Skift Editor-in-Chief on Why Hotels Are Going Independent
For people that are willing to have a risk tolerance that will allow them I mean, the world is ripe for the taking right now, not just in hotels. That's just life right now in 2026. So some people are gonna be pushed and some people are gonna go willingly, but I think we're gonna see a lot of change.
Speaker 2:From Hotel Tech Report, it's Hotel Tech Insider, a show about the future of hotels and the technology that powers them. Today on the show, have skipped editor in chief and former Bloomberg managing editor, sarah koppit. As independent hotel margins have shrunk, franchise chains like Marriott, Hilton, and Hyatt have been exploding across the globe for the last decade. Yet hotel owners have unprecedented access to technology, AI and other tools allowing them to unbundle and manage services that only major brands used to provide. Sarah joins us to unpack this massive shift and debate the true value proposition of going branded in the modern tech era.
Speaker 2:Sarah, thanks so much for coming on the show today.
Speaker 1:Thank you for having me.
Speaker 2:Sarah, so this problem of the value shift between hotel owners and chains has been bugging me for, I would say, like five to seven years. The first thing that made me interested in it was really self serving, to be totally honest. And it was, we had a software company in our ecosystem, there was a client, And they worked with like a 150 Hilton properties. And they basically came out like guys is there anything you could do at Hotel Tech Report to help us with this. We work with a 150 Hilton properties but Hilton won't even pick up the phone and I'm like well, that's weird.
Speaker 2:Like, 150 Hilton owners like this software so much that they skirted the brand standards, and they're adopting this and paying for this other software. And like, Hilton won't even pick up the phone for these owners or this software company. And so I started pulling on the thread. And then right after that, I booked a trip to Miami. And I looked on Marriott and I was like, holy shit.
Speaker 2:There's like 67 Marriott properties in South Beach. Like Yeah. At what point are there so many Marriott properties that the W well, actually, the W owner in South Beach, I think, just reflagged to a Waldorf that they're like, well, why am I paying Marriott for this when they're gonna get value? Whoever books anywhere, it's basically an OTA. So I'd love to go into how you got into this problem and when you first started seeing this or hearing this in your channel checks.
Speaker 1:Yeah. So it was actually a very organic thing, I think, for me. It really only started back in January. So as you know, like I'm editor in chief at Skipd. I don't cover hotels.
Speaker 1:It's not my beat per se. But in January 2026, when there was all of the kind of protesting, outrage, like conversation around ice in Minneapolis specifically, the thing that struck me was just how often hotels were featured in that like protest material. There were these like, I think they called them, you know, noise outs. And so I pulled on that a little bit. And this is the long way of getting to your question.
Speaker 1:I went there and what I found was that hotels were in hotel owners
Speaker 2:Yeah.
Speaker 1:Were in an absolutely no win situation. They were getting it from every single side. There was no good solution for them. And as I talked to hotel owners while I was there and just other, you know, other reporting leads that I got to, I talked to hotel owners. And I heard this over and over and over again.
Speaker 1:So it was outside of the political sphere but, you know, a lot of it they talked about the financial pressures and the squeeze and how they were just feeling, you know, it from both the bottom line and the top line. They were getting so compressed. And then there were a whole bunch of people that were like, I don't even know if we need a franchise or I'm going independent or I know this person who's going independent.
Speaker 2:Yeah.
Speaker 1:And it was kind of like whispers around around the industry. I went to some conferences. I went to Ohohan, Philly, and it was just a big topic of conversation. And so I wrote this three part series. The first started, like I said, in Minneapolis, just talking about political pressures around hotels.
Speaker 1:Second part was around the financial pressures, the squeeze. And then the third part is what's happening because of all of this, which is, you know, this kind of I don't want to say it's a groundswell yet. I looked at the numbers. We haven't seen a huge number of people actually deflagging. The numbers, according to CoStar, were about flat.
Speaker 1:But I can certainly tell you the conversation is out there. Yeah. And as this next generation, you know, hotel ownership is often a family business, this next generation of hotel owners like the one that I profiled in the piece Going It Alone, you know, they're looking at their franchise agreements now. These a ton of these franchise agreements that were maybe signed in the early two thousands, right as the, you know, boom construction boom was taking place in The United States. And they're just like, well, I can do this kinda like you were saying, like, lot of it is AI, a lot of it is changes in banking.
Speaker 1:But, like, I can do this myself. Yeah. I can do this better without the brand. And especially for that economy and mid tier price point, they're the ones that are really looking at this and trying to make the numbers work in the opposite direction.
