Between Brand and Individuality: How White-Label Operators Influence the Hotel Industry

White-label operators are playing an increasingly important role in the hotel industry in Germany. But what exactly is behind this concept, and what opportunities and challenges does it present for the sector? We take a closer look at the key developments and their impact on the market.

What are white-label operators?

White-label operators are specialized service providers that manage hotels on behalf of investors without promoting their own brand. As franchisees of global hotel groups, they act as intermediaries between property owners—often institutional investors—and internationally operating hotel chains such as Radisson, Wyndham, or IHG. They assume operational responsibility for the hotels, ensuring that internal processes and services comply with the brand standards of the respective hotel chain. At the same time, they cater to the needs of investors by signing long-term lease agreements that provide stability and predictability.

What are the advantages of white-label operators?

From an investor’s perspective, this structure allows them to benefit from the expertise of global hotel chains while gaining access to their international reservation, sales, and loyalty programs—without having to be operationally involved themselves. Additionally, they can continue to sign lease agreements, which are predominantly used in Germany, ensuring financial security and long-term stability.

Several other factors also contribute to the growing popularity of white-label operators. The flexibility in contract structures allows independently managed hotels to maintain their unique characteristics while still meeting the brand’s minimum standards. Moreover, by centralizing services such as revenue management, sales support, and reservation systems, white-label operators can enhance the operational efficiency of individual hotels. This leads to cost savings and potentially higher profits for hotel owners.

From the perspective of franchise providers—the hotel chains—the white-label operator model offers an efficient way to expand into new markets. By transferring management and branding responsibilities to an operator in exchange for franchise fees, hotel chains can establish new locations without the need to invest directly in an operational structure. This enables them to grow their brand portfolio strategically while keeping financial risk to a minimum.

Looking at the market as a whole, the dynamic created by the increasing number of white-label operators fosters competition. This drives innovation, diversifies offerings, and raises quality standards, ultimately benefiting hotel guests the most.

What challenges do white-label operators present?

The growing number of white-label operators in the German hotel market presents various challenges for both the industry and hotel chains:

When a few white-label operators dominate a significant share of the market, they gain stronger negotiating power against hotel chains. This creates the risk that hotel chains become dependent on a limited number of operators, reducing their strategic flexibility.

Additionally, as white-label operators gain experience and expand their investor networks, there is a risk that they may bypass franchise agreements and establish their own hotel brands. This could significantly increase competitive pressure—not only among white-label operators themselves but also for franchise providers.

Case study: Novum Hospitality

A well-known example of this development is Novum Hospitality. Initially operating as a white-label operator, the company built strong relationships with investors eager for expansion. In 2017, Novum took a strategic step by launching its own hotel brand, “the niu”, allowing it to manage its properties independently and significantly reduce its reliance on franchise agreements with major hotel chains. However, in April 2024, Novum reversed course and announced a partnership with InterContinental Hotels Group (IHG), which included the integration of more than 100 hotels into IHG’s portfolio. Moving forward, these properties will be operated under a co-branding model as “Holiday Inn – the niu”. While this collaboration enables Novum to benefit from IHG’s global reach and brand recognition, it also means that the company has once again relinquished a (small) degree of its independence by becoming a franchisee and adhering to IHG’s brand standards.

Case study: HR Group

In contrast to Novum, HR Group International has successfully expanded its presence in the hotel market through a dynamic growth strategy in recent years. The company has experienced significant growth due to its aggressive expansion policy, which began in December 2019 with the acquisition of 16 Mövenpick hotels in Germany. Just two years later, in 2021, HR Group further strengthened its portfolio by acquiring 23 hotels from the Austrian Vienna House hotel group, while the Vienna House brand itself was simultaneously sold to Wyndham Hotels & Resorts. This transaction followed a classic “sale & leaseback” model, where HR Group retained the properties but operated them under a brand that had been strategically sold to a hotel chain under optimized conditions. For HR Group, as a white-label operator, the focus is not primarily on brand ownership but rather on lease agreements—provided that the brand standards and franchise conditions align with the operator’s strategic goals. In 2022, HR Group expanded its portfolio again by acquiring Success Group, adding more than 20 hotels in Germany along with additional projects in Germany, Austria, and Belgium. That same year, the company also took over the management of 23 hotels from the Amedia hotel group. The group’s international expansion accelerated further in May 2024 with the acquisition of shares in U Global. Just a month later, in June 2024, HR Group acquired 34 hotels, including two development projects, from Centro Hotel Group, adding over 2,800 rooms to its portfolio. Today, HR Group is one of the leading multi-brand operators in Europe. With 167 hotels, approximately 30,000 rooms, and 28 different brands, it stands as the largest multi-brand operator in the European market.

