Franchise agreements, like casinos, tend to favor the house. Now, as a generation of hotel contracts begin to expire, some owners are deciding to walk away from the table.
Marriott built one of the most lucrative loyalty programs in travel. Hotel owners who fund the points want more of this year's expected billion-dollar windfall from the co-branded credit cards.
IHG CEO Elie Maalouf is telling franchisees that eight years of tech investment has begun to expand their margins. It's an open question whether this early tech advantage will woo more hotel owners, boosting the growth rate of IHG's system.
A franchisee of Hilton and IHG has temporarily closed its two hotels in St. Paul, highlighting a challenge that may face other hoteliers nationally in coming months.
The franchise model is having a moment. The challenge will be to maintain quality standards at the local level, and to ensure that the fee structure benefits both parties.
"Here's a mostly empty office building that we want to turn into a cool hotel" is, in 2025, an easier sell to lenders than "Here's an empty lot that we want to turn into a cool hotel." That's true because of high interest rates and construction costs.