Affiliation to hotel chains as a development opportunity for Bulgarian hotels

Abstract

Goal and objectives of the dissertationGoalThe dissertation aims at revealing the opportunities for the long term development of independent hotels by affiliating to international or domestic hotel chains.Objectives1. To critically evaluate the academic literature on hotel chains and identify their specific characteristics and functions.2. To develop a holistic and comprehensive conceptual model of hotel chains as economic and social organisations.3. To elaborate the process of affiliation of an independent hotel to a hotel chain, from the viewpoints of the hotel and the chain.4. To analyse the place and the role of hotel chains for the development of Bulgarian hotel industry.5. To outline practical recommendations to Bulgarian independent hotels regarding their future relationships with hotel chains and the opportunities hotels can derive from chains for their long term strategic development.MethodologyThe research targeted 6 respondent groups: 1) international hotel chains with hotels in Bulgaria; 2) international hotel chains without presence in Bulgaria; 3) Bulgarian hotel chains; 4) Bulgarian hotels, belonging to international chains; 5) Bulgarian hotels, which once belonged to a chain; 6) independent hotels. Hotels that belonged to domestic chains were not contacted, because they were fully or partially owned by the domestic chain, which means that the decision to join a chain was not based on market principles but on ownership relationships. Data collection took place in the period June-November 2012. The response rate was about 75% for the domestic chains and the current chain members, and between 2.40-5.31% for the rest of the respondent groups. The final dataset included the responses of 5 foreign chains present in Bulgaria, 5 foreign chains not present, 9 domestic chains, 36 hotel affiliated to foreign chains in the country, 7 hotels former foreign chain members and 103 independent hotels. Secondary data were also collected from the websites of the hotel chains and their affiliated properties. Differences between the opinions of hotels and hotel chains were identified via t-test. Data were further analysed with descriptive statistics and ANOVA.ResultsResearch results show interesting and valuable information, regarding Bulgarian hotel industry and its future development. Bulgaria is highly assessed by foreign hotel chains as a destination, with developed tourism industry and stable political and economic environment. International hotel chains find a great potential for market penetration in the country, but, in contrast to previous research, they consider comparatively limited number of internationalisation factors. Instead, they approach individually to each destination and partner.In the same time, Bulgarian hotel chains are not ready for international expansion, and plan to expand only domestically. Their main concerns are connected mostly with legal and financial conditions when choosing among entry modes. On the contrary, international hotel chains report marketing risk and available reliable partners as essential when choosing an entry mode. The most popular entry mode among international hotel chains is reported to be management contract.Results show that Bulgarian independent hotels do not have enough information about hotel chains, because of their scattered answers. Also, they tend to continuously overestimate the advantages chains offer. Centralised marketing system and brand recognition are perceived as the biggest advantages of chain affiliation, while chain hotels rely more on their own managerial capabilities, as well as immediate benefits from their affiliation, like consultancy and competences.Bulgarian independent hotels prefer to keep operational control, therefore they would choose full ownership and franchising, instead of managerial contract or other contractual form. They point out financial risk as main reason when choosing type of affiliation, but also term of the contract (over 75% of the hotels say it is very important for them). …