In the world of hotel ownership, few decisions are as consequential—or as complex—as entering into a long-term relationship with a major hotel brand. These agreements, often spanning 20 years or more, are the bedrock of a hotel’s identity, operations, and long-term financial trajectory. When they work well, they can be a powerful engine of value creation. But when the relationship between owner and brand begins to falter, the fallout can be costly, time-consuming, and emotionally draining.
At LHA, we’ve seen both sides of the story. And more importantly, we help navigate the middle ground when things go south.
Understanding the Brand’s Perspective
From a brand’s point of view, each new hotel represents not just a building, but an opportunity to grow footprint, loyalty program membership, and system-wide revenues. In the competitive race for growth, brands may lean aggressively into the proforma—a projection that might reflect not just the property’s true potential, but also what it takes to secure the agreement.
This optimism isn’t necessarily disingenuous. Brands have access to regional comps, historical performance data, and global best practices. But there can be a fine line between confident forecasting and wishful thinking. In pursuit of new flags, brands may occasionally underplay operational complexity, local market headwinds, or ownership inexperience but in their defense, they may truly believe these obstacles can be overcome with the strength of their brand.
The Owner’s Side of the Equation
For hotel owners—especially those new to the industry—a brand relationship can feel like a turnkey solution. You get the name, the booking engine, the marketing machine, and the playbook. What could go wrong?
Plenty, as it turns out—especially if the owner doesn’t fully grasp the intricacies of the Hotel Management Agreement (HMA) or the Franchise Agreement. These documents are long, legalistic, and often skewed heavily in favor of the brand. Owners may not understand the limitations on control, the fees embedded in the agreement, or how performance clauses (if they exist at all) are triggered and enforced.
Over time, the reality of operations sets in. Revenues may lag the proforma. Costs may exceed budget. Asset value might not grow as projected. Frustration builds—especially if communication with the brand becomes strained or adversarial.
When the Relationship Breaks Down
It doesn’t usually happen overnight. But when a brand-owner relationship starts to deteriorate, warning signs emerge:
• Declining trust in performance reporting or brand priorities
• Misalignment over capital expenditures, renovations, or service levels
• Concerns about value leakage—whether from brand fees, mandated vendors, or corporate overhead
• Owner fatigue from feeling like a passive investor in what should be an active asset
Unfortunately, getting out of a brand agreement is rarely easy—or cheap. These contracts are specifically designed to ensure brand stability and discourage churn. Termination clauses, liquidated damages, and performance tests are all structured to protect the brand.
LHA’s Role: Mediator, Translator, Problem Solver
At LHA, we don’t take sides—we take perspective. Our job is to understand the journey that got everyone into this situation, and then work toward a practical, strategic solution.
We’ve sat across the table from both brand representatives and ownership groups. We understand the language, the priorities, and the pressure points on each side. That allows us to:
• Diagnose the root cause of the relationship breakdown—not just the symptoms
• Clarify expectations versus contractual realities
• Bridge the communication gap between brand operators and financial owners
• Identify realistic paths forward, whether that’s brand remediation, renegotiation, or a strategic exit
Our bias is always toward preservation. These relationships were designed to last decades, and unwinding them is often more damaging than mending them. Whenever possible, we aim to recalibrate expectations, rebuild trust, and restore the alignment that brought both parties together in the first place.
In Conclusion: The Long Road Deserves a Long View
Hotel brand relationships are like marriages: they start with optimism, require constant attention, and can strain under unmet expectations. But with the right insight, structure, and guidance, many can be repaired before they break.
If you’re a hotel owner sensing that something is off—or a brand partner concerned about an asset drifting off course—LHA can help you make sense of the situation and steer toward resolution.
More Articles in the LHA Library
Additional articles on luxury hospitality are available at the LHA library.