20 February 2025
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The asset-light model has become the dominant strategy for major hotel brands, allowing them to expand without the capital-intensive burden of real estate ownership. But what does this mean for hotel owners and investors?
In a recent article from Hospitality Investor, Jim Butler, Chairman of JMBM’s Global Hospitality Group®, explains why this model continues to thrive.
“It solves the capital restraint on hotel company expansions…the market gives higher valuation to companies that are less capital dependent for growth.”
By focusing on management and franchise agreements instead of property ownership, hotel brands have sold off billions in real estate while maintaining control over their flags. This has fueled massive growth, but it also creates challenges for owners, who must carefully navigate long-term agreements that can last for decades.
Butler notes that while this model benefits brands, hotel owners must ensure their agreements protect their interests:
“The hotel companies are no longer primarily concerned with the profit from individual hotel operations…they are not affected directly by the profit and loss, or economic performance metrics of the hotel.”
So, what should investors consider before signing onto an asset-light deal? JMBM’s Global Hospitality Group® members have spent decades guiding hotel owners through these complex agreements. Contact them to discuss how they can help.
For a deeper dive into how the asset-light model affects owners and investors, read the full article on Hospitality Investor’s website.
JMM’s Global Hospitality Group® has been involved in more than $125 billion of hotel transactions and more than 4,700 hotel properties located around the globe.
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