Hotel Express International
Description:
Hotel Express International is the world's leading hotel discount program, now launching in the US. Outstanding franchise opportunity in the hotel booking industry.
Opportunities:
Nationwide, State and Authorized (single) distributorship opportunities available across the US.
Business Type:
Franchise.
Minimum Investment:
$1,000.
Training Provided:
Yes.
Success With A Travel Franchise From The World's Leading Global Hotel Discount Program
Richard Somogyvari, founder and managing director of Hotel Express International (Pty) Ltd, South Africa, talks about his experience building the business into the leading independent hotel affinity program in Southern Africa.
"Hotel Express International (Pty) Ltd, South Africa was founded in July 2001 by Swedish entrepreneur Richard Somogyvari. The company was the first Hotel Express licensee in Sub-Saharan Africa and is today the leading independent hotel affinity program in Southern Africa. Around 250 quality hotels in the region participate, with representation from the most important hotel groups. The headquarters, with an outbound call centre and reservations help desk, employs ten people in Johannesburg. Agents in Zimbabwe, Botswana and Swaziland employ a further eight people and contribute an important share of the membership base.
"Around 5,000 active members use Hotel Express primarily for business use, and a further 80,000 members are serviced through partnership arrangements where members make use of Hotel Express almost exclusively for leisure purposes, creating a good overall mix for our partner hotels. More than 30,000 room nights and 3,000 car rental days are utilized by our members on an annual basis, making Hotel Express a significant partner for most of our vendors. The overall renewal rate is 60%, with a higher rate in the frequent traveler segment – around 80%.
"At present, we employ a multi-strategy to reach our markets. The most important channel is our own direct telesales team. This channel accounts for more than 50% of our revenue. The channel is also the most expensive in terms of cost, as most first year revenue goes toward marketing.The profit generation starts when members renew.
"The second most important distribution channel is our agent network. The agents contribute around one quarter of our revenue, at lower profit levels per member but at less expense and utilization of human resources in our offices.
"The partner channel contributes the last quarter of our overall revenue and is at present the fastest growing segment. Again, the yield per member is very low but the volumes make up for the difference. Also, once partner agreements are in place, they run with relatively little utilization of our human resources.
"One major difference between the telesales/agent channels and the partner channel is that we offer a full reservation service in the partner channel, whereas in the other channels we only assist with international bookings. This allows us to match booking requests with any hotel inventory made available to us in a way impossible through the other channels, at least at the present time.
"This channel is perhaps the most interesting going forward as the scalability it offers is better than the other channels. However, the downside risk is possible cannibalizing of existing channels if we pick partners with the wrong membership base or if the right partners discontinue their contracts upon renewal as contracts are relatively large.
"We face a number of challenges in the years ahead. The paramount challenge is always to employ the right people, retain the good ones and fire the bad ones. If we get this challenge right, the other challenges turn into interesting opportunities. In an extended way, this is also true of choosing the right agents, partners and hotels.
"The direct challenges we face at present in this marketplace are the emergence of similar programs, both independent and hotel specific, an overall increase in hotel occupancies due to an unprecedented boom in the local economy and the tourism industry, and the ongoing technological advances.
"Hotel Express is a unique concept. It requires unique people to make it work today and to succeed in the future. It requires a lot of work, much more than an outsider may anticipate, but this is fortunately an exceptionally fun and interesting business to be part of. It allows the right people to build successful enterprises and being part of the Hotel Express family is a privilege. Working with licensor Hotel Express International in Norway is a broad two-way street. License holders are allowed maximum freedom in terms of developing their businesses, developments which may affect the global operation. The strength of the global business lies in the success of the local business and Hotel Express allows the right partner, from an ambitious entrepreneur to an expansive large company, to extract an excellent return on investment in the process."
Richard Somogyvari
MD
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