What is the background of this expansion?

When a white-label operator continuously drives its expansion to gradually gain market share and increase revenue, it simultaneously strengthens its bargaining position with major hotel chains. By expanding its market presence, the operator not only gains greater economic leverage but also significant influence over investors. This strategic positioning provides a crucial advantage in negotiations.

“Such a consolidation of a few large white-label operators is a less desirable scenario from the perspective of hotel chains, as it increases pressure on the brands. This is especially true if a white-label operator focuses primarily on one brand or if multiple white-label operators join forces to form an association, as was the case in France with several operators of Ibis Hotels,” explains Michael Schnürle, Senior Consultant at Horwath HTL DACH.

The advantage of such an alliance is that a white-label operator can fully align itself with a specific brand and consistently tailor its hotels to collaborate with that brand. This ensures that the brand identity remains intact, preventing any dilution of the brand experience from the guest’s perspective.

How will the hotel market develop?

It is generally expected that the share of branded hotels in Germany will continue to grow, creating additional growth opportunities for white-label operators. However, white-label operators such as Novum or RIMC Hotels & Resorts also face the challenge of stabilizing and strategically developing their internationally expanded portfolios in the post-pandemic era.

Unlike Novum, which, as mentioned earlier, relied on a partnership with IHG, RIMC Hotels & Resorts chose to adjust its portfolio. Founded in 1990, RIMC has established itself as an internationally active hotel management company, having successfully completed over 200 hotel projects worldwide. Over the years, the company positioned itself as a white-label operator, working with brands such as Marriott, Radisson, and Hilton.

While RIMC pursued a continuous expansion strategy, the post-COVID-19 period brought significant challenges, including a highly publicized shareholder dispute that damaged the company’s reputation. This conflict led to staff layoffs, the insolvency of a subsidiary, and a consolidation of its portfolio. Currently, RIMC operates over 30 hotels, including nine in Germany.

In addition to the “big players” among white-label operators in Germany—such as HR Group International, Novum Hospitality, and for a long time, RIMC Hotels & Resorts—there are also numerous smaller white-label operators. These companies often manage not only branded hotels but also smaller, independent hotels, typically with a strong regional connection.

From the perspective of major hotel chains, these smaller, locally focused white-label operators pose a lower risk of becoming independent competitors due to their fragmented market presence. Unlike large-scale operators that can leverage market power to establish their own brands, smaller operators remain more dependent on franchise agreements and partnerships with established chains.

What is the impact on the market and independent hotels?

But what are the broader implications of the growing number of white-label operators—both large and small—on the overall market, particularly for smaller, independently operated hotels?

By offering diversified portfolios and integrating strong brands, white-label operators significantly influence regional tourism markets. This creates intense competitive pressure on traditional, family-run hotels.

Additionally, white-label operators benefit from economies of scale, making them even more competitive compared to private hotels. To remain viable in this evolving landscape, independent hotels must proactively enhance their services, differentiate themselves with unique offerings, and continuously adapt to changing guest expectations.

Moreover, the presence of white-label operators raises industry standards and continually enhances guest experiences. Their strong brand portfolios influence traveler perceptions and preferences, as guests increasingly gravitate toward recognized and reputable brands when choosing accommodations.

To compete effectively, traditional hotels must strategically position their own brands, build strong guest loyalty, and create unforgettable experiences that distinguish them from the branded offerings of white-label operators.

Conclusion: Growing influence and new challenges in the hotel industry

In conclusion, the importance of white-label operators in the German hotel market will continue to grow—regardless of whether a few large operators or many smaller ones ultimately dominate the industry. From the perspective of hotel brands, the latter scenario would likely be the more favorable option.

White-label operators successfully combine the advantages of long-term lease agreements—which are widely preferred in Germany—with the resources and networks of major hotel chains. However, their increasing presence also intensifies competition, posing significant challenges for smaller, independent hotels trying to maintain their market position.

Yet, this competitive pressure ultimately drives the industry to continuously invest in quality, service, and innovative concepts to remain differentiated and long-term competitive.

Within this dynamic, white-label operators act as intermediaries, not only bridging the gap between investors and hotel chains but also contributing to a more dynamic and competitive market environment. Their role is crucial for shaping the future of the German hotel industry, ensuring that it remains diverse, resilient, and aligned with both guest expectations and the financial interests of all stakeholders.

Susann Sparwasser is a consultant at Horwath HTL Germany. Her areas of expertise include feasibility studies, project management, conception and long-term strategic planning for hotels and destinations. Connect with Susann on LinkedIn.

This article originally appeared on Horwath HTL.