Can ‘fun’ shake up franchising in Asia Pacific?

INTERNATIONAL REPORT – Ovolo Hotels joins a small band of boutique lifestyle brands that are challenging the notion that franchising in Asia Pacific is only viable for cookie-cutter hotels. The risk for Ovolo? Putting the brand in the hands of franchisees who just can’t quite handle its ‘fun’ ethos, creative design and experiential focus.

Shivang Jhunjhnuwala is well aware of that risk. As chief of staff, the son of Ovolo Hotels’ Founder and CEO Girish Jhunjhnuwala now plays a central role at the company. “We would rather have three proper Ovolo hotels than six that are hit-and-miss. We’re willing to have fewer franchised hotels, but making sure everyone who comes onboard is better than the last,” he said.

“What I’m focused on right now is getting the first one right because that will prove we know how to do franchising and have a formula that works,” he added.

The franchising strategy, for which Ovolo Hotels recently signed a partnership with Wyndham Hotels & Resorts to expand in APAC, reflects the group’s attempt to evolve beyond Hong Kong and Australia, and from an asset-heavy to asset-light model.

COVID forced us to re-evaluate the business. We’re owner/investor, asset manager, operator and brand. That’s a whole lot on our plate. At some point, you have to slowly start sacrificing one of those to focus on the growth of the other ones.

Shivang Jhunjhnuwala

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This started around 2018 amid Hong Kong’s fierce political student protests and was driven further by COVID-19’s impact. But there’s been just one Ovolo hotel addition so far – the acquisition of a hotel in Kuta, Bali. The group then launched TriO Capital in 2023 as a way to diversify the business and expand the Ovolo brand. TriO acquired a hotel in Phuket, but that’s under the Hilton Garden Inn brand, not Ovolo.

In fact, the Ovolo portfolio might have shrunk a little due to the divestment and capital recycling of three or four properties. Currently, the website shows nine Ovolo hotels that customers can book.

“COVID forced us to re-evaluate the business. We’re owner/investor, asset manager, operator and brand. That’s a whole lot on our plate. At some point, you have to slowly start sacrificing one of those to focus on the growth of the other ones,” Jhunjhnuwala said.

“We believe that Ovolo as a brand deserves to be spread out far and wide, making the world a better and more interesting place. And that ties into us going down the asset-light route. Before, we were an owner/operator, now we’re willing to explore just an operator route, [specifically] the franchise route, where we’ll have our brand on assets around the world that are operated either by us or by a third-party, depending on what’s best for the owner and, most importantly, in a way that doesn’t compromise the brand.”

At the same time, Jhunjhnuwala said Ovolo won’t completely steer away from acquiring assets. “We have divested some assets, giving us the ability to recycle that capital into new exciting projects which will expand our brand footprint,” he said.

Platinum Room at Ovolo Central Hong Kong

Brand advantage

Ovolo has the advantage of being admired as an APAC homegrown brand that is brazenly original. Launched by the senior Jhunjhnuwala in 2010, there were few, if any, of such boutique lifestyle brands at the time.

Along the way, the brand markets a string of industry “firsts,” including free breakfast for direct booking; free in-room minibar fully stocked and refilled during the stay; all-day snacks at designated stations; flexible, interest-free installments for booking; and many others.

Ovolo, in a nutshell, can hold its head up as global boutique lifestyle brands such as Moxy by Marriott and Ennismore’s Mama Shelter begin to offer franchising in the region.

“Ovolo is a great brand with rich DNA and we are confident it will be a strong franchise partner,” said Marcus Hanna, COO of La Vie Hotels & Resorts. “With Wyndham distribution connected to the brand, owners will have confidence of excellent distribution with a brand that has a great following.”

Said Dan Voellm, CEO and founder of AP Hospitality Advisors, “A franchise can be scaled fastest with a highly standardized product. Lifestyle concepts are relatively new to franchising given their individual character. The Ovolo brand was built with great passion by its founder and team and is very innovative in their service offerings. Finding the right owners who share the vision and drive will be key for the brand to flourish.

Like any new partnership the parties will need to work hard at appropriate integration and to ensure a suitable alignment of interests. There will no doubt be more transactions of this type to come.

Andrew MacGeoch

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“Rolling out of the brand would thus require more involvement from corporate office, which would call for a change to the Wyndham business model. Depending on how the deal is structured, Ovolo may handle technical services and operations to ensure brand experience, while Wyndham mostly focuses on development and distribution.”

The timing is also right for Ovolo Hotels to take the franchising route, observed Andrew MacGeoch, a seasoned and well-known hotel lawyer in Asia based in Hong Kong.

“Hotel operators in Asia are now focusing on franchise arrangements and not just in the budget mid-scale sector but in the upscale, lifestyle and on occasions even luxury sectors,” MacGeoch said. “There is now significant confidence among international hotel chains in working with the many mature and sophisticated owners in Asia. Somewhat delayed after two decades of massive development growth in Asia.”

On the Ovolo-Wyndham tie-up, MacGeoch said, “Like any new partnership the parties will need to work hard at appropriate integration and to ensure a suitable alignment of interests. There will no doubt be more transactions of this type to come.”

Protecting the brand

According to the next-gen Jhunjhnuwala, the company has created a very robust and intense ‘Operational Brand Experience Playbook’ consisting of well over 100 pages.

Moreover, Jhunjhnuwala said Ovolo Hotels will work with owners and their teams to train them on how their experiences and service rituals need to be followed.

He expects to see “some franchising opportunities” to come online before the end of the year.

If I am capable one day of taking over, I hope that day will be a long time in coming. Not that I don’t want to be capable, but because I really enjoy this dynamic I have with my dad.

Shivang Jhunjhnuwala

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And when asked if he has a dream location for the first franchised Ovolo hotel, Jhunjhnuwala said he would love for it to be in Mumbai.

“I would love to have a hotel in India. Born and raised in Hong Kong, but being of Indian descent, India in some ways has always been enticing to me as it’s a huge contributor to who I am as a human being,” Jhunjhnuwala said. “There are lots of hotels opening in Mumbai, but none are like Ovolo. Lifestyle brands are just entering the market, which is exciting.”

As chief of staff, Jhunjhnuwala is a conduit between the team and the CEO. He works with group director of people and performance, Nicole Downs, COO of Ovolo Hotels in Australia Wayne Taranto and GMs of hotels in Australia, Hong Kong and Bali.

“When they bring up problems that they are facing, it is my job to work with them on the solution options then present these options to Girish,” said Jhunjhnuwala, who joined the group in January 2024.

So, where is he on the learning curve towards becoming the CEO?

“My dad and I have an interesting work relationship. Family businesses are complicated for a variety of reasons. But one of my favorite feelings that I get on a regualr basis when I’m in the office is when I hear Girish say ideas that no one has thought about. Or, sometimes we’ll present him with options A, B and C and he’ll come up with D and E that no one else saw. And we can further build on the idea, feeding off on each other’s energy. For me, that’s really exciting.

“So, if I am capable one day of taking over, I hope that day will be a long time in coming. Not that I don’t want to be capable, but because I really enjoy this dynamic I have with my dad.”