The U.S. hotel and lodging industry plays a crucial role in the economy, supporting over 2.8 million jobs. Nearly 60% of U.S. hotels operate under a franchise model, which has been a significant contributor to the sector's growth. Franchised hotels generate an impressive $100 billion annually in economic impact, alongside $35 billion in state and local tax revenue. Over the past decade, the number of franchised hotels has increased by 34%, showcasing the model's resilience and adaptability in a changing economic landscape. The franchise model has been in existence for over 80 years and is credited with supporting 8.7 million direct jobs and contributing $860 billion in overall economic output. Kevin Jacobs, CFO of Hilton and chair of the American Hotel and Lodging Association (AHLA), and Mitch Patel, CEO of Vision Hospitality Group and vice chair of AHLA, emphasize the importance of trust and communication in business relationships within the franchise model. However, there are growing concerns regarding government regulations that could threaten the franchise model, which is viewed as a catalyst for achieving the American Dream. This model not only provides opportunities for entrepreneurs but also strengthens the hospitality industry as a whole [0204928b].
In conjunction with this, the number of brands entering franchising has been steadily increasing. In 2022, there were 414 new brands entering franchising, and 2023 is expected to finish at a similarly high number. This surge in new business applications reflects a strong interest in entrepreneurship and franchising, supported by changing attitudes toward work and the availability of cash from Covid relief programs. The fastest-growing sectors in franchising include personal services, residential services, and quick-service restaurants (QSRs). Approximately 20% of new brands have initial backing, either as part of an existing system or with investment from private equity firms or angels. Additionally, over 30 brands from outside the United States launched in 2022-2023, highlighting the continued interest in the U.S. market. The rise in new business applications and franchising reflects a shift in the economic landscape of the United States, emphasizing increased support for entrepreneurship and evolving consumer behavior [ea16e137].