The demographics of hotel ownership are changing as historically underrepresented groups explore the revenue potential of hotel ownership.
What’s more, they’re doing it their own way. Wyndham franchisee Dr. Amina Gilyard James and Wyndham Garden franchisee Harmeet Mann offer their insight on three trends redefining ownership and paving the way for new entrepreneurs.
Current Market Conditions
The worldwide hotel market reached $1.5 trillion in 2023, up 5% from the previous year.1
According to data from STR and Tourism Economics, this upward trend should continue. For 2025, the organizations predict a boost in U.S. occupancy from 63.0% to 63.4% and a 2.6% increase in RevPAR.2
These conditions create the opportunity for underrepresented groups to explore new pathways for hotel ownership. Three trends are now helping drive change for new owners.
Trend #1: A Shift in Ownership Models for Aspiring Hotel Owners
The owner/operator model of hotel ownership remains popular because it works. The caveat? It also requires a lot of work.
“My parents and my husband’s parents are all from rural India,” says Mann. “When they moved here 30 years ago, they started doing labor jobs. They were driving taxis and trucks and invested in small assets. Eventually, my in-laws purchased a hotel; they owned and operated it. They bought and sold two motels in Washington and got into hotels in California. When they moved, it became harder to manage it on their own.”
James and her husband had a similar experience. “For the first year and a half,” she says, “we were owner-operators, and we operated with just a GM on the ground. It was a lot of work, and now we have a management company.”
Why Some Owners Are Moving Away From Traditional Owner-Operator Models
For James, being an owner-operator provided much-needed experience. Over time, however, many owners find the 24/7 nature of operations both challenging and time-consuming.
Mann also started out on the front lines of hotel operations, helping her in-laws manage their first property. The experience prompted her to explore hotel ownership and create her own management company. This move to management started when she saw processes that could be improved. “My mother-in-law was the general manager,” she recalls, “and my brother-in-law would help her out a lot. I would overhear them talking about operations and ask, ‘Why are you doing things that way?’ We explored how we could be more efficient together.”
Making the move to a third-party management company keeps owners informed about key operations but gives them the freedom to explore new opportunities and potentially expand their portfolio.
Potential Benefits of Outsourcing Hotel Management for New Owners
There are benefits to using a trusted management company for hotel operations.
The first is time. With management companies handling day-to-day operations, owners can spend their time exploring new ways to enhance the guest experience or streamline key processes to drive increased revenue.
Third-party management also brings the benefit of perspective. When they’re working the front desk, answering phones, and addressing guest concerns, it’s easy to miss the forest for the trees. With a management company, owners get a birds-eye view of what’s working in their hotel, what isn’t, and what needs to change.
Trend #2: A Changing Perception of Hotel Ownership for Entrepreneurs
Many second-generation hoteliers were discouraged by their parents from taking on ownership. Instead, they pursued higher education with the intention of becoming doctors, lawyers, engineers, or other professionals.
“A lot of second-generation hoteliers never thought they would enter the market,” says Mann, who recently converted three hotels to Wyndham Gardens.
Addressing the Concerns of Second-Generation Owners
For second-generation owners, two common concerns are scalability and changing expectations.
From a scalability perspective, second-generation owners don’t want to spend all their time at the property. They want to explore other options and look for ways to scale up one hotel into two, five, or, in Mann’s case, 20 and counting. This means working with trusted brands like Wyndham to help streamline the new build or conversion process, and it means hiring — or building — a third-party management firm.
As noted by James, hotels offer the ability to hold onto a piece of land and establish a path to long-term wealth. Second-generation owners see the benefits in both long-term value and expanding operations to increase the number of properties held.
Mann says that second-generation owners may also struggle with their parents’ changing expectations. Many were encouraged by their parents to pursue higher education. “They didn’t want their kids working the front desk for the rest of their lives, and so a lot of second-generation hoteliers never thought they would enter the market. Now, a lot of parents want their kids to become hoteliers. That’s the mismatch.”
