Operating through uncertainty: Protecting hospitality assets and sustaining performance

As hotel owners and operators in the region navigate challenges, they need to focus on two priorities at once: taking immediate action to protect performance and reassess their choice of operating models that will eventually determine how resilient an asset can be in the face of future disruption

The recent Middle East conflict has seen softer tourism demand in the GCC, driven by airspace disruptions, travel advisories and shifting traveller sentiment. Prior to the regional disruption, the World Travel & Tourism Council had estimated tourists would spend about US$207bn in the region in 2026 – a figure that is now likely to be revised.¹ This brings into focus broader questions around resilience in the hospitality sector.

Navigating disruption is not new to the GCC’s hospitality leaders, having already proven their ability to adapt and rebound strongly during the pandemic. However, the current environment may require a more deliberate and coordinated response. Owners and operators of hospitality assets may potentially consider reassessing how they manage through this cycle and position their portfolios for sustained performance in a less predictable environment.

Short- to medium-term considerations for hotel owners and operators

The objective now is not only to respond to current conditions, but to strengthen resilience, protect value and ensure the region remains well-positioned as global travel patterns continue to evolve.

Here are some key actions to help optimise outcomes under the current situation: 

Beyond the disruption – generating long-term value

The choice of operating model is essential for a hospitality asset to generate long-term value and ensure resilience. In the hospitality sector, guest expectations are continuing to evolve, with travellers placing greater value on authenticity, local connection, and distinctive experiences. As a result, there is a clear shift in where and how value is created across the hotel value chain. Technology is also accelerating this transition. Hospitality assets can be operated under a range of models, from traditional management agreements and franchise structures to more hybrid or owner-operated structures. Each model differs in how control, risk and economic returns are distributed between owners and operators.

Understanding the hotel value chain is therefore essential. It helps show how different operating models allocate responsibilities, risk and economic value between owners and operators. In periods of disruption, control over more parts of the value chain can become an important strategic advantage. While shifts in operating models shape long-term performance, immediate actions are still needed to stabilise operations and protect asset value.

The recent regional disruption has shown that rigid operating models can constrain decision-making and slow operational response during periods of volatility, reinforcing the need for greater flexibility in how assets are managed and operated.

The new economics of hotel operating models

Historically, hotel operating models followed a predictable structure. Owners deployed capital to develop and maintain the asset, while brands provided identity, standards, and demand generation through global distribution and loyalty systems. In many cases, brands also operated hotels directly under long-term hotel management agreements (HMAs), creating a stable allocation of responsibilities.

This model is evolving. As global hospitality companies have shifted toward asset-light strategies, brand stewardship, demand generation and operations have progressively separated. This has accelerated franchising, expanded soft brand portfolios, and enabled the rise of third-party operators.

At the same time, technology has broadened access to capability. Revenue management, customer relationship management, and digital marketing tools are now widely available, enabling owners and operators to execute sophisticated strategies without relying solely on brand infrastructure.

In mature markets such as the United States and Europe, these dynamics are well established. The Middle East however remains more hotel management agreement-dominated, but franchise adoption is rising, signalling a gradual shift toward more diversified models.

Ultimately, the choice of operating model dictates how decision-making authority, economic value, and accountability are distributed along the hotel value chain. Understanding these dynamics is essential for owners seeking to navigate an increasingly complex operating environment and build resilience through flexibility.

Transitioning into a new operating model

As owners consider transitioning to alternative operating models, they should start with a clear assessment of internal readiness to take on a more active role across the value chain. Key considerations include:

• Capability build-up: Strengthening core functions such as commercial strategy, revenue management, and operational oversight, particularly where owners seek to increase control over day-to-day performance
• Organisational evolution: Adapting structures to clarify roles, decision rights, and accountability across asset management, finance, and operations
• Operating partner selection: Identifying and aligning with third-party or white-label operators with the right capabilities and governance approach

In parallel, any transition should be underpinned by a comprehensive risk assessment, covering operational continuity, financial exposure and brand implications where applicable. This should be supported by clearly defined mitigation plans to ensure stability and performance throughout the transition period.

Evolving operating models for flexibility and resilience

Franchising as a scalable alternative

Franchise agreements are emerging as a compelling alternative for owners seeking greater operational control while retaining access to brand distribution and loyalty platforms. Under this model, operations can be managed in-house or outsourced to a third-party operator, allowing owners to take greater ownership of commercial strategy, cost structures, and service delivery.

While still nascent in the Middle East, the model aligns with growing demand for assets that balance identity, authenticity, and scale. For owners with the right capabilities, or access to them, franchising offers a more flexible route to capturing brand value while improving margin efficiency.

The rise of owner-led platforms

Institutional owners in the region are already moving in this direction, building dedicated hospitality platforms, enabling them to manage portfolios internally while engaging brands selectively for distribution and positioning. This reflects a broader shift toward active value-chain management rather than full outsourcing.

Hybrid models as transitional structures

Hybrid approaches, particularly manchise agreements, provide a phased pathway for capability building. These structures typically begin as management agreements before transitioning to franchise models, allowing owners to gradually assume greater operational responsibility under brand guidance.

The role of white-label operators

White-label operators are a critical extension of this shift. Operating independently of brand ownership, they provide professional management across multiple brand affiliations, typically with more competitive and performance-aligned fee structures.

A key advantage is continuity. Because the operator remains in place, owners can reflag assets with minimal disruption - preserving teams, culture, and operating performance.

A structurally advantaged model

For many sophisticated owners, the combination of franchising and white-label operators is emerging as a structurally advantaged model. It combines brand-driven demand with flexible, owner-aligned operations, while enabling greater control over cost and strategy.

The result is a more balanced allocation of the value chain, where owners retain influence over operations and asset management, while engaging brands selectively where they create the most impact.

In the Middle East, institutional and government-related owners also play a central role in the region. Their priorities, including long-term value creation, governance clarity, and operational consistency, shape operating model decisions. For these stakeholders, operating model flexibility is increasingly important. Clear alignment of decision rights, cost structures, and performance accountability supports stronger governance and resilience in a changing environment.

Today, the strategic question for owners is no longer simply “Which brand should I choose?” but rather a set of questions which include “Which parts of the value chain should I control? What immediate actions are required to protect performance in today’s volatile environment as I transition into a new operating model?”

Owners that answer these questions clearly will be better placed to shape the next phase of hospitality investment in the Middle East. This means building capabilities where they have a clear competitive advantage, partnering where brands or operators bring critical expertise, and structuring agreements that reflect the value each party delivers.

In doing so, they stand to achieve stronger asset performance, enhanced profitability, and greater long-term resilience amid uncertainty.