Why Are Some Franchisors Defranchising Exterior Corridor Hotels?

Here are impertinent questions for hotel franchisors that are in search of pertinent answers.

• Why do the advertisements of the largest hotel franchise companies never mention subjects of greatest interest to franchisees: areas of protection, encroachment and impact, termination and liquidated damages, arbitration vs. litigation, choice of law venues, etc?
• How do the following large franchise companies measure up to AAHOAs 12 Points of Fair Franchising: Marriott, InterContinental, Starwood, Hilton, Hyatt? Why not give us your own self-evaluation?
• Why are some hotel franchise companies defranchising exterior corridor hotels? The most expressed reason is that guests prefer interior corridor hotels because they are safer. However, there is no published evidence to support this conclusion.

There are an estimated 500,000 brand-affiliated, exterior-corridor hotel rooms now operating in the United States. If you add independent properties, there are probably one million rooms, or 30 percent of all domestic hotel rooms. At a 50 percent occupancy and $30 average daily rate, these hotels generate nearly $5 billion in annual room revenues and pay $150 million in royalty fees (using a conservative three-percent franchise fee).

Unfortunately, there is a dearth of reliable data regarding many of the questions involved in this controversy:

• How many exterior-corridor properties are in operation in the U.S.?
• What do travelers think about exterior-corridor properties?
• Are these properties considered outdated and undesirable?
• How many guests still would rather park close to their rooms so they can:
  • see their automobiles and their possessions 
  • have a short walk with their luggage
  • have the convenience of avoiding hotel lobbies, elevators and long interior corridors
• Do women guests believe that exterior corridor hotels are safer?

The hotel industry badly needs primary research on consumer preferences for exterior corridor hotels. Franchisors and franchisees should sponsor such research under the aegis of one or more of the following: the American Hotel & Lodging Association, The Asian American Hotel Owners Association, The Cornell Center for Hospitality Research, the NYU Tisch Center for Hospitality, Tourism and Sports Management and/or other hotel schools at major universities.

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About the author: Stanley Turkel, MHS, ISHC operates his hotel consulting office as a sole practitioner specializing in franchising issues, asset management and litigation support services. Turkel’s clients are hotel owners and franchisees, investors and lending institutions. Turkel serves on the Board of Advisors and lectures at the NYU Tisch Center for Hospitality, Tourism and Sports Management. He is a member of the prestigious International Society of Hospitality Consultants. His provocative articles on various hotel subjects have been published in the Cornell Quarterly, Lodging Hospitality, Hotel Interactive, Hotel-Online, AAHOA Lodging Business, etc. Don’t hesitate to call  917-628-8549 or email stanturkel@aol.com:

• If you need help in negotiating your franchise agreement
• If you have a problem with encroachment and impact
• If you need an expert witness in a hotel litigation law suit
• If you need a featured speaker at your company or organization.

Stanley Turkel is available as a featured speaker at on the following subjects:

• From Ragas to Riches: The Origin and Growth of the Asian American Hotel Owners Association
• Great American Hoteliers: Pioneers of the Hotel Industry
• Franchise Advisory Councils: Powerhouses or Powderpuffs?
• Henry Morrison Flagler: The Robber Baron Who Invented Florida
• Fred Harvey: Great Food, Unique Hotels and the Harvey Girls