Hotels don’t deflag on a whim. Sometimes the decision is forced, other times, it’s a slow realization that the math no longer works, and the flexibility just isn’t there.
Either way, it’s a high-stress transition with a lot of moving pieces.
Rooms are already on the books, staff need answers, and the systems you relied on may be going away. And while deflagging can feel overwhelming, it can also be the moment your hotel finally regains control.
What is deflagging?
Hotel deflagging is the process of ending a franchise or brand affiliation and transitioning a property out of a branded hotel system.
In practical terms, deflagging means a hotel is no longer operated under a major brand’s name, standards, systems, or commercial controls. The property may continue operating as an independent hotel, or it may later reflag under a different hotel brand, but the defining moment is the exit from the existing franchise relationship.
Deflagging is not a single action. It is a multi-phase commercial transition that affects how a hotel sells, operates, markets, prices, and communicates with guests.
What deflagging is not
Despite how disruptive it can feel, deflagging is often misunderstood. It is not:
A hotel closure
Deflagging does not mean shutting down operations. Hotels remain open, guests still arrive, and reservations already on the books are honored.
Starting from zero
Hotels do not lose their physical asset, staff, or market presence overnight. What changes is the ownership of systems, data, and decision-making, not the hotel itself.
An automatic revenue cliff
While brand demand and loyalty traffic may decline, bookings do not disappear if the transition is planned correctly. Hotels that prepare early can maintain distribution and protect revenue.
What deflagging actually represents
At its core, deflagging is a shift in control.
Under a branded model, much of a hotel’s commercial engine, including technology, loyalty programs, distribution rules, pricing guardrails, revenue management, and marketing standards, is dictated by the brand. Deflagging removes that layer of control and places responsibility back with ownership and the operating team.
That shift can be empowering for hoteliers, but it also introduces risk if it’s treated too narrowly.
“If people treat this [deflagging] just as a transaction — going from brand to non-brand — they’re not going to do well. But if they think of it as a commercial transition, where operations, revenue, marketing, and distribution all change together, they’re going to do much better.”
This is why deflagging is rarely just a technical exercise. It requires coordination across departments and an understanding of how revenue, visibility, and demand are actually generated without a brand behind them.
Forced vs. voluntary deflagging
Some hotels actively choose to exit a big brand after years of evaluation. Others are pushed into deflagging by circumstances largely outside their control.
Forced deflagging
Forced deflagging occurs when a brand terminates — or declines to renew — a franchise agreement. While it can feel sudden from the hotel’s perspective, it is often the result of long-standing misalignment between brand expectations and property realities.
Common triggers include:
- Prolonged underperformance against brand benchmarks
- Inability or unwillingness to complete required property improvement plans (PIPs)
- New owners, refinancing events, or lender requirements that conflict with brand standards
- Brands consolidating portfolios, exiting markets, or repositioning
A recent, high-profile example is Sonder, which, in a November 10, 2025, press release, announced an ‘immediate wind-down of operations.’ For affected property owners, this meant sudden brand removal and an accelerated transition to independent operations.
When Sonder collapsed, we deflagged two properties and converted them into independent properties in under 36 hours.
When the clock is ticking, experience matters.
If your brand situation changes suddenly, our team can help you stabilize fast.
Forced deflagging often comes with compressed timelines and limited negotiation power. Hotels may receive notice with only months — sometimes weeks — to prepare for the loss of brand systems.
The risk in these situations isn’t deflagging itself. It’s being forced to execute a complex commercial transition without enough time to line up technology, distribution, staffing, and marketing.
Voluntary deflagging
Voluntary deflagging is a deliberate decision made by ownership, typically after reassessing whether the brand relationship is delivering the value it promised.
In many cases, hotels are not failing under the brand; they’re just outgrowing it.
Common drivers include:
- Owners seeking greater autonomy
- Rising fees and mandatory programs that erode net profitability
- Frustration with slow brand approvals and limited ability to adapt to local market conditions
When you run a cost analysis, there are times that the management fees and the loyalty program actually end up being less ROI, less bottom line, delivered to the owner than if they’re independent. It depends on the location, how many redemptions you get, and how much the brand can really drive. And oftentimes, when owners start to believe they’re not getting the value they expected, that’s when they consider going independent.
Voluntary deflagging usually allows for longer planning windows, better leverage with partners, and more thoughtful system selection. Hotels can prepare well in advance and build a post-brand commercial strategy before access disappears.
Why hotels are deflagging more often
Deflagging is not a fringe decision made by a handful of underperforming assets. It’s a strategic response to how hospitality has changed financially and technologically.
There is a lot of exciting growth in the independent market. As of 2025, the Independent Lodging Market was estimated to be valued at USD 281.7 billion with a compound annual growth rate of 11% over 10 years (reaching USD 800 billion by 2035).
11%
CAGR for the independent lodging market
There are typically a few main reasons for voluntary deflags:
Rising fees, shrinking flexibility
For many owners, the deflagging conversation starts with the question of ‘What am I actually paying for and is it still worth it?’
