Are Independent Hotels on the Rise? Why More Owners Are Questioning the Brand
Franchise fees and OTA commissions are pushing some owners to drop the flag. Here is what the data says, and what to weigh before you go independent.
Talk to owners of small portfolios — two, five, ten select-service hotels — and you'll hear the same frustration: between the brand and the online travel agencies, a big slice of every room night is gone before the property pays a single employee. More of those owners are now asking a question that would have sounded risky a few years ago: do we still need the flag?
What owners are paying
Brand fees. Franchise royalties typically run about 4–6% of room revenue, and that's before marketing assessments, reservation and technology fees, and loyalty program charges. Industry commentators put the all-in cost of a brand at roughly 10–12% or more. One economy-brand owner profiled by Skift in 2026 said his family was paying about 10% of revenue to the franchisor off the top.
OTA commissions. Online travel agencies such as Expedia and Booking.com commonly charge 15–25% of the room rate, according to industry analysts. By comparison, a direct booking typically costs a few dollars per night to acquire.
Stack those together and it's easy to see why owners feel squeezed — especially when operating costs are rising faster than inflation.
So, are independents on the rise?
The honest answer: the conversation is growing faster than the numbers — but the numbers are moving.
- Deflagging leads conversions. CoStar data shows that when hotels change affiliation, going from branded to independent has recently been the single largest conversion category — about 35% of conversions in 2024.
- A wave of expiring agreements. According to FRANdata, cited by Skift, more than 1,200 economy and midscale franchise agreements expire by 2030. Many are 20-year deals signed in the 2000s, and each one is a decision point for an owner.
- The tools have caught up. Modern property management, channel management, and revenue management systems now give independents much of the operating toolkit that used to require a brand.
- Owners are frustrated with impact. Weak territorial protection — a sister brand opening down the street — is pushing some owners out.
At the same time, branded hotels still hold the large majority of U.S. rooms, and research continues to show branded hotels generally outperform on occupancy. Going independent is a real option, not a guaranteed win.
The catch: OTA dependence
Here's the trade-off owners need to plan for. Branded hotels lean on loyalty programs and direct channels; independents lean on OTAs. Cloudbeds' 2026 report found OTAs made up about 63% of independent hotel bookings, with OTA cancellation rates roughly double those of direct bookings. Some analysts estimate independents pay two to two-and-a-half times more in OTA commission than branded hotels.
In other words, dropping an 8–10% brand fee doesn't help much if the hotel ends up paying 15–25% to OTAs on far more of its business. The independents that win invest in their own website, direct booking, local and corporate accounts, reputation management, and a property guests actually want to come back to.
What going independent means for the building
Leaving a brand isn't just a paperwork decision — it's a physical one. Owners typically need to:
- De-identify the property. Remove brand signage, logos, and trademarked elements inside and out.
- Reposition the guest experience. Lobby, guest rooms, and public spaces need to stand on their own and justify the rate without a flag on the building.
- Spend smart. Without a brand-mandated PIP, owners can focus capital on what actually drives reviews and revenue — guest rooms, bathrooms, beds, Wi-Fi, and first impressions.
- Consider a soft brand. For some owners, a soft-brand or collection affiliation offers a middle path: more design freedom and lower brand standards, with access to a reservation system and loyalty program.
The bottom line
Independent hotels are gaining attention, and for the right owner in the right market, the math can work. But the decision should be made with clear numbers on fees, distribution, and the capital required to reposition the property.
Whether you're keeping your flag, switching brands, or going independent, Refined Hospitality Solutions helps owners plan and deliver the renovation work behind the decision — from de-identification and soft-goods refreshes to full repositioning — on budget and with the hotel open.
Sources: Skift, "Going It Alone: Why Hotel Owners Are Dropping the Big Brands" (June 2026); Hospitality Net, "What Is the Real Value of a Hotel Franchise in 2026?" (Jan. 2026); Hotel Guru, "What OTAs Actually Cost in 2026" (Sept. 2026); Cloudbeds, 2026 State of Independent Hotels Report (Mar. 2026); CoStar, "U.S. Hotel Conversion Activity Remains Muted."