Speaker 2:Yeah. And I think especially in that Ahoah contingent. When we kind of talk about the finance side, So I guess there's a finance side that's been a huge anchor and boon for the chains where it's much harder to get financing as an independent unless you're one of those you know patels with a thirty year operating history in a local area going to local bank. What's the dynamic now with banks and do you think that there's some room for change there or any of the banks that you talk to that see the brands the chain value proposition a little bit differently because of this?
Speaker 1:Yeah I talked to a lot people on like, you know, as you know, like bankers are not like a monolithic group. There's all different sorts of people who deal with money and capital raise.
Speaker 2:Yeah.
Speaker 1:And they really, I think a lot of them were right in the same place as the owners themselves, meaning like they are certainly hearing about it. And they it's almost like they can feel it coming. And I think that they also are not immune from kind of this spread of information like the internet, just being more aware of what's going on out there in the hotel owner community and that you don't have to have a brand to have a successful hotel. I think that that is something that they are, you know, waking up to. And they these kinds of like really rigid requirements like, you know, in order to give you x financing, you need to, you know, have a brand tied to it.
Speaker 1:Yeah. I think it is loosening. I think it is changing. And that and that's what a lot of the pros that I talked to told me.
Speaker 2:Did loyalty play into this? Like, I just think about the devaluation of loyalty programs. And I'm like, I don't know. Like, I got some points at Marriott, but am I really getting points? And I've got this Amex plat which gives me status.
Speaker 2:Am I really getting anything for that? Do you feel like that was playing into the owner mindset at all?
Speaker 1:I actually think the opposite. What I heard was that the loyalty issue was one that the independent guys can't really solve themselves. Like, that was was a bit of a difficulty, so to speak, you know? I'm a Marriott Bonvoy member. Like, I don't know.
Speaker 1:Like, if I'm driving down I-eighty and I need to, you know, stay over for the night, I'm probably gonna whip out my phone and, like, see who's closest and who, you know, where I can get a hotel room for my points. And they acknowledged that. They acknowledged that that was something that was a pain point for them, that they it was difficult for them to replicate that. But I know that there are some companies out there who are trying to do that, like group the independents together and all those kind of things. But I would say that that was more on the it's not so easy to go independent.
Speaker 1:The loyalty side of it was the harder part for them.
Speaker 2:And do the owners generally feel like that loyalty is accruing to them? Guess, I know you talked a little bit about in your article about how I think one of the people that you interviewed, I think it was a lawyer who reviewed franchise agreements at end of life, saying if you're over 40% in bookings from the chains, then it's worth it. And if not, then you should really reconsider what you're doing. Can you dive into that a little bit?
Speaker 1:Yeah. So I think that what he was really saying was that it really depends upon who you are if going independent really makes sense for you. Like if you're getting X number of your business from the loyalty apparatus, if they're really sending you a lot of stuff, you know, maybe maybe it works for you. So if that is you, if you are that owner who really has a, you know, a really good loyalty program and really gets customers from that demographic of consumer, then you should probably stay. But, you know, but if not, then you should take a hard look at it.
Speaker 1:And he was also saying that, you know, he's been a his name is Bob Braun. He's a franchise attorney in California. And he said that in the thirty years plus that he's been doing this, now the idea of going independent is something that he asks and he talks to all of his clients about, no matter who they are. And that has not always been the case. That is not something that that is it's a relatively, you know, newish thing that it would be even an option.
Speaker 1:And so he said that it's just something now that really it's a real option for people and it just hasn't been the case over the last twenty or thirty years.
Speaker 2:As you talk to the brands and you say hey the value proposition is kind of been unbundled the banks are more open to having better terms for independence. The OTAs are driving a significant amount of demand and now the hotels have enough technology that they can kind of put together the same stack or better than what you guys are providing because you have to roll something out ecosystem wide. They can switch out and get best of breed really quickly. And then layer on top of that in The US, have these management companies that basically do all of the work. So where does the brand play in the future and how do the brands respond to you when you ask them that question?
Speaker 1:So it's interesting because the brands are making more money than they ever have ever. And that is part of, I think, the financial squeeze that everybody has talked about or the owners have talked about. I think if the brands this is just my take on this. This is my gut feeling. If the brands weren't making so much money, the owners wouldn't be so upset.
Speaker 1:Granted, they would still be feeling the pinch. But if it was going around equally, I think that it wouldn't be as hard to stomach. That is not the case. I mean, it's earnings season right now. I completely expect they will all report record earnings as they've said that they probably will.
