SPECIAL REPORT
FRANCHISING
HOTEL
FRANCHISING IN THE MIDDLE EAST
Christopher Lund, head of hotels - Colliers MENA, discusses the latest developments and how franchising agreements are changing.
Large international hotel chains initially grew their footprint across the Middle East typically under management agreements with owners. This satisfied a dual need, as many of the initial investors in large hotels across the Gulf region were government or semi-government entities that did not have the exposure to hotel management and many of the operators themselves were keen on overseeing operational quality as they exported their brands. The nature of the relationship remained the same until relatively recently, when larger chains began exploring the idea of a fusion of both management and franchise agreements. This led to the smartly coined term “manchise agreement” or a “manchise.” Such agreements were attractive to owners who wished to avail of the management expertise of the chains in the pre-opening stage and initial years of operation (usually the first five years). After the initial term
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HOSPITALITY NEWS ME | JUN - JUL 2021
was completed, the owner would have the option to flip the agreement to a franchiseonly agreement for the remainder of the term having grown their own competency in hotel asset management and satisfying any qualifiers for the brand put in place to protect operating standards.
The relationship is thus more of a partnership rather than an owner versus manager dynamic, which can sometimes be fractious.
Manchises have been a main feature of the market for the past five years or so. However, more recently, the larger chains are becoming more open to franchising from the beginning of operation. Some
