As the hospitality industry continues to evolve, the outlook for multi-unit franchisees in 2025 presents a mixed bag of opportunities and challenges. Concerns regarding tariffs and global conflicts are casting a shadow over the economic landscape, potentially impacting profitability. However, experts such as Karim Khoja predict that advancements in artificial intelligence (AI) and robotics could enhance operational efficiency and profitability within the hotel sector. Mitch Cohen expresses optimism about a potential drop in interest rates and the growth of various brands, although he remains cautious about the implications of rising import taxes. Paul Booth highlights that despite inflation and fluctuations in the labor market, continued growth is anticipated for multi-unit franchisees. To navigate these challenges effectively, franchisees are advised to adopt AI tools to improve efficiency, budget for rising costs, and engage in strategic planning with professionals [86f45b12].
In the broader context, the U.S. hotel and lodging industry, which supports over 2.8 million jobs, has seen nearly 60% of its establishments operate under a franchise model. This model has been a significant contributor to the sector's growth, generating approximately $100 billion annually in economic impact and $35 billion in state and local tax revenue. Over the past decade, the number of franchised hotels has increased by 34%, underscoring the model's resilience. Kevin Jacobs, CFO of Hilton and chair of the American Hotel and Lodging Association (AHLA), alongside Mitch Patel, CEO of Vision Hospitality Group, emphasizes the importance of trust and communication in franchise relationships. However, there are growing concerns regarding government regulations that could threaten this model, which is viewed as a catalyst for achieving the American Dream. The franchise model not only provides opportunities for entrepreneurs but also strengthens the hospitality industry as a whole [0204928b].
Moreover, the number of brands entering franchising has been on the rise, with 414 new brands reported in 2022 and expectations for a similar trend in 2023. This increase in new business applications reflects a strong interest in entrepreneurship, 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].