THE BULLETIN
OPTING OUT
EDITORIAL David Eisen Editor In Chief
P
laying blackjack is fun until the cards turn against you. The smart ones walk away or risk losing it all.
Hotel owners I have spoken to in recent days have expressed feeling like a card player on tilt— frustrated by a perceived imbalance in the franchise relationship. Ironically, it was a brand CEO who shined a light on the association and, by doing so, inadvertently or not, caused many in the hotel industry and media to pause and consider that the relationship may be out of balance.
“ If we are going to be asset light; someone is going to be asset heavy,” exclaimed the CEO of IHG Hotels & Resorts at an industry conference earlier this year. Despite the obviousness of the statement, it stirred debate:“ Was the traditional franchise agreement out of whack?”“ Why are lodging company stock prices at all-time highs as REIT stock prices stagnate?”
As Skift pointed out in a recent series underscoring some franchisee discontent, a new and younger breed of hotel owners is scrutinizing franchise agreements at a much higher frequency than their parents and, as many of these agreements come up for recertification, are deciding to not reup and walk away. Why?
Some say the“ math ain’ t mathing” and with a full spectrum of off-the-shelf technology readily available, those owners are saying the heck with brands, I’ ll go do this on my own as an independent property.
When you own the real estate, it’ s your prerogative to do what you want with it.
But this is not a column bashing brands. Rather, the reverse. Hotel brands are a victim of their own success. Years ago, when the modern hotel business was in its infancy, companies from Hilton to Marriott oftentimes owned the hotel, ran it, branded it. Then they decoupled: someone else owned the risk, managed the risk— the brand became the label. It’ s the label, however, that matters; it’ s a mark of trust and consistency that many travelers want when they are on the road. Not to mention their loyalty points. Independent luxury hotels often succeed because they have a story. Can a select-service hotel that ditches its flag in Sheboygan do the same?
America is celebrating its semiquincentennial. Two hundred fifty years built on a foundation of freedom to choose. Hotel owners have agency and, unbound by any legal contract, can decide their fate. It hasn’ t been easy: bloated expenses eating at margins atop the myriad fees paid out for the right to use a name and connect to a distribution system. Is the decision to go independent the equivalent of walking away from the blackjack table? Or should they double down?
Time: It tells a cautionary or prescriptive tale.
David Eisen Editor In Chief
Tatiana Valenzuela Editorial Coordinator
Swasti Sharma Story Editor
Juan Cruz del Val Designer
PUBLISHING Ali Jahangiri CEO
Brian Levine Publisher
INTERNATIONAL ADVISORY BOARD Gilda Perez-Alvarado Group Chief Strategy Officer, CEO of Orient Express, Accor
Arash Azarbarzin CEO, Highgate
Danny Hughes President, Americas, Hilton
Jeanelle Johnson Partner, PwC
Raj Chandnani EVP & CDO, WATG
Cindy Estis Green Co-founder & CEO, Kalibri Labs
Raúl González CEO EMEA, Barcelo Hotels & Resorts
Alan Fuerstman Founder, Chairman, CEO, Montage International
Patrick Scholes MD, Lodging and Leisure Equity Research, Truist Securities
ADVERTISING Caroline de Donnea José Sylvester
ADMINISTRATION Kristi Carlson Kimberly Guidry
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