Speaker 1:So I think that the brands are in a very interesting situation because the business model they've got going on right now at this exact moment is working really really really well for them. That is what a corporation, especially a public company is, you know, like Marriott's and the Hilton's of the world, that is what they have to do. They have a fiduciary duty to their shareholders. Their entire purpose of being in existence is to make money and that's what they're doing. But they also know what the brands have also told me is they understand that their future is incredibly linked to the success of their owners.
Speaker 1:And there will become a point where if enough of those owners fail or are in trouble, then it is going to start affecting the bottom line. And so they know this. They talk about this. They understand, like the CEOs on earnings calls and such, you know, they've been pretty open about the fact that they are doing really well. And they often phrase it around the pandemic like the recovery hasn't been the same for everybody.
Speaker 1:That's generally how you hear them how you hear them say it. But, you know, at the same time, they, like I said, like they want to make money. They want to keep being profitable. So, you know, some of them are doing things like cutting back on certain fees if you reach like a, score from your customers. Like small things like that I've seen some of the bigger companies do.
Speaker 1:I know that, you know, especially coming out of the pandemic, a lot of the pips were, you know, put on hold, but we're six years out now. So those are starting to come due, which is another hardship. So I think that the brands are saying, we know there's a problem. Here are some of our very small solutions, but it kind of, you know, when you talk to an owner, if I put my owner hat on, they're gonna say, well, you know, that is a drop in the ocean, you know. It's not enough.
Speaker 1:It's too little. So but the brands know that this is an issue for them. They know that it's something that's eventually gonna come to bite them if they don't fix it. And I think that they're trying to make incremental changes to kind of see where that level is.
Speaker 2:So one thing that's always been my perception, I had Sloane Dean on the podcast who's the CEO of Remington, and he seemed to think that it was a little different. But I always thought that. Yes kind of incentivize this the same way the banks do and that. If you are a Marriott property you pay some marginally lower contribution on your OTA bookings and Marriott's kind of negotiate this with like. Booking is kind of helping grow Marriott which is then hurting booking like why don't you just give the preferential rates to the independence.
Speaker 2:And that way you get more independence and you kind of break up that. Don't see monopoly tenants trying to like shift the competitive pressure out of that space and then give yourself the power but I'm surprised that the OTAs are. There is so favorable but I guess they just have to have that inventory on the platform.
Speaker 1:Yeah. I was gonna say the OTAs need to make money too. So there's that. But one of the owners that I talked to, he had an interesting point. Like, talk about the fees to OTAs, and owners don't really like that either.
Speaker 1:But one of the owners that's in my piece, he was like, you know, I never used to, like, really book with Airbnb, but now I do. Like, now that I'm independent, my little hotel, I'm I have an Airbnb plug in and I'm getting this entirely new type of consumer that I just didn't have access to before and, you know, would never have found me before. So I thought I thought that was kind of interesting. He brought that up. That was something that he wanted to tell me about.
Speaker 2:That owner that you featured in your piece where is he in the decision process and what were his biggest apprehensions about going it solo because it sounds like the financing was kind of locked in what are the biggest barriers to going it on his own.
Speaker 1:Yeah, so his name was Pritesh Patel and, you know, he's a smart dude. He was a consultant at Pricewaterhouse and, you know, he kind of didn't think about being a hotelier. His parents were. He'd grown up with that. And it really truly was like he just read the agreement and was like, yeah, I can do better.
Speaker 1:And he talked me he talked me through like what the steps were. They did include financing, going to his bank. But I think for him, his family's hotel was a Super eight. He was just like nobody is coming to stay at a Super eight. And so there really wasn't much friction for him specifically.
Speaker 1:He had a pretty good idea of what exactly he could do and he went out and did it. He had also worked at Cloudbeds so he had experience with some of the tools that, you know, PMS that could make this easier for him, that allowed his operating system to go. So he also is very online, like there's a link in the piece to his Instagram account. So he's very up on the content space and how that for advertising and loyalty can help. So that was him.
Speaker 1:And then there was another guy that I talked to who was kind of on the on a different end of the spectrum. He really struggled with his hotel. He was in Arkansas. He was with Choice. And he really was at the point where he was like, it wasn't like I with Pritesh, it was more I have a better idea of how to grow this business.
Speaker 1:With Gary, that was the other owner, he was like, it just economically does not make sense for me anymore. Like, I have to go it alone or else or else I can't survive. And so they were kind of two sides of the same coin, like same decision, different circumstances. And I think it just but very similar outcomes, meaning, you know, they both had to find a PMS system. They both had to kind of rename.
Speaker 1:They both dealt with the tech struggles of Gary was telling me how he had such a hard time with Google because he lost all of the, you know, 400 plus reviews that he had spent eighteen years building up, you know. He thought of those as his. These are my reviews for my hotel that I had run for eighteen years, But then when he left the franchise system, those all went to Choice, not him. And so he had to start over fresh. So there were certain pain points and frictions for both of them.