For Mann, two components are critical in getting second-generation owners on board. First, they need to see that the hotel market is scalable — hoteliers can start with a single hotel and expand into new chainscales or geographic markets. Second, new owners don’t need to spend all their time at the front desk. With the help of a management company, hoteliers can focus on boosting revenue and building their reputation.
Exploring Multiple Pathways to Ownership
For James, collective economics is one pathway to improving the proportion of Black owners. “The number is still hanging around 2%,” she says, “but we’re going to see bigger changes. For our Wyndham property, we have five general partners, and we had to raise almost $3 million. Already, that’s contributing to an increase in owners.”
For Mann, working with her in-laws led her down the path to multiple hotel ownership. “Our company grew a bit bigger and faster than we thought. While we’ve explored different businesses, we always come back to hotels.”
Trend #3: A Move to Modern Hotel Financing Options
Owners are also starting to make the move to more modern hotel financing options.
“We did something untraditional,” says James. “Our first hotel was financed using a traditional bank and we used friends & family investments to raise the equity. For our second property we used a crowdfunding platform to raise the equity, and we partnered with Wyndham to use a preferred lender. They work with qualified franchisees to provide debt with favorable terms, higher loan-to-value, and lower interest rates to support under-represented groups.”
How Crowdfunding Can Help Finance Your Hotel Project
James notes that traditional lenders are not as flexible as they could be. This can create challenges for new owners who may not have access to significant amounts of capital.
Crowdfunding offers a more approachable finance model. “If you invest money in a direct hotel investment,” she says, “it’s like getting a share. As an investor, you get a percentage of equity. For both of our projects, one share was $25,000.” James says that she’ll likely do crowdfunding again for future hotels. “I think it’s great. Investors can ask questions right on the crowdfunding site, and I can answer them directly.”
The Role of Partnerships in Securing Hotel Financing
Partnerships also play a key role in hotel financing. While crowdfunding can help raise a substantial amount of the required capital, new owners also need to consider the debt side of the equation. Partners like Wyndham can help aspiring owners find preferred rates and equitable terms.
Programs such as Women Own the Room help advance this cause — in the 24 months since Women Own the Room began, Wyndham has helped open over 20 women-owned hotels. Mann notes that with Women Own the Room, women owners can get access to Wyndham’s high-impact revenue-driving programs, revenue management service (RMS) and remote sales support (RSS), free for a year. “We have a good relationship with Wyndham,” Mann says. “The rewards are good. They’re willing to work with owners to find what works. Most importantly, they help put heads in beds.”
To further the commitment to helping Black and women entrepreneurs overcome barriers to hotel ownership, Wyndham has teamed up with investment firm Lafayette Square to provide diverse hoteliers with improved access to capital. Through an exclusive relationship, Wyndham will vet and directly connect qualified owners with Lafayette Square, which aims to help hoteliers with up to $100 million in combined financing from the firm over the coming years. Wyndham introduced James to Lafayette Square, resulting in her becoming the first Wyndham franchisee to receive financing from the firm. While not all hoteliers will qualify, approved candidates can use the funds to move forward projects that would otherwise stall due to lack of traditional financing.
Embracing the Next Generation of Hotel Ownership
The face of hotel ownership is changing. Underrepresented groups are now forging their own path to hotel ownership, one that takes a very different approach than traditional hotelier practices.
Rather than taking on the long-term role of owner-operators, they’re working with — or creating their own — third-party management companies. Instead of going through traditional banks, they’re considering crowdfunding opportunities. And in lieu of taking a different path from their parents, they’re taking on the challenge of owning hotels.
They’re just doing it their own way.
Curious about how modern hotel ownership can fit your financial goals? Talk to our team today and explore your options.
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Sources
1Global hotel & resort industry market size 2023, Statista, August 19, 2024, https://www.statista.com/statistics/1186201/hotel-and-resort-industry-market-size-global/
2STR, TE maintain 2024-25 U.S. hotel forecast, STR, August 8, 2024, https://str.com/press-release/str-te-maintain-2024-25-us-hotel-forecast
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