The Hotel Industry Shift to Franchising
📌 Marriott has more than tripled in size over 20 years by moving away from real estate ownership to commodifying its brand name.
📌 Major hotel chains like Hilton and Hyatt are following a similar playbook: investing in real estate to build a brand, then selling down the real estate assets.
📌 Independent owner-operators, like MCR, now own and run most hotels, paying the brand (e.g., Marriott) a franchise fee of 5% to 15% of property revenue.
📌 This shift allows brands to scale much faster as they are not on the hook for asset costs, significantly reducing real estate financial risk.

Impact of the Franchise Model on Operations and Pricing
🏨 Brands focus on the owner as their new customer, proving the value of the flag through data provision on operations and revenue management.
🏨 Revenue managers use data to dynamically price rooms, often leading to multiple price changes in one day based on local events (like a Taylor Swift concert).
🏨 Pricing strategies aim to optimize for the entire week, sometimes setting very high prices on high-demand days to compensate for low-profit days like Sunday.
🏨 Flying a flag offers owners better terms with Online Travel Agencies (OTAs) and leverages massive loyalty programs (e.g., Marriott/Hilton over 180 million members) to attract customers, especially in secondary markets.

Brand Operation vs. Franchising Tiers
🏢 Franchising is dominant in mid-tier properties which require fewer services (no ballroom, spa, or specialty restaurants).
🏢 Most luxury tier hotels are still operated directly by the brand to maintain complete control over the complex guest experience and amenities.
🏨 Brands occasionally purchase and renovate properties, like Marriott buying the W Hotel, specifically to use them as an incubator for new designs and ideas.
🌍 The trend shows a consolidation, with only three or four major hotel flag families dominating, and the number of branded hotels is projected to increase.

Key Points & Insights
➡️ Hotel brands have shifted risk by outsourcing ownership and operations while retaining revenue through franchise fees.
➡️ Loyalty points are a key incentive, acting as a currency that drives customer traffic between a guest's earning location and their redemption location.
➡️ In high-demand markets, independent hotels may outperform due to greater demand elasticity, suggesting franchising isn't universally optimal.
➡️ Owners must rely on the brand's data systems to maximize revenue per available room (RevPAR) across the week, balancing demand fluctuations.

📸 Video summarized with SummaryTube.com on Nov 27, 2025, 15:29 UTC