Speaker 1:But they both made the same decision, which was to leave.
Speaker 2:There is like an ethical consideration that plays in there, but that's super interesting. Do you feel like these guys had a clear roadmap where it's like, get my lawyer, cancel this agreement, sign up with my new PMS, migrate my data over. And do you feel like from there they felt confident into the steps that needed to be done to get back to that steady state and start improving and growing as Pritesh wanted to do?
Speaker 1:I do. You know, and I feel like there's enough people out there now who are doing this so they have a little bit of, you know, support. I mean, if these, you know, you take Pritesh for example, he's the one actually who's kind of leading the way and teaching other people how to do this. But I think it's very similar to just so many things out there. We're kind of a DIY world right now.
Speaker 1:You know, it used to be you had to pay a lot of money to go learn and how to do all sorts of things in this world. And now I could probably like type on Claude and like figure out how to be an expert in x y and z that ten years ago would have taken me god knows how long to do. So I think for people who are ambitious, for people who aren't afraid of change, for people that are willing to have a risk tolerance that will allow them. I mean, the world is ripe for the taking right now, not just in hotels. That's just life right now in 2026.
Speaker 1:So some people are gonna be pushed and some people are gonna go willingly but I think we're gonna see a lot of change.
Speaker 2:Obviously you talked about the franchise attorney did you see any. Your system of consultants that like help people de flag hotels just at least provide them that peace of mind that's like, know this is a little bit of a scary thing, but I'm gonna get you the bank. I'm gonna get you the software. I'm gonna get you all the things that you need to get in touch with Google, whatever.
Speaker 1:I did not. What a good business pitch right there.
Speaker 2:What's the size of the prize? As someone like Pratesh was modeling it out, how much more profit did he think that he could yield or cash flow relative to sticking with Super eight in that case?
Speaker 1:I mean, look, he's he's doing gangbusters. You know, he opened his books to me a little bit and he just bought another hotel, another former franchise that he's taking independent. So, I mean, the sky's the limit. Like, I I did ask him. I asked him.
Speaker 1:I'm like, well, are you gonna become a franchisor? No. Absolutely not.
Speaker 2:And the efficiencies that he modeled were mostly just that percentage of revenue that he's paying into management fees. Were there any other areas where he was like, hey, like, if I get rid of their PMS, I can do this meta search thing through CloudVets that I can't do on my own now.
Speaker 1:Yeah. I mean, it was actually kind of funny. When he when he was talking to me about that, he is actually kind of saying that the the amount in, the actual franchise fee that he he's like, I don't know. It's just a few a few percent. For him, I really do think it was more of a control of the brand and the identity than it was pure play, like, percentage off the top line revenue.
Speaker 1:He wanted to make a better product. That's what he wanted to do. And so that's where the money is really coming for him is really on that. It's more he's making money as opposed to saving money.
Speaker 2:Awesome. Sarah, this has been really, really cool to not just talk to you here, read the stories that you're putting out there. It's such an important message, I think, for the industry to be thoughtful about where things are going and what decisions we're making and what are these barriers, bottlenecks, red flags of like shaking it loose with them, muckraking with the banks of, like, why are you only giving financing to this business when this one could actually be more profitable? And then also providing paths. Like, you're saying that you can go to a local bank, you could establish an operating history, you can do all these things that even if you're not going to switch now, like set yourself up to switch so you're in a stronger position your next negotiation.
Speaker 2:Maybe you can negotiate your fees down because you have this other option. And so it just makes life so much better for these owners and they can create better businesses. And there could be a new fourth generation of Battels that own their all the hotels in The US.
Speaker 1:Yeah. Absolutely.
Speaker 2:Well, thanks so much for coming on, sarah, and let's do this again.
Speaker 1:Thank you.
Speaker 2:That's all for today's episode. Thanks for listening to Hotel Tech Insider produced by hoteltechreport.com. Our goal with this podcast is to show you how the best in the business are leveraging technology to grow their properties and outperform the concept by using innovative digital tools and strategies. I encourage all of our to go try at least one of these strategies or tools that you learned from today's episode. Successful digital transformation is all about consistent small experiments over a long period of time, so don't wait until tomorrow to try something new.
Speaker 2:Do you know a hotelier who would be great to feature on this show, or do you think that your story would bring a lot of value to our audience? Reach out to me directly on LinkedIn by searching for Jordan Hollander. For more episodes like this, follow Hotel Tech Insider on all major streaming platforms like Spotify and Apple Music.
