Hotel brand companies come in all shapes and sizes, but they all deal with issues such as economic uncertainty, labor shortages and changing guest preferences. Hotel Business caught up with Christian Charnaux, chief development officer, Hilton; Larry Cuculic, president/CEO, BWH Hotels; Chris Guimbellot, president/CEO, hihotels by Hospitality International; and John Murray, CEO, Sonesta International Hotels Corporation, to find out how their companies are navigating the current environment and their forecasts for 2026.
—Adam Perkowsky
How has your company addressed changes in guest expectations?
Charnaux: People will always be at the core of our hospitality, and technology further enables that experience. Hilton innovations like Digital Key and confirmed connected rooms make stays easier for guests and more efficient for owners. Thanks to our cloud-based technology platform, we are uniquely positioned in the industry to continue delivering tailored experiences, responding quickly to guest feedback and unlocking new ways for team members to deliver a quality stay.
We are also expanding our brand portfolio across segments to ensure we offer a stay for any guest, any occasion, anywhere in the world. An example is the recently launched Outset Collection by Hilton, which taps into a white space in the upscale and upper-midscale collection segment. The brand has more than 60 hotels in development, with long-term growth potential of more than 500 hotels across the U.S. and Canada.
Cuculic: Guest expectations have evolved toward greater digital convenience, personalization and design-forward, localized experiences. We made meaningful enhancements to our website and the Best Western to Go app this year, driving a record share of direct bookings and increased engagement within Best Western Rewards. We also advanced two key technology partnerships, AutoClerk Atlas, powered by HotelKey for modern PMS infrastructure and Canary for seamless, mobile-driven guest interactions, to reduce friction at key touchpoints and enhance the overall guest experience. At the same time, we have been expanding our Aiden and GLō boutique brands and focusing on experiential offerings through our new glamping properties, which are part of WorldHotels.Guimbellot: We’ve observed that, in the limited-service segment, guests increasingly value loyalty programs that offer immediate rewards rather than points to be redeemed in the future. Our INNcentive Instant Rewards program provides guests with a 15% room discount, early check-in, late checkout and access to thousands of discounts from national merchants—all available from their very first stay, with no additional cost to the hotel.
We also recognize that some brand standards in the industry focus heavily on visible branding elements that may not actually influence guest satisfaction but do create additional capital investment for owners. Our approach is to keep standards sensible and focused on what guests truly value: a clean, comfortable room and a straightforward, rewarding experience.
We also understand that guest expectations can vary by region. That’s why we work closely with each franchisee to tailor offerings to the needs of their specific market, rather than enforcing a one-size-fits-all model. This flexibility allows our owners to better meet their guests’ expectations and adapt to demand.
Murray: In the last year, Sonesta has doubled down on guest service. In 2024, we focused efforts on a capital refresh program for managed hotels, ensuring that TV, WiFi, showers and beds are updated and top of the line. This year, we pivoted to focus efforts around first impressions and understanding what effective guest service looks like for travelers across a range of market segments. We are driving brand loyalty through key strategic initiatives. We have renewed our focus on guest relations by implementing a new CRM platform to track guest preferences and information to improve brand loyalty. In parallel, we have continued our strategic partnership with Rolling Stone’s Musicians on Musicians, which brings exclusive musical programming to our Sonesta Travel Pass members and potential franchisees across the U.S.
What demand trends are you seeing across your portfolio?
Charnaux: We continue to see strong owner demand for our brands across all regions and categories. Our lifestyle and luxury brands are expanding rapidly and, in the third quarter, comprised 20% of all openings. This year, we opened our 1,000th hotel across both categories. Another example is extended stay, which has been an important part of our growth story for a while now. Home2 Suites remains one of our fastest-growing brands, now with more than 800 hotels and another 800 in the pipeline. LivSmart Studios is another great example. Launched in 2023, the brand has more than 225 deals at various stages of negotiation, and we expect it to reach 1,000 hotels over time, underscoring demand from guests and owners. Conversions also remain a strong driver of our growth. We expect nearly 40% of openings in 2025 to be conversions across 12 of our brands, sourced from a mix of independent hotels and competitor brands. At the same time, lenders know our brands perform well, and we expect new-build development starts to be up over 25% year-over-year in the U.S.
Cuculic: We see sustained demand across global leisure destinations and continued improvement in major urban markets as travel patterns normalize. Interest in Best Western remains high, supported by our strong RevPAR performance in North America and our reputation for quality and value in a cost-conscious travel climate. Luxury and upscale categories remain strong, particularly across WorldHotels in EMEA, APAC and the Caribbean. Extended stay also continues to lead industry-wide, with @HOME by Best Western growing to more than 30 properties in its development pipeline following recent groundbreakings..
