While they may make the headlines, the hotel owners with large portfolios of properties aren’t the majority of the U.S. hotel industry.
The largest hotel owner in this country probably has 1,500 hotels, said Michael Blank, principal at hotel ownership and asset management firm Woodmont Lodging, in an interview for the Hotel News Now podcast. The numbers go exponentially down from there.
“So, the little guy is the majority,” he said. “They are one to three hotels. They own them in the same little town or the town that they’re in. They run them. Their family runs them. Their family’s invested in them, but they’re kind of the lifeblood of what this industry is for the most part.”
Hotel owners operating at a smaller scale face a lot of the same challenges that bigger owners do, but they also have some that are unique to their size, he said. They don’t sit on a war chest of money, so if something goes wrong, such as a boiler going down or a water leak, their ability to make the necessary fix is different than that of an institutional shop.
“But they’re also scrappy, and I think we sometimes lose sight of the ability to solve problems in an efficient and effective manner,” he said.
A bigger owner might have a team of consultants or a third-party management company to use, while the smaller owners may have to “MacGyver” their fixes at times, he said. They know the vendors, and they can figure out how to solve a problem.
“Maybe it’s not the perfect way, but it gets the room back in service,” he said.
It’s a tight-knit community, Blank said. Even though there is fragmented ownership, there’s cohesion and communication. They often lean on other owners in the market to help them solve problems. Maybe another owner down the street becomes a minor investor in a property, and that helps solve the boiler problem. Maybe one owner gives another a micro-loan to get across the finish line.
“They find solutions,” he said.
Smaller owners can grow within their specific markets because of that “street corner business” model and the relationships they have, Blank said. They prove their worth and can grow, moving up to other brands they can operate, adding second and third hotels because of that intimate market knowledge.
They might pay more for a hotel than others would, but they can yield the income to give them momentum to grow their platform, he said.
Small owners actually have an advantage when working with lenders on deals, he said. They can tap into Small Business Administration loans, and U.S. Department of Agriculture Rural Development Loans are available for smaller acquisitions.
Blank related a story from a colleague about an owner who bought 25 hotels in 2024. The headlines talk about how deal volume is down and how investors are sitting on money, but there are owners transacting.
“Here's a guy who probably no one is aware of in most of the universe who bought 25 hotels last year,” he said. ”These smaller owners, and I mean, 25 is a lot, so he's probably not in the smaller owner bucket anymore, but the fact that he's not on a panel at the big conferences means that he's below most of the radar screen, and he's getting deals done.”
For more from the interview with Woodmont Lodging's Michael Blank, listen to the podcast embedded above.