A franchisee of Hilton and IHG has temporarily closed its two hotels in St. Paul, highlighting a challenge that may face other hoteliers nationally in coming months.
The franchise model is having a moment. The challenge will be to maintain quality standards at the local level, and to ensure that the fee structure benefits both parties.
"Here's a mostly empty office building that we want to turn into a cool hotel" is, in 2025, an easier sell to lenders than "Here's an empty lot that we want to turn into a cool hotel." That's true because of high interest rates and construction costs.
Fortressing is a smart way for Domino's to grow its store footprint and shorten delivery times, but at the same time it puts a lot of pressure on franchisees to find territory to build.