With its new ‘manchise’ concept, Citymax Hotels hopes to offer a flexible franchise model that is beneficial to owners and operators. Landmark Hospitality’s Russel Sharpe tells Hotelier why he believes the concept will work
Earlier this year, UAE-based Citymax Hotels announced the launch of its ‘manchise contract’ concept — a business model that combines traditional hotel management and franchise operations into a tailor-made contract.
As part of the contract, Citymax Hotels will offer its expertise coupled with a traditional management contract for the first three to five years of operations, following which the agreement will revert to a franchise-type arrangement customised for owners in the region for a further 10 to 15 years, thereby giving them the opportunity to benefit from flexible terms and conditions.
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“It’s not something new. We are not trying to reinvent the wheel. We own and operate our own hotels and we had a number of owners who said they would like to get the brand and have us operate the hotels in different locations.
“However, they were asking for franchises in some locations; Saudi Arabia in particular. And we realised that for a mid-market brand like ours, there would be an opportunity for us to actually give them what we call a ‘manchise’, which means that we will operate the hotel for a period of time between three to five years under a management contract, and then train and hand over the property to the owners on a franchise contract,” explains Landmark Hospitality COO — hotel division Russel G. H. Sharpe.
Sharpe believes the fact that management contracts weigh heavily in the operator’s favour is also a key factor in the shift toward more owner-managed models.
“You see now that things are changing slowly. Standard management contracts are not so popular now. If you go to some of the hotel consultants, they will tell you they are fed up of negotiating with international operators, where all these contracts are so one-sided. They try to make it equitable, but it never really works,” he states.
Sharpe has also noticed a worrying trend of properties changing hands among operators with little attention to the “DNA” of the brand. “We’ve seen in the past a number of hotels changing brands.
They take the sign down and put up another sign. How does that work? Is it as easy as that? If that’s the case, then why do you need a management contract? A management contract is supposed to put the DNA into the hotel,” he laments.
Sharpe adds that the number of brands in the market further complicates matters, with owners having a variety of choices to try.
“Today, it’s fair to say that Dubai is probably the largest city in the Middle East, with the most brands. The hotel business has become a brand-driven business, which doesn’t necessarily have DNAs that are distinctive — they all overlap. So it’s just a matter of really choosing the right brand for your product and making sure you get the right agreement,” he asserts.
With the option of manchise contracts, Sharpe believes owners have the opportunity to train staff according to a particular brand standard — effectively incorporating the brand DNA into the property — before eventually taking over the franchise.
“I’ve had one owner who told me they had been trying to discuss with other international companies, and they either say you take a management contract, or you take a franchise, but we want to make sure that we are getting the right brand and the right training. That’s where the maturity comes in,” he states.
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