The independent-versus-branded debate in hospitality is one of those arguments where both sides are right, depending on what is being measured. Here’s the breakdown as I see it.
SALES, MARKETING AND INFRASTRUCTURE (ADVANTAGE: BRANDS)
Brands have marketing dollars, infrastructure and name recognition that independent hotels can’t compete with. Independents can mitigate this by joining an association, such as Relais & Châteaux, Preferred Hotels, Select Registry or The Leading Hotels of the World, but even so, brands have an advantage that is hard to dispute.
SPEED, FLEXIBILITY AND INNOVATION (ADVANTAGE: INDEPENDENTS)
Decision-making at branded properties can take months, sometimes years, for even something modest like an update to a CRM system. This “innovation lag” is one of the most frustrating things about working at a branded hotel: if you propose an innovation, by the time it’s put into play (if it ever is), you probably have moved on or retired!
Independents don’t have that problem. If market conditions change, the response doesn’t take months or years. We can swap out a restaurant concept, bring in a new artist for the lobby, rework our wellness program or respond to what’s happening culturally in the moment, without asking permission from anyone beyond our walls. Here at The Boca Raton, we can test something today and, if it’s not a success, reimagine it and try Version 2.0 tomorrow.
STORY AND TERROIR (ADVANTAGE: INDEPENDENTS)
Terroir—the culinary concept that the soil can literally be tasted in the wine or in the produce—can be extended to the broader world of hospitality. Here, the independent advantage is substantial.
True distinction in hospitality is born of place, not policy. An independent hotel can express its surroundings without filter—the culture, history, architecture, cuisine and rhythm of its community—authentically and unscripted. Its story isn’t retrofitted to brand standards or shaped to align with a global template; it emerges organically from its setting and stewardship. That authenticity creates emotional resonance, and emotional resonance builds loyalty. Brands can offer consistency and scale, but they can’t replicate the singular narrative, local texture and rooted sense of belonging that define an independent property.
LOYALTY PROGRAMS (ADVANTAGE: BRANDS)
Branded hotels can offer an undisputed advantage to their guests: the benefits of a comprehensive, worldwide loyalty rewards program. This is a branded advantage that cuts through every demographic; even with our ultra-high-net-worth guests, we’re not surprised to hear a CEO’s assistant saying, “And of course, make sure Mr. X gets his or her points when staying at your property.” Well, sorry. We can’t.
But to get on my soapbox, the term “loyalty program” needs particularly big quotes around it. Hotel travelers are typically members of three or four different loyalty programs, and the median share of spending for their preferred brand is only about 50%, according to a McKinsey study.
OTA COMMISSIONS (ADVANTAGE: BRANDS)
Branded hotels enjoy a double advantage here. First, they negotiate lower commission rates, typically 10% to 15% per booking versus the 15% to 30% independents pay. Second, they need OTAs far less: only 35% of branded bookings come through OTAs, compared to 61% for independents, according to Cloudbeds data.
With the emergence of AI, however, the playing field is going to dramatically change, and the new winners will soon be revealed.
FRANCHISE FEES (ADVANTAGE: INDEPENDENTS)
Franchise fees paid by branded hotels typically run 8% to 12% of rooms revenue, according to HVS data. Add the mandated FF&E reserves of 4% to 5% of revenue, and you get to a total of 12% to 17% of revenue in costs that independents don’t encounter.
CLOSE TO THE CUSTOMER (ADVANTAGE: INDEPENDENTS)
Independents have the advantage here—if they put in the time and the effort. At The Boca Raton, we have a specifically trained team that reaches out to every guest before arrival—and I mean really reaches out. The goal is to curate the experience. What do they eat? What would they like in their rooms? Why are they coming?
A managed hotel could do this as well, but would they? And would it feel the same? You might get an automated email from the concierge team: “We’re looking forward to your visit.” But there’s an advantage to actually calling and not just reading a profile that might be two years old. Would a branded hotel realize you’ve given up wine and now you’re on water?
When one of us says “Welcome back” to a returning guest in person and actually remembers them, it goes a long way.
THE OWNER FACTOR: PERSONALITY, CAPITALIZATION, COMMITMENT (ADVANTAGE: BRANDS)
At an independent property, one great (or not-so-great) owner is going to make a dramatic difference. If your owner is strapped for cash, or has a challenging personality, or lacks full commitment to the hotel, you’re going to feel it every day. This is also true in the branded world, of course, but at least there you have your management company’s central corporate structure to provide some balance.
THE BOTTOM LINE
Branded hotels represent some 72% of the U.S. market, a figure that has held more or less steady for a decade, and that we independents have learned to live with. Yet despite that dominance, conversion activity appears to have slowed at least a bit, suggesting the remaining independents are there by choice, not by accident.
Financially, independent hotels often achieve better cap rates due to their flexibility and higher ADR and RevPAR, according to Mary Beth Cutshall, CEO of Amara Capital Group, as quoted in Hospitality Investor, while branded hotels can offer significant value in portfolio sales, she added, providing a cohesive and recognizable product to potential buyers.
Of course, scale works. The machinery is proven. But what guests remember, what brings them back, is rarely the system. It’s the feeling that someone was paying attention. That a place had a point of view. That it belonged to somewhere, not merely to something. That’s harder to build than a loyalty program, and it cannot be franchised. For those of us on the independent side, it’s also the whole point.
Story contributed by Daniel Hostettler, president & CEO, The Boca Raton.