Most people in the travel business, and many outside it, are familiar with three primary models of hotel operations – owned, managed, and franchised. In Asia, the first two models have ruled the roost for several decades. Most established brands in this part of the world either own the hotels that they operate or have a management contract with the owner.

The third model – franchising – is fast gaining in popularity over recent years, for many reasons. In the US and Europe, most branded hotels operate under a franchise agreement, leaving the brands to focus on marketing, distribution, and development. This model gives the owners direct control over the operations of the hotel while enjoying the support and recall factor of a known brand. However, it is contingent on the ownership possessing the requisite skillsets to operate the hotel themselves.

Another model that has been prevalent in more developed markets for several years is of third-party management. To put it simply, this is a hybrid version of the management contract and franchising models. An owner might want to be more involved in his asset but lack the skills, team, or inclination to operate the hotel themselves. At the same time, they recognise the benefits of having an established name on their hotel. Enter the third-party operator, who will sign a management contract and may also help negotiate a franchising arrangement with a brand. Thus forms a three-way partnership between the owner, operator, and brand.