Hotel Collections Continue to Thrive
Owners of strong, unique independent hotels are finding that they can gain many of the advantages of an affiliation with a branded hotel management company without entering into a management contract and relinquishing control of the hotel. This is indeed the case and much has been written about the many collections of hotels now available in the marketplace, but the benefits should be approached with a clear head and a keen eye because at the end of the day there will be a signed collection agreement signed with the branded hotel management company that will have a significant term of years and that will not be subject to easy termination by the hotel owner. To acknowledge the positives of the relationship, an owner with a hotel that has a unique story and that is recognized in its target market can benefit from the brand’s strength as a part of the underwriting process for financing, as well as better access to a rewards program, reservation system, buying power and training. Nevertheless, remember that the collection contract is essentially a franchise agreement, with a significant term and fees to be paid to the brand. The fees are not uniform, so care must be taken in examining that aspect of the transaction. The variations on fees include fees based upon total gross revenues or total rooms revenues or simply the bookings through the brand’s systems. If the owner is not going to self-manage the hotel, the better practice would be to involve the hotel manager in the process because the hotel manager will need to understand its duties and obligations to the owner in the context of being part of the collection.
To make the point, in early November 2015, Starwood rebranded the SLS-Las Vegas as part of the Tribute Portfolio, with the Lux Tower operating under the W brand. The Tribute Portfolio is the second collection of hotels offered through Starwood, joining The Luxury Collection of hotels. Other examples of branded collections include Marriott’s Autograph Collection, Hilton’s Curio Collection, Sofitel’s Legends Collection, the BW Premier Collection from Best Western and the Ascent Hotel Collection of Choice Hotels.