Luxury Hotel Franchises in the U.S: As the hotel industry continues to split between strong luxury performance and slower growth in other segments, hospitality leaders say the issue is not a lack of luxury supply, but a shift in who today’s luxury travelers are—and what they expect.
Speaking at the ALIS by Northstar conference in Los Angeles, Raul Leal, CEO of Starwood Hotels, said luxury customers are evolving rapidly, driven by what he described as “new money” rather than traditional luxury travelers.
“These guests still want flawless service and execution,” Leal said. “But they’re also looking for more curated, experience-driven stays than what luxury hotels offered 10 years ago.”
Luxury Is Changing, Not Shrinking
Leal explained that modern luxury travelers—often younger and wealthier—are placing greater value on experiential offerings, including wellness programs, food and beverage innovation, and partnerships with local brands.
“They want something different,” he said. “It might resemble luxury from the past, but it has to feel more personal and thoughtfully designed.”
Despite industry debate over whether hotel companies need even more brands, Leal questioned whether expansion is always necessary. Starwood currently operates 1 Hotels, Baccarat, and Treehouse.
“There may be an opportunity to create another brand,” he said. “But this conversation makes you wonder if we really should.”
Instead, Leal suggested Starwood may focus on acquiring underperforming assets that can be repositioned within its existing brands—particularly Treehouse—if the market and property are a good fit.
The Risk of “Generic Luxury”
Christopher Hartley, CEO of the Global Hotel Alliance (GHA), warned that luxury hotels offering standardized, surface-level experiences face serious challenges.
“Generic luxury is a real risk,” Hartley said. “It becomes very difficult to justify premium room rates if the experience doesn’t feel unique.”
Hartley noted that only a limited number of travelers are willing to pay $1,000 per night for a stay that lacks distinct character or authenticity.
That challenge presents an opportunity for independent hotel brands, which make up GHA’s global portfolio. Hartley said there are hundreds of independent brands worldwide seeking growth while remaining independent.
GHA is targeting expansion in both established and emerging markets, including Japan, as well as Brazil, Indonesia, and India, where expanding middle-class wealth is fueling new hospitality demand.
“These markets will create their own hotel brands,” Hartley said. “And many of them want to stay independent—we see that as a major opportunity.”
Franchise Growth in Affordable Segments
While luxury hotels dominate headlines, Sonesta International Hotels Corp. CEO John Murray emphasized that most Americans are staying in midscale and economy hotels, not ultra-luxury properties.
“That’s where the bulk of the growth opportunity really is,” Murray said.
Sonesta continues to expand aggressively through its franchise business, converting managed hotels into franchise properties to improve margins and profitability.
“There are a lot of family-owned hotels that perform well,” Murray said. “Franchising allows us to keep them in the brand while becoming more fee-generative.”
Growth Through Outperformance
Joseph Bojanowski, president of PM Hotel Group, said his company is prioritizing organic growth following several acquisitions in recent years.
“In a weaker revenue environment, growth comes from outperforming your competitors,” he said.
With RevPAR declining in 2025 and expected to fall again in 2026, Bojanowski said success depends on gaining market share, strengthening customer loyalty, and operational excellence.
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