Experts worry over growing dumping of hotel franchise in Nigeria

By Obinna Emelike

Hospitality experts across the country have decried the rate at which hotel owners terminate existing franchise deals and move to new managers without considering the impact of such actions on the hospitality industry at large. In the last five years over 20 hotels have changed their brand names, management and operation style, an action which most experts say confuses guests. They further say such widespread franchise cross- carpeting by hotels in Nigeria could lead big international hotel brands to lose faith in the Nigerian hospitality sector. Experts further question the rationale, especially when little or no change results from the new branding.

The experts observe that in the process of rebranding, the hotels do not necessarily come out new, about 30 percent of the staff are usually retrenched, those who remaining are not trained as promised by the new management, while the new managements come with their key staff who end up earning far more than the existing staff.

According to Andy Uganwa, a hospitality consultant, most indigenous hotel owners are after quick returns on their investments, and therefore seek hotel brands and management companies that will collect cheap franchise or management fees, but deliver more profit at the end of the month. “You can recall that UPDC contracted Novotel to restore, brand and manage a hotel for them in Lagos, but surprisingly, the hotel was opened as Golden Tulip Festac. It means that the Golden Tulip brand probably bargained for a cheaper management, fee unlike Novotel.

“Le Meridien left Eko Hotel also because of management issues, as well. At the opening of Golden Tulip Ibadan, the towels and doormats were branded Protea, meaning that Protea furnished but could not manage because of disagreement over fees. “That is also why African Sun left Amber Tinapa Hotel which is now (unbranded as) Tinapa Lakeside Hotel. There are many instances”, he stressed. Tunji Omonuwa, a hotel manager, said more hotels will be rebranding soon, especially now that banks are going tough with their debtors, including hoteliers. “If a hotelier is under pressure to repay or service the loan he obtained from the bank to build a hotel, he will also seek ways to cut cost and make most of the profit. Of course, he may engage the services of a cheaper brand, hence hotel names can change anytime”, Omonuwa said.

Besides, the pressure of repaying bank loans, Omonuwa noted that hoteliers can go for cheaper brands when they cannot compete fiercely with other brands, hence the only option remaining for them to stay in business is to rebrand.

“When the owners of Protea Oakwood discovered that competition has brought more hotels around their vicinity, they disengaged the Protea brand and remained Oakwood Hotel”, he noted saying many hotels may be going the same way soon. However, Nick Moore, a reviewer for TripAdvisor, noted that the quest to get more franchise fees has made some international hotel brands to go for any hotelier and property, as long as franchise fees, salaries and allowances of their expatriate staff are paid.

Moore however said this negative development is usually at the expense of quality and standard, as the management company looksthe other way when guests complain, and rather will push it to the owners who then start scouting for other managers.

 

http://businessdayonline.com/2015/08/experts-worry-over-growing-dumping-of-hotel-franchise/

 

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One comment

  • PATRICK OLUYEMI

    Complement of the day,
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    Patrick Oluyemi
    CEO/MD

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