What does the "asset light" model mean in the hotel industry?

The "asset light" model in the hotel industry refers to a business strategy whereby companies focus on managing hotels without owning the actual real estate. This approach allows hotel operators to reduce their capital expenditure and financial risk associated with owning physical properties. By prioritizing management contracts or franchise agreements, companies can concentrate on their core competencies, such as brand development and guest service, while outsourcing the ownership and property management to other investors.

This model has gained popularity as it enables rapid expansion and greater flexibility, allowing hotel brands to increase their footprint in various regions without being tied down by the financial burden of property ownership. It is often seen as a way to generate revenue through management fees, rather than tying up resources in real estate investments.

The other options reflect different aspects of ownership or investment but do not capture the essence of the "asset light" approach, which specifically emphasizes the separation of hotel operations from property ownership.