Brand affiliation comes with a layered fee structure that adds up quickly. Most agreements include:
- Initial franchise fees – A one-time entry cost paid upfront to access the brand
- Royalty fees – 2–6% of gross room revenue, paid regardless of profitability
- Marketing and reservation system contributions – 1–4% of gross room revenue, funding brand-level marketing, distribution, and systems
- Loyalty program fees – charged on qualifying revenues, including redemptions that may deliver lower ADR
And that’s before capital requirements. Brands also require:
- FF&E (furniture, fixtures, and equipment) reserves
- Renovations tied to property improvement plans (PIPs)
These obligations can erode net profitability, especially when the brand is no longer delivering the return owners expect.
Technology has leveled the playing field
A decade ago, brands had a clear technology advantage. That gap has closed.
Today, independent hotels can access the same — and often more modern — technology as branded properties, without being locked into rigid brand stacks.
Modern systems allow independents to:
- Manage rates, inventory, and distribution in real time
- Connect directly to online travel agencies (OTAs), GDS, and metasearch platforms
- Automate pricing, forecasting, and reporting
- Personalize guest communication across the entire journey
Critically, these tools are modular and interoperable. Independent hotels can choose the systems that fit their complexity and market and get them implemented fast.
Independents can move faster and more intentionally
For owners seeking greater creative and commercial control, independence offers a clear advantage.
Independents don’t have to wait for brand approvals to:
- Adjust pricing strategies
- Launch new packages or experiences
- Update positioning and messaging
- Adopt guest-facing technologies
This agility allows hotels to respond to market shifts immediately and encourages closer alignment across departments.
What hotels lose when they deflag
Deflagging creates opportunity, but it does come with trade-offs. While hotel owners are happy to lose some things (like rigid technology), there are important things to be aware of before deflagging.
Typically, hotels can expect to lose:
Brand demand engine
Branded hotels benefit from centralized brand marketing, loyalty-driven bookings, and brand-led distribution. Once the flag comes down, hotel operators need to rebuild this engine.
Loyalty program access
A lot of guests choose brands purely to collect and redeem points.
Centralized SOPs and playbooks
Brands provide a ton of information in regards to standard operating procedures, training materials, and playbooks. Deflagging means hotels must rebuild their own standards and workflows.
Brand-controlled systems
Most critical operating systems, like the property management system (PMS), booking engine, channel manager, and CRS, are controlled by the brand. Once access is removed, hotels must replace these systems to avoid disruption.
Guest data
While future reservations and required financial records typically remain accessible, brands often retain ownership of centralized guest profiles, loyalty histories, and marketing databases. What isn’t exported before access disappears is often lost permanently.
Once you lose the brand, there’s usually a gap — anywhere from two weeks to ten weeks — before you can get your full distribution system back up and running. Operations can usually continue. Revenue generation is what gets missed. And that’s where hotels feel the impact the most.
What hotels gain when they deflag
Deflagging restores control and presents a ton of exciting opportunities for owners in the hospitality industry.
It unlocks:
Pricing & revenue control
Independent hotels regain full authority over pricing strategy. That means flexible rate plans, demand-driven pricing, creative packages, and the ability to respond instantly to market conditions, which can help boost occupancy.
Brand and positioning ownership
Your property stops being a logo inside a large hotel chain and starts standing on its own identity and brand name. Independents control how they show up in search, on OTAs, on social media, and across every guest touchpoint with an authentic voice that reflects the property.
Guest experience freedom
Without brand rules dictating service models, hotel management can design experiences that fit their guests, staff, and market. That might mean digital check-in, removing the front desk entirely, hyper-local partnerships, or service moments that would never make it through a brand committee.
These changes often result in a boost to guest satisfaction.
Technology choice
Deflagging allows hotels to choose technology that fits how they operate — not how a brand wants them to operate. This results in cost savings, automations that streamline operations, and a happier team.
Our 2025 PMS User Experience Report found that 38% of employees left their job due to the PMS, indicating that the wrong technology can drive people away from the hotel industry.
Make the right tech choice.
Discover top priorities for PMS usability.
Long-term margin upside
Without layered franchise fees and mandatory programs, hotel properties can reinvest in areas that actually drive performance — staffing, marketing, guest experience, and technology. While the transition period requires investment, many independents see stronger margin control over time.
There’s a creativity you can have in the independent world that you just can’t have in the brand world. When you get released from the brand rules and processes, marketing teams get creative — with offers, with voice, with how they communicate with guests. That freedom makes a real difference.
Deflagging is just the beginning
Deflagging isn’t a collapse of the business. It’s a shift in control.
When handled intentionally, deflagging allows hotels to reclaim ownership over areas that have become increasingly constrained under traditional franchise models.
At the same time, deflagging is not a purely technical exercise. The hotels that struggle most are those that treat it as a simple system switch or brand swap. The hotels that succeed are the ones that recognize deflagging for what it really is: a commercial transition that touches every part of the business, from operations and revenue to marketing, distribution, and guest communication.
Let’s plan your transition.
No matter what stage you’re at, our team can help you map the next step with confidence.
