White Label Operator

White Label

Definition: A “white label operator” (“WLO”) is a hotel management company which does not have a brand. In the case of a white label hotel, the chain or brand affiliation plays a subordinate role in the external presentation. Another term used is “third party operator” (TPO).

A WLO is a service provider that is appointed by a hotel owner to manage the hotel.

WLO’s are particularly suitable for the following types of hotel investor:

with limited or little previous hotel operational experience;
who look for flexibility in hotel management agreements
who wish to keep their hotel’s individual charm and identity

Flexibility in contracting arrangements

There is increased flexibility with WLOs who tend to be extremely flexible and agile in their ability to negotiate bespoke terms which suit both the hotel investor and the WLO.

For example:

Operating term

The operating term of an agreement with a WLO can be as little as one year. Compare this to the traditional management agreement where the operating term is typically for between 15 to 20 years and even more for top luxury hotels.

Fees

WLOs typically take more of a vested stake in a business than traditional operators where the interests of the WLOs and hotel investors are aligned through performance-related remuneration structures. WLOs take a significantly management fee based on total hotel revenues, typically between 1.5% to 3%, with much of their fee being comprised in see more..

WLOs are more personal

Hotel investors have been migrating over to WLOs as the hotel chains’ operational costs and central overheads increase which are passed onto hotel owners. WLOs have lower overheads than hotel

WLOs are loyal to investors

Hotel chains are typically loyal to the brand and to hotel guests – this is where their priorities lie. Consequently, hotel chains strive to present their brands in the best light possible at the cost of the hotel investor. WLOs, on the other hand, are loyal to the hotel investor and their priority is to achieve see more..

Appointment of a WLO for independent hotels

WLOs are also making an impact in the higher end of the market, on luxury unbranded properties. As travellers move away from all inclusive holidays for more intimate properties, with their own distinct brand, authentic independence and flavour, hotel investors do not need to rely on the acquisition of a brand to differentiate their properties and build their reputation. By engaging WLOs, hotel investors can maintain their hotel’s individuality whilst the WLO provides them with flexible management at a cost which is significantly less than that offered by hotel chains through see more..