A branded hotel pays the brand 5-12% of revenue in fees. These fees do not reduce GOP — they sit below it. A first-time hotel finance reader sees the GOP and concludes the property is performing well, then sees the NOI and wonders where the money went. The brand is where the money went.
The three brand fee categories
A property with €15M rooms revenue at a 9% total brand fee burden pays €1.35M per year to the brand. That 's €1.35M that leaves the property between GOP and NOI.
Why this matters for the operator
The GM at a branded property is bonused on GOP, which means the brand fee is invisible in their bonus math — even though it is the largest single line item between GOP and NOI for most branded properties. The independent operator across the street is competing on the same comp-set with a structurally lower cost base by 7-10 points.
This is also why the brand-vs-independent decision is not a simple math problem. Yes, the independent saves the brand fee. But the independent also gives up the brand's distribution channel (15-25% of bookings come through brand.com at branded properties), the loyalty program contribution, and the manager's confidence that a brand audit covers part of their job.
The renewal conversation
Brand contracts come up for renewal every 10-20 years. The renewal is the only moment the operator has real leverage to renegotiate the fee structure. Most operators do not prepare for renewal seriously — they assume the fee structure is fixed. The fee structure is negotiable on the margin if the property has a strong-enough independent alternative and the operator has done the math.