- The hotel industry has shifted from owning properties to a franchise model.
- Marriott’s Project Chariot in the 1990s pioneered this industry transformation.
- Brands earn fees, while property funds own the physical hotels.
- The model reduces reliance on online travel agents through loyalty programmes.
- Irish hotels are affected, with employment and investment decisions often made remotely.
The hotel industry has increasingly shifted away from owning the properties that carry its brand names, a transformation that has been accelerating since the early 1990s. For most of the twentieth century, a hotel company was a company that owned hotels, but the rise of franchising from the 1950s marked the first step away from this model. The shift became more pronounced following a crisis at Marriott in the early 1990s, when property values collapsed and the company was left holding both buildings and debts. Marriott’s solution, Project Chariot, divided the company into a property-owning entity (Host Marriott) and a management company (Marriott International), a structure now copied across the industry.
In the current model, the hotel itself belongs to investors or a property fund who pay the group a fee to trade under its name. This arrangement offers significant advantages, as franchise fees of four to seven percent of room revenue are lower than the 15 to 30 percent commission independent hotels pay to online travel agents like Booking.com or Expedia. The brand brings a loyalty membership numbered in the hundreds of millions, delivering guests directly and reducing reliance on third-party booking platforms. For example, Marriott Bonvoy has 271 million members, while Hilton Honors has 243 million, with these members accounting for a significant majority of room nights globally. The model has financed an enormous expansion in hotel rooms and protected large groups through downturns that ruined competitors who owned their buildings.
The consequences of this shift are felt inside the hotels and have particular significance in Ireland, where hotels and guesthouses employ around 69,000 people directly, with roughly seven in ten jobs outside Dublin. A general manager now answers to an owner watching the asset’s value, a brand enforcing standards, and sometimes a management company protecting its fee. The model changes how success is measured, with the brand seeking standards compliance, the owner seeking a return on the building, and the operator seeking its management fee. As the industry consolidates, with groups like Marriott and Hilton now owning fewer than a hundred of their nearly 19,000 properties, the questions asked about an Irish hotel will increasingly be answered in yields and fee income, with staffing and investment decisions potentially influenced by headquarters in Stockholm and Oslo rather than local management.