Guimbellot: Across our portfolio, demand growth in the economy and midscale segments has been flat to slightly negative. Domestic leisure travel growth has slowed due to concerns about inflation, tariffs and declining consumer confidence. Economy hotels are facing increased competition from alternative lodging options, such as short-term rental platforms, which are popular with price-sensitive travelers.
Some locations with larger immigrant populations, such as Houston, are experiencing more pronounced declines in occupancy—up to 7% in some cases—largely due to increased ICE presence and enforcement activity.
Murray: International demand remains down portfolio-wide given the current state of the travel industry and restrictions resulting from the current administration’s policies. Sonesta is hopeful that FIFA World Cup 2026 will be significant in bolstering industry performance, but we are concerned about pending U.S.-implemented visa restrictions becoming a headwind.
The luxury hotel segment remains strong, as the typical guest is not profoundly impacted by economic uncertainty. The travel and hospitality industry leaders like AHLA, AAHOA and U.S. Travel Association continue to advocate in Washington to stave off policies that negatively impact our bottom line and convince both Congress and the White House that tourism is vital to the U.S. economy.
How are high interest rates and economic uncertainties impacting your development pipeline or investment decisions?
Charnaux: We continue to believe that, in the U.S., lower interest rates, a more favorable regulatory environment, certainty on tax policy and a significant investment cycle will result in accelerated economic growth and meaningful increases in travel demand. When coupled with the broader travel trends and historically low supply growth, it is a solid setup for owners. This optimism is reflected in our development pipeline—the largest in our history at approximately 515,000 rooms, with nearly half under construction and more than half located outside the U.S.
Cuculic: While high interest rates and tight lending conditions remain industry-wide challenges, our development pipeline continues to demonstrate strength because of the breadth and adaptability of our brand portfolio. In 2025, we added more than 100 hotels globally across luxury, boutique and extended-stay segments, reflecting sustained developer confidence in BWH Hotels. We support owners by simplifying processes and providing modernized technology and operational tools that reduce long-term costs. We also offer competitive development levers, including key money and low-fee structures, to help owners advance projects. Despite macroeconomic pressures, our development strategy remains disciplined and focused on markets with long-term growth potential.
Guimbellot: High interest rates have definitely slowed down hotel sales and new development. We’re seeing fewer transactions overall, and when hotels do go on the market, it’s often because owners are looking to exit rather than expand. That said, these sales can create good opportunities for conversions, which is where we tend to shine as a brand. Like most franchises, the SBA 504 loan program is a key part of the equation for our owners. Being certified on the SBA Franchise Directory is a real advantage—it gives prospective owners more financing options and can make the difference when they’re deciding between joining a franchise or staying independent.
Murray: Rates declined slightly, and we are hopeful that they will continue to do so. Currently, the cost for renovations is high, and there is an inability to predict tariffs and labor costs, this uncertainty has kept many on the sidelines. Renovations are less likely given the current economic climate, and conversions often require a PIP. We are taking measures to give franchisees more time and providing strategic key money to mitigate the costs of converting into our brands. Across the board, owners are sitting tight and observing before they act.
Looking ahead, what is your outlook for growth in 2026?
Charnaux: We expect to achieve net unit growth between 6% and 7% annually over the next several years, fueled by the returns our brands deliver to owners over the long term. In the past year alone, we have added almost three hotels per day on average, enabling us to surpass 9,000 hotels in October—more than double the size of our portfolio a decade ago. We have great momentum and a powerful suite of brands. And with just 5% of the existing share of global rooms and 21% of the industry’s total rooms under construction, there is a tremendous opportunity to further grow our portfolio in partnership with owners around the world.
Cuculic: With 18 brands spanning luxury to economy, we expect strong growth in 2026 driven by solid portfolio performance and a robust global development pipeline. We will continue to expand our offerings, including growing Aiden, branded luxury residences and additional experiential concepts such as upcoming glamping destinations in Latin America and the Caribbean. Continued investment in technology and enhancements to the Best Western Rewards ecosystem will drive deeper guest engagement and stronger direct booking performance. We are well-positioned to advance our long-term growth strategy across every segment of our business.
Guimbellot: For our franchisees, we expect 2026 to be a stronger year for revenues compared to 2025. They will continue to have to fight rising costs. However, we will continue developing and expanding programs that help our hotel owners operate more efficiently and increase their sales and marketing opportunities. In terms of our franchise sales efforts, interest rates remain elevated, but the SBA’s reinstatement of the Franchise Directory in mid-2025 should make SBA-backed financing more accessible. Our pipeline is already 300% higher than this time last year, indicating we are receiving strong consideration from hotel owners seeking a franchise solution.
Murray: We are forecasting RevPAR growth for managed hotels north of 3%, largely due to major national events in 2026 like America’s 250th anniversary and the FIFA World Cup, as well as renovations that have been completed in the last several years, allowing hotels to now be hitting their stride. Organic net unit growth is estimated to be between 2%-3% though that number has the potential to change significantly with the execution of pending deals.
