As a Hilton franchise owner, you are a crucial part of the Hilton Worldwide business model. The Hilton Worldwide 2016 Annual Report notes that 90% of their adjusted EBITDA is from fees, and 70% of those fees are “franchise driven”.1 The fees you pay to Hilton are not small, but they are worth it because of Hilton brand loyalty, and because of the business it brings you through the Hilton Honors program.
But will conditions at the “Unacceptable” Hilton Anchorage impact brand loyalty? Hilton Worldwide should do everything possible to protect your investment. That includes deflagging “Unacceptable” properties in the franchise system.
Hilton acknowledges risk
Jim Holthouser, VP of Global Brands at Hilton Worldwide, has been informed of conditions at the Hilton Anchorage numerous times since 2016. Further, Hilton Worldwide is well aware of the potential that situations like the one in Anchorage could impact the power of their brand. In the Hilton Worldwide 2016 Annual Report, they state: “If our third-party property owners fail to make investments necessary to maintain or improve their properties, guest preference for Hilton brands and reputation and performance results could suffer.”2 Hilton also warns that “Any deterioration in the quality or reputation of our brands could have an adverse effect on our reputation, business, financial condition or results of operations.”3
That could translate into lost business for your properties. Furthermore, it can foster unfair competition in the market if competing Hilton Owners have to meet different brand standard expectations.
The Asian American Hotel Owners Association (AAHOA) has advocated on behalf of hotel owners dealing with the demands of franchisors. In Point 4 of their “Points of Fair Franchising,” they write that “Franchisors should have the same standards for each of their Facilities operating under a specific brand name in the franchise system.”
Your voice with Hilton
Hilton Worldwide needs franchisees to make their business run. They acknowledge your vital role in their 2016 Annual Report: “Unless we maintain good relationships with third-party hotel owners and renew or enter into new management and franchise agreements, we may be unable to expand our presence and our business, financial condition and results of operations may suffer.”4
But what does Hilton do to ensure fairness amongst franchisees, and ensure that your feedback is taken seriously? Hilton has brand “Advisory Councils,” but those councils consist of people appointed by Hilton, and the councils can be dissolved whenever Hilton wants. Even the Hilton Global Owners Conference is only open to “select owners”.
Organizations like AAHOA and the National Association of Black Hotel Owners, Operators and Developers (NABHOOD) have advocated on behalf of franchisees. The Association of Starwood Franchisees and Owners of North America (ASFONA) does not apply to Hilton Owners, but it could provide insight to franchisees who want advice on how to assert themselves to Hilton.
Hilton cares about your partnership, and you should tell them about the Hilton Anchorage. You can tell Jim Holthouser (Executive VP of Global Brands) at [email protected] or Dianne Jaskulske (VP of Owner Relations, Americas) at [email protected]ilton.com.