Hospitality & Leisure Trend Watch

Global hotel brands and investors are accelerating M&A to gain scale, expand into new markets, and boost fee-based revenues. With the sector still highly fragmented, acquisitions aim to strengthen loyalty programs and drive operational efficiencies.

Hotel owners have many considerations when choosing between a franchise agreement or a management agreement with a hotel brand, most crucially factors such as how much control and flexibility an owner wishes to maintain versus the expertise and full suite of services brand managers can bring. While rarely the primary driver of the decision, this choice would also have material implications on financing the property. Mortgage lenders will, like owners, find increased control and flexibility in connection with the lenders’ rights within a franchise arrangement. However, those same lenders generally see brand-managed properties as a lower-risk asset given the hotel brand’s stability, oversight, and commitment.