Commercial Real Estate News / General CRE / Property Profile: Holiday Inn

Property Profile: Holiday Inn

Published: 03-16-22 Category: General CRE

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Hotels are a necessary facet of the gem of travel. While some travelers have embraced the vacation rental format, it isn’t all about Airbnb. Traditional hotels still have their place in the travel puzzle, and commercial real estate enthusiasts looking to examine hotels will find plenty of data to sink their teeth into.

Take an established brand like Holiday Inn for instance. Holiday Inn is a brand that’s part of IHG Hotels & Resorts. IHG owns multiple branded property chains, including InterContinental, Crowne Plaza, Kimpton, Staybridge Suites, Candlewood Suites, and Even Hotels.

In the Americas alone, IHG has 4,268 open hotels. Leveraging a Holiday Inn for sale can yield long-term rewards for CRE investors looking to capitalize on the industry’s recovery.

The Power of Franchising

Why franchising? It’s the ultimate give and take that can give entrepreneurs the competitive edge they need to enter tougher industries. Getting people to stay at a well-known hotel, after all, is much easier than getting them to stay at a new and unknown hotel. What will the service be like?

The benefits of franchising are plentiful, and a few key advantages are listed below:

Support from the franchisor brand: franchisees benefit from the marketing and advertising money and effort spent by the franchisor.
An established brand has a built-in audience that doesn’t need additional convincing.
Easier to sell the franchised asset vs. a brand that would need more marketing for a potential buyer to pick it up.
Easier avenues to get financing for a franchise, as lenders understand the existing product or service.

Building a franchised brand still takes effort for the franchisee, but it is often a lot less effort than starting completely from scratch. People interested in franchising opportunities should definitely consider looking closer at the Holiday Inn brand, as IHG does have additional training and networking opportunities.

Franchising Opportunities With Holiday Inn

It’s important to understand how to work with a franchise opportunity. IHG deeply focuses on franchising agreements: on their development page, the company stated that more than 80% of their branded hotels operate under franchise arrangements.

They even break down the multiple ways to get involved, including new builds, conversions, mixed-use, and dual-brands. The right approach depends on a lot of different factors, including the business owner’s level of comfort.

Someone trying to break into the hotel industry may find themselves quickly overwhelmed by building from the ground up. Purchasing an existing property for conversion could make a lot more sense in the right market.

It is important to note that operating a Holiday Inn does come with significant fees and expectations for those joining the franchise opportunity.

Cost of a Franchise Opportunity with Holiday Inn

The initial franchise fee for a Holiday Inn is $50,000. The initial investment can range quite a bit, from $8.8 million on up. The royalty fee is between 5 and 6 percent, and this fee is what goes back to IHG in exchange for the franchisee to use the brand name for the hotel.

Is financing available? Yes, IHG does work with several third-party sources to help new franchisees. However, financing alone is not going to cover everything needed to make the hotel successful.

Marketing Approaches for Holiday Inn Hotels

Connecting to the local community is just as important as spending money on advertising. The local travel committee for the area has a vested interest in helping hotel owners succeed; that success is felt throughout the entire community. When hotels are full and operating efficiently, it means that they can hire and retain staff.

The taxes generated from the hotel stays go back into the community, and everyone benefits.

On the flip side, a vacant hotel struggles to stay in business, which has negative consequences for the community at large. A hotel that can’t operate well also cannot hold onto staff, increasing unemployment as those employees have t go out and find work again.

It is important before any acquisition or franchising takes place to begin thinking about how to advertise and market the hotel successfully. While it’s true that brand loyalty amongst travelers is high, the reality is that brand loyalty isn’t enough for growth purposes.

It’s important not just to speak to the people that would stay at a Holiday Inn no matter what, it’s also important to build a real strategy to bring in new guests frequently.

Considerations for Marketing and Advertising

Building a good advertising and marketing strategy can often feel like sludging through the mud. Where do you begin, and why? What do you look for first?

Here are a few considerations to make, especially in connection with an established brand like the Holiday Inn line of hotels:

Does the Chamber of Commerce offer any assistance?
Billboards are still an effective way to build awareness of hotel presence and location.
Imagine what the ideal grand opening looks like. How can you make it happen?
Look into what IHG already offers franchisees in terms of advertising and marketing assistance.
Can you partner with local companies with cross-interests?
Working with the local radio station can be effective for quality radio ads.
Look into what the local hotel associations in your city and state can offer.
Can the team make partnerships with local businesses that often use hotels, such as companies within the skilled trades?

These are just starting points on the advertising and marketing journey. The power of the Internet can bring new people as well. However, it’s still wise to take a lot of time to build a strategy that can be replicated over and over again, rather than just grasping at proverbial straws.

The Road Ahead

Acquiring a Holiday Inn is a huge decision. Even when done in a partnership with multiple people working together, it’s still a big challenge with a lot of moving partners. If working within a team for the hotel purchase and expansion, it’s important to ensure that all voices get a seat at the table.

Don’t leave anyone out, as they may have extra insights on how to make a hotel even more profitable.

In the right location, a hotel with big brand recognition like the Holiday Inn is very profitable and consistent. There will be seasonal shifts to think about, as hotels generally aren’t at full capacity all year round.

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