In this issue

• Revolt of the Franchisees: Hotel Owners Band Together to Rewrite the Rules
• Marriott’s Sony Music Settlement: Navigating Indemnification Claims in Franchise and Management Agreements
• Hotel Owners: Is It Time to Launch an Internal Investigation?
• Issues Affecting the Selection of an Arbitrator in Hotel Management Agreements and Franchise Agreements
• U.S. Hotels Faced Profitability Squeeze in 2024 Amid Rising Costs and Environmental Disruptions (a HotStats Profit Matters report)

Revolt of the Franchisees: Hotel Owners Band Together to Rewrite the Rules

KEY TAKE
Independent hotel franchisees are increasingly uniting through associations to demand transparency, fairer contracts, and greater influence in brand decisions, reshaping the traditional franchisor-franchisee power dynamic.

In the high-stakes world of hotel franchising, where brand giants like Hilton, Marriott, and IHG have long called the shots, a quiet rebellion is brewing. Franchisees — those independent hotel owners who pay hefty fees for the privilege of flying a corporate flag — are no longer content to sit silently on the sidelines. Across the country, they’re forming independent associations, arming themselves with collective bargaining power, and demanding a seat at the table. This isn’t just a story of discontent — it’s an underdog tale of hoteliers challenging one-sided mandates, securing transparency, and, in some cases, winning big. For the hospitality industry, it’s a seismic shift in the franchisor-franchisee power dynamic, one that offers lessons in negotiation, resilience, and the fragile glue that holds a brand together.
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Marriott’s Sony Music Settlement: Navigating Indemnification Claims in Franchise and Management Agreements

KEY TAKE
Marriott’s Sony settlement highlights the critical role of indemnification clauses in allocating liability between franchisors and hotel owners.

Marriott International, one of the largest hospitality companies in the world, recently settled a dispute brought against it by Sony Music Entertainment alleging “rampant” and “willful” copyright infringement. While the terms of the settlement have not been made public, we understand that Marriott has been attempting to pass on the cost of this settlement to its hotel owners, assessing charges to its managed and franchised hotels. This article explores the background of the dispute, Marriott’s actions, and why owners may not have a contractual obligation to indemnify and/or reimburse Marriott for these costs.
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Hotel Owners: Is It Time to Launch an Internal Investigation?

KEY TAKE
In the face of allegations of wrongdoing, hospitality executives need to act promptly and should proactively coordinate and execute an independent, well-structured internal investigation.

Consider the following scenarios that could be faced by a hotel owner: numerous guests are claiming overcharges; or vendors are alleging that the manager is requiring kickbacks; or there’s a data breach involving guests’ credit card information; or there are allegations of ethical lapses involving senior management; or there are allegations that contracts are being awarded to friends of employees; or employees are alleging harassment or discrimination. Among the first actions the hotel should take in each of these situations, among others, is to consider the need for an internal investigation.
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Issues Affecting the Selection of an Arbitrator in Hotel Management Agreements and Franchise Agreements

KEY TAKE
Hotel management and franchise agreements often require arbitrators with specific hospitality industry expertise, but overly restrictive qualifications or unclear selection procedures can lead to court intervention or even invalidate the arbitration clause if a suitable arbitrator cannot be found or agreed upon.

Hotel management agreements (HMAs) and franchise agreements (FAs), like many other commercial contracts, very often contain provisions requiring that the owner and manager, or the franchisor and franchisee, arbitrate any disputes between the parties. However, the business and law of hospitality is unique and specialized, such that the parties often desire to ensure that the individual or individuals resolving their disputes have sufficient knowledge of the hospitality industry and its laws.
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U.S. Hotels Faced Profitability Squeeze in 2024 Amid Rising Costs and Environmental Disruptions (a HotStats Profit Matters report)

KEY TAKE
Despite revenue growth, 2024 proved to be a challenging year for U.S. hotels, making it the only global market to experience a decline in Gross Operating Profit per Available Room (GOPPAR). Rising labor costs outpaced revenue growth every month of the year, squeezing margins across all segments of the brand scale. Midscale and economy hotels showed the greatest resilience, managing to achieve a positive flex despite a contraction in top-line revenue. However, for full-service and luxury properties, profitability pressures intensified as operating costs climbed amid revenue decelerations.
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Trivia Question Congratulations to the winners of last's edition’s puzzle! The answers were CLUB, HOTELS/MOTELS REFERENCED IN ROCK MUSIC, LAS VEGAS HOTELS.  Common Elements Puzzle  Identity 3 groups of 3 words each that share something in common – and identity the common element. All 3 sets relate to the hospitality industry! The first five readers who guess correctly will receive a special Akerman gift.   Please send your answers to [email protected] by Friday, June 6, 2025.