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Rising loan rates have hit the hospitality sector hard and slowed down the building of new hotels. As a result, independent hotel operators and giant...

Independent hotel operators and giant global chains are increasingly linking up in franchise agreements as high-interest rates have slammed the hospitality industry, slowing down new hotel construction. "Historically, global conversions have been 10% to 20% of the rooms entering the system, today it is probably closer to 40%," said Patrick Scholes, Truist equity analyst. For U.S.-based Marriott International, conversions in 2023 accounted for 40% of organic room signings, double the 20% rate a year earlier.

NEW YORK: Independent hotel operators and giant global chains are increasingly linking up in franchise agreements as...

Independent hotel operators and giant global chains are increasingly linking up in franchise agreements as high-interest rates have slammed the hospitality indu...

For big chains, new franchise agreements from conversions keep investors happy by opening new hotels in the short term. Meanwhile, independent, unbranded hotels like switching to franchise agreements because it gives them greater access to potential bookings and cheaper financing from lenders.