August 30th, 2022 | Ken Schnee, General Manager - Technology, Media, Entertainment, and Hospitality

Hotel Franchise Owners are Multiplying: Here’s Why

Why Safe and Efficient Hiring Could Be Driving Success: Hotel Franchise Owners Are Growing

As travel continues to surge, many business owners in the hotel and lodging industry find themselves excited to capitalize on the rising demand, but also intimidated by a competitive job market. Hiring hotel staff in times of high demand is almost always a stressful undertaking. When you pair an unprecedented increase in travelers with an historic shortage of available workers, the task can seem downright impossible.

However challenging the situation may seem, it hasn’t stopped the broader hotel industry from continuing to focus on rapid expansion. More specifically, some of the largest, most frequented businesses in the lodging space have been building out franchised locations in record numbers. According to Hospitality Trends’ 2022 data, Marriott International, Hilton Worldwide, and InterContinental Hotels Group (IHG) all announced a string of new building plans in the fourth quarter of 2021, and their collective efforts account for more than 65% of active projects in the total US construction pipeline.

Naturally, the success of franchised locations will be of critical importance to their parent companies, not only for generating additional profit but for preserving the reputation of their brands. With pandemic-related woes not yet entirely in the rearview mirror and the ongoing labor shortage in the hospitality industry, the overall hiring processes used by franchisees will undoubtedly have an influence on their performance.

In this blog, we’ll explore the importance of hotel companies providing consistent experiences for customers and employees across all locations, as well as how a truly modernized, safe, and efficient hiring process can help ensure the long-term success of franchisees.

Success by Association

According to a 2022 economic outlook report published by the International Franchise Association (IFA), the lodging sector took a larger hit than most other industries at the height of the pandemic, but has also bounced back at an impressive rate. More specifically, the report notes that the overall hotel industry was “the primary force for franchise employment and output recovery in 2021, growing at the fastest rate in both measures.”

While the initial boom is being attributed by most experts to pent-up demand after more than a year of travel restrictions, the hotel industry faces no shortage of headwinds in 2022 and beyond. Despite gas prices remaining high and staffing staying low, hospitality businesses continue to see opportunities to capitalize on the renewed appetite for travel.

Considering the challenges ahead, businesses in the lodging sector may want to be particularly thoughtful in their introduction of new franchised locations.  In order for franchise growth to be rewarded, it may help for businesses in the lodging sector to focus their efforts on these three areas:

1. Brand Reputation. In the social media age, brand reputation is more important than ever. While a hotel company might not own or operate a franchised location in the traditional sense, when a customer has a bad experience, their grievances aren’t targeted at franchisees, but at the brand they represent. Of course, optimizing customer experience might seem like the highest priority when leveraging a franchise model, but optimizing employee and candidate experience is just as important. In the event that an employee is mistreated, or a franchisee doesn’t comply with Fair Chance requirements and other fair hiring regulations, the brand itself may be negatively impacted by the scrutiny, indirectly affecting franchisees themselves.
2. Scalability. Past success doesn’t always imply future success. While a hospitality company may have the resources to build out hundreds of franchised locations, continued scalability could be threatened if those projects fail to perform at a comparable level to their corporate counterparts. Overall, when it comes to implementing a franchise model, aiming for consistency across a scaled business model is a proven strategy for future growth.
3. Accelerated Time-to-Hire. Finally, as hiring competition and employee churn remain high in the hospitality sector, hotel companies can mitigate the risk of widespread staffing shortages by ensuring that franchisees have access to the same efficient hiring tools as corporate locations. Without the proper resources or guidance, franchisees may struggle to move candidates through the process and end up losing potentially valuable employees to competitors. In the worst of cases, a franchisee looking to hire quickly without the right tools might attempt to cut corners by loosening or even eliminating critical background screening requirements from the process. Unfortunately, this could pose serious risks to workplace safety and brand integrity.

As if labor shortages and the pressure of hiring during a travel surge weren’t challenging enough, the hotel industry also has a uniquely pressing obligation when it comes to the background screening process. In addition to ensuring a safe work environment for all employees, hotel owners are also tasked with protecting hundreds — if not thousands — of guests each month.

Fortunately, large companies in the lodging space are no strangers to leveraging modern technology to expand and transform their operations. Many of the most recognizable brands in the sector are already utilizing tools like virtual online tours to attract travelers. To get employees to work faster, hotel companies are adopting modernized, streamlined screening solutions to ensure that background checks are both thorough and efficient.

As companies look to grow their franchise presence, the most successful rollout of new locations will be one that integrates only the most sophisticated screening technology and expert support available. After all, if you’ve already seen success with your screening provider on the corporate level, your franchisees are bound to benefit equally from the same quality service. While looking for a screening provider for your franchises, here is what you should look for:

• Improved onboarding. Frustrating delays in the onboarding process can easily result in losing a new hire to a competitor. Look for a screening provider that can accelerate the process and keep potential employees engaged throughout every step.
• Streamlined screening and identity verification. Many businesses perform their screening initiatives in silos, with little to no cohesion when it comes to efficiency and quality. Look for a screening provider that leverages automation to streamline the entire screening process, from identity verification to criminal background checks to education and employment verification, delivering fast, high-quality results without exception. Moreover, as your company grows, your screening provider should help you scale your hiring process to meet new initiatives.
• Compliance updates. Hiring and employment regulations are evolving faster than many business owners have time to keep up with. Your screening provider should make this easy by providing both the technology to streamline compliance initiatives, and personalized industry expertise to help ensure your processes remain up-to-date.

At the end of the day, the influx of new hotel franchise operations implies a significant growth opportunity for both franchisees and the brands they represent. While there will likely be some unavoidable challenges along the way, hotel companies can ensure the success of everyone involved by cultivating consistency in how locations operate and how they leverage modern technology and innovation. Interested in learning more about Sterling’s background screening solutions for the hospitality industry? Click here to get started.

Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.