

Travelodge’s part of the market is a particular one: the midscale market (an attractive one at that) and economy sector. This low-cost operator is a favourite for many international and domestic travellers thanks to modern rooms at affordable prices. They cater to both business and pleasure visitors.

About 90 per cent of Travelodge reservations come through direct channels, resulting in an attractive 21 million customers per year. Again, the marketing and advertising will be made easy with such a big name as this one.

If you're interested in buying a hotel franchise, browse our wide range of franchise opportunities. You can also browse restaurant franchises, gym franchises, retail franchises and property franchises.