Barry Sternlicht, founder of Starwood Hotels and a hospitality industry veteran, has issued a stark warning to established hotel chains: adapt or risk losing market share to nimble, independent brands. Speaking at the NYU International Hospitality Investment Forum, Sternlicht highlighted how shifts in consumer behavior and the rise of social commerce are eroding the advantages that once cemented the dominance of major hotel groups.
Sternlicht, who sold Starwood Hotels to Marriott for USD 13 billion in 2015, drew parallels between the hospitality industry and consumer product markets, where independent and niche brands have steadily eaten into the market share of large corporations. “In cosmetics and fashion, upstart brands now hold about a third of the market, up from just 10% a few years ago,” Sternlicht noted, leveraging insights from his long tenure as a board member at Estee Lauder.
Sternlicht emphasized that social commerce—direct consumer engagement through social media platforms—is reshaping the competitive landscape. Unlike traditional marketing, which often requires significant capital investment, social media allows smaller brands to cultivate direct, personal relationships with their audiences.
“The old models of marketing, where deep pockets determined reach, are giving way to a world where creativity and authenticity rule,” Sternlicht said. “It’s easier than ever for an independent hotel to go viral with the right post, turning a single property into a must-visit destination overnight.”
Major hotel chains, Sternlicht argued, must rethink their strategies to maintain relevance in this rapidly evolving environment. The size and structure that once provided stability can now act as a barrier to agility. “Big chains are fantastic at operational efficiency and consistency, but they often struggle with the kind of flexibility and creativity that today’s consumers demand,” he said.
Sternlicht noted that younger travelers, in particular, are seeking unique, localized, and experiential stays—qualities often better delivered by boutique or independent properties. “They don’t want a cookie-cutter experience. They want authenticity, and they’re willing to pay for it,” he added.
While acknowledging the challenges, Sternlicht also pointed to opportunities for large hotel brands to innovate. By investing in smaller, lifestyle-oriented sub-brands and adopting a more personalized approach to guest engagement, major chains can remain competitive.
“Partnerships, acquisitions, and the strategic use of technology can bridge the gap between size and individuality,” Sternlicht said. “But it requires a mindset shift—a willingness to take risks and embrace change.”
Sternlicht’s message resonated strongly with the audience of industry leaders, many of whom are grappling with the same questions about how to adapt to an increasingly fragmented market. His insights serve as both a warning and a roadmap for the future of the hospitality industry.
“Disruption is coming,” Sternlicht concluded. “The question is whether the giants of the industry will evolve fast enough to meet it head-on.”
As the hospitality sector continues to recover from the effects of the pandemic, the dynamics Sternlicht described are likely to play a critical role in shaping its next chapter. For now, the race between the agility of independents and the scale of giants has never been more intense.
