Braemar Hotels shifts Sofitel Chicago Magnificent Mile to franchise model under Remington Hospitality

Braemar Hotels & Resorts Inc., a real estate investment trust focused on high-end hospitality properties, has announced a major structural shift in the management of the Sofitel Chicago Magnificent Mile. Rather than continuing under a brand-managed structure, the 415-room luxury hotel will transition to a franchise model by May 2025, with operational oversight handed over to Remington Hospitality. This change allows Braemar to retain the Sofitel branding while gaining greater operational flexibility—a move that reflects a growing trend among hospitality REITs seeking to improve margins and asset liquidity.

The Sofitel Chicago Magnificent Mile will remain part of the internationally recognised Sofitel brand, which is owned by French hospitality group Accor. Under the new franchise structure, Remington Hospitality will manage the day-to-day operations of the hotel under the terms of Braemar’s existing Master Hotel Management Agreement. Importantly, all employees currently working at the hotel will be offered positions with Remington subsidiaries, ensuring continuity of service and operational stability through the transition.

This decision marks a significant evolution for one of Chicago’s most prominent luxury hotels and underscores the REIT’s intent to optimise the value of its core portfolio assets. Braemar Hotels & Resorts has not been required to undertake any immediate renovations or upgrades as part of this conversion. However, the company has voluntarily committed to a phased renovation of the hotel’s public spaces—including the lobby, restaurant, and meeting rooms—over the next two years. These enhancements are designed to modernise the guest experience while sustaining the premium status of the Sofitel Chicago Magnificent Mile in a competitive urban hospitality market.

What does the franchise model mean for Braemar Hotels and Sofitel Chicago?

Transitioning the Sofitel Chicago Magnificent Mile into a franchise model grants Braemar Hotels & Resorts more control over the asset’s operational and financial direction. Unlike brand-managed models, which often tie hotel owners into long-term contracts with limited operational autonomy, franchise agreements allow for a more flexible, asset-light approach. In this case, Braemar can maintain the strong brand equity of Sofitel while engaging Remington Hospitality, a trusted operator, to manage the hotel under terms that are more adaptable to future strategic decisions.

Richard J. Stockton, President and Chief Executive Officer of Braemar Hotels & Resorts, indicated that the move is expected to immediately boost the value of the property. He pointed to the benefits of maintaining the Sofitel name while gaining a sale-terminable management agreement as factors that make the property more appealing from a portfolio management and investor perspective. Such a strategy may position Braemar more favourably in terms of future asset sales or joint ventures.

This type of franchise conversion has become increasingly common among hotel REITs as they seek ways to enhance portfolio returns without compromising on luxury brand alignment. In maintaining the Sofitel Chicago Magnificent Mile brand, Braemar also ensures continued access to Accor’s global distribution systems, loyalty networks, and marketing reach.

How does this fit into broader trends in the luxury hospitality sector?

The move by Braemar to shift the Sofitel Chicago Magnificent Mile to a franchise model reflects a larger trend in the upscale and luxury hotel segment, where asset owners are reassessing the balance between brand affiliation and operational control. While brand-managed hotels typically offer a more hands-off model for ownership groups, they also limit control over costs, staffing, pricing strategies, and operational agility.

Franchise arrangements, by contrast, allow hotel owners to tailor operations to local market conditions and strategic goals, often through a third-party management company like Remington Hospitality. This structure has gained favour in recent years, particularly in North America, as rising interest rates and cost pressures have placed increased scrutiny on REIT margins.

The trend is especially pronounced in urban luxury markets like Chicago, where premium hotels compete not only on location and design but also on service quality, brand strength, and financial performance. With new developments entering the market and traveller expectations evolving post-pandemic, hotel owners are seeking models that enable them to adapt quickly while maintaining brand consistency.

Braemar’s commitment to upgrading key areas of the Sofitel Chicago Magnificent Mile—even without a required property improvement plan—signals a recognition that design and amenity improvements remain essential to sustaining revenue per available room (RevPAR) growth in the face of rising guest expectations.

How is Braemar’s stock performing amid this transition?

Despite these strategic efforts, the share price of Braemar Hotels & Resorts (NYSE: BHR) has faced headwinds. On April 3, 2025—the same day the franchise announcement was made—the stock closed at $2.38, reflecting a drop of 8.81%. Over the prior 30 days, BHR had lost nearly 16% of its market value. Analysts attribute this decline to broader market concerns impacting REITs, especially those exposed to hospitality and interest rate fluctuations.

The short-term outlook for Braemar’s stock remains cautious. Forecast models predict a modest price rebound to approximately $2.54 in the near term, suggesting a 6.7% potential upside. However, investor sentiment is still guarded, as reflected in a current Fear & Greed Index score of 39, which signals an environment of “fear” among equity investors.

Nonetheless, Braemar has taken several steps to improve its financial position. In March 2025, the company refinanced five of its hotels, reducing interest expenses and improving liquidity. It also declared a $0.05 per share dividend for the first quarter of 2025, signalling continued commitment to shareholder returns even during a period of stock price volatility.

Given the company’s recent efforts and the expected operational benefits of the Sofitel Chicago franchise shift, investment analysts recommend a “Hold” position. The franchise conversion is seen as a positive long-term move, but investors are urged to monitor how these structural changes translate into improved financial metrics across the company’s portfolio in the quarters ahead.

What can guests and investors expect from the Sofitel Chicago Magnificent Mile in the future?

For guests, the transition to a franchise structure is unlikely to result in any immediate noticeable changes. With Remington Hospitality stepping in under familiar management terms and all current staff being retained, the daily experience at the hotel is expected to remain seamless. The upcoming renovations to the public areas will aim to enhance guest experience further, modernising the aesthetic and functionality of high-traffic spaces.

For investors and analysts, the Sofitel Chicago Magnificent Mile will serve as a bellwether for Braemar’s broader strategic direction. If the franchise model proves successful—improving margins, guest satisfaction, and property valuation—it may become a template for similar transitions across other assets in the portfolio.

Ultimately, Braemar’s shift to a franchise model at one of its marquee assets signals a calculated evolution in its asset management strategy. As the luxury hospitality sector continues to evolve, REITs like Braemar are rethinking how best to balance brand power with operational independence. The Sofitel Chicago Magnificent Mile, under its new franchise and management arrangement, stands at the center of this dynamic.