Nearly 80% of Marriott's roughly 9,805 branded properties worldwide operate under license or franchise agreements as of December 2025, with the company owning or leasing fewer than 1% — just 14 hotels in the United States and Canada. The figures, laid out in a new analysis by law firm Pryor Cashman published in the New York Law Journal, chart the industry's 30-year shift to the asset-light model and the mounting tension it creates between brands paid on top-line revenue and owners who carry the property-level balance sheet.

From ownership to fees

The hotel business began, in Conrad Hilton's formulation, with "soap, water and elbow grease" — brands owning and operating the properties that carried their names. That model tied the brand to the hotel's success but exposed hoteliers to construction overruns, labor costs and disputes, property taxes, debt service and downturn risk.

Beginning in the 1990s and accelerating through the 2000s, brands separated their marks from the real estate, a move private equity and investment banks recognized as a value-creation tool. Marriott led: in October 1993 it split into two companies, keeping Marriott International as a franchising and management business while spinning off its real estate into what is now Host Hotels & Resorts, the world's largest publicly traded hospitality REIT.

Other majors followed. IHG owned or leased nearly 200 hotels in 2002; by 2015 it had sold its last major owned asset, completing real estate sales totaling almost $8 billion. Hilton's 2007 acquisition by Blackstone accelerated its own transformation, and in 2016 it spun off its remaining real estate into a REIT and its timeshare business into a separate public company. By 2025, Hilton owned fewer than 50 of approximately 9,200 branded properties.

Hyatt took a similar path. Its 2009 annual report acknowledged exposure to "significant investments in owned and leased real estate," and the company pursued an "asset recycling" strategy targeting $1.5 billion in property sales in 2017. Its 2025 purchase of Playa Hotels & Resorts illustrated the playbook: Hyatt bought the brand, promptly sold Playa's real estate and kept the management contracts.

How the economics split

Under a typical management agreement, the owner funds development, working capital, operating shortfalls and capital improvements. The brand collects a base fee calculated as a percentage of top-line revenue plus an incentive fee tied to profitability, and holds day-to-day operating control.

Franchising pushes risk further downstream. The franchisee pays royalties plus system, marketing, reservation, technology and loyalty fees, operates the hotel itself or through an approved manager, and funds whatever capital improvements the brand mandates. The franchisor keeps enforcement authority over standards and vendor approvals without managing operations.

The de-risking is not absolute for brands. Vendors, suppliers and group-booking customers often look to the operator when something goes wrong — a exposure that materialized during the COVID-19 pandemic, when many operators were sued for unpaid wages and other expenses after owners, often bankruptcy-remote single-purpose entities, failed to fund operations.

Where the model frays

Franchising and licensing is now the predominant arrangement in the industry. Beyond Marriott's 80%, more than 75% of Hyatt's U.S. properties are franchised and nearly 90% of Hilton's are. Luxury is the exception: brands in that segment typically insist on controlling every facet of operations.

The structural conflict is straightforward. Owners care about bottom-line net profit; brands are paid on top-line performance. Brands, whose chief product is now goodwill and reputation, are incentivized to police standards — which means forcing owners to fund capital projects that may not clear an acceptable return. Franchise agreements typically contain no default procedure, so owners can be obligated to keep paying fees even when they conclude the brand is not delivering guests. Brands, conversely, bear reputational risk when owners fail to maintain standards.

Pryor Cashman says the series will next take up how major stakeholders — brands, owners, third-party managers and lenders — can reach common ground as the model continues to evolve.