By Jim Butler —
Every hotel management agreement and franchise agreement has a history. This post is the first in “The New Rosetta Stone” series telling that story: the people, the deals, and the decisions that created the documents we negotiate today. The founders who built this industry faced the same questions owners and operators face now: Who owns the building? Who runs it? Who sets the standard? And what happens when someone fails to meet it?
Six strangers in one bed
Two hundred fifty years ago, six strangers shared one bed at a roadside inn — and any person who complained was judged unreasonable. In this first post, Benjamin Franklin puts John Adams to sleep with a lecture on air. The first hotel room with a lock and key in 1829! And the moment brand segmentation was born—at a wagon stand on the National Road.
~ From “DNA of the Hotel Deal,” prelude to Hotel Management & Franchise Agreements: Negotiating and Terminating Hotel Contracts (expected publication early 2027).
When privacy was an unreasonable demand
Today, the United States has approximately 65,000 hotels and 5.8 million guest rooms. It is one of the most saturated hospitality markets on earth. Two hundred and fifty years ago, six strangers shared one bed at a roadside tavern, and the only person who complained was judged unreasonable. Everything between those two facts is the story this book will tell.
Six strangers shared one bed at a roadside tavern, and the only person who complained was judged unreasonable.
In colonial New England, keeping a “public house” was civic duty, not business. The Massachusetts General Court required towns to maintain houses of entertainment for travelers. Connecticut demanded that every town identify a “sufficient inhabitant” to serve as keeper. When Concord and Newbury failed to provide accommodations, they were fined. The colonial records of 1644 note that “strangers were straitened” (pressed for shelter) when towns neglected the obligation.
The keeper’s license contained the basic architecture of what we now call a management agreement. Someone other than the ultimate authority was granted the right to operate, on defined terms, with defined duties, and a defined consequence for failing to perform. Losing his license and his sign was crude, but it amounted to a termination right. The keeper did not own the franchise of keeping a public house; the town granted it, and the town could revoke it.
The keeper’s license contained the basic architecture of what we now call a management agreement.
Privacy, in those early houses, simply did not exist. Six strangers might share a single bed. A traveler who objected was considered, in the language of the day, “obnoxious and unreasonably fastidious.” The real money came from food, strong liquor, and care of horses. The room itself was a low-margin service that law forced the keeper to offer.
Benjamin Franklin and John Adams demonstrated the state of the art in 1776, sharing a room at a New Brunswick inn on their way to meet Lord Howe on Staten Island. Their chamber was “a little larger than the bed, without a chimney and with only one small window.” Adams wanted the window shut against the night air. Franklin insisted it be opened. Adams closed it. Franklin launched into a lecture on his theory of air and respiration. Adams fell asleep listening.
It took 200 years to invent a private bedroom
It took 200 years for the first purpose-built hotel to appear in the United States. For nearly two centuries, American travelers slept in converted private homes, taverns, and roadside ordinaries. No one had built a structure whose sole purpose was lodging strangers for profit.
That changed in 1794, when the City Hotel opened in lower Manhattan: five stories tall, with more than 100 rooms, public parlors, and a ballroom. It was the first building designed from the ground up to sell privacy as its core product. It was a proof of concept. The market would need another generation to catch up.
That generation arrived with the Tremont House in Boston in 1829. The Tremont was the first hotel to offer locking private bedrooms. For the first time, a guest could shut and secure a door against the world. It also introduced early indoor plumbing, but not necessarily on your floor. The eight indoor toilets were all on the ground floor, bathtubs in the basement, and a roof tank with a steam pump to supply water. Guests still had to leave their rooms and go downstairs, but the direction was unmistakable.
Even so, it took decades more for these fundamentals to become common, much less universal. The private, lockable hotel room that travelers now consider nonnegotiable was not the industry’s starting point. It was a hard-won achievement, arrived at slowly and against resistance. One guest. One room. One lock. But still no private bathroom. That would take another 78 years—and a bellboy from Ohio with a radical idea, but that is another chapter in the history of our industry.
Manifest Destiny needed a place to sleep
In 1803, the United States purchased 828,000 square miles from France for $15 million, roughly doubling the nation’s land area overnight. Within a year, Meriwether Lewis and William Clark set out to map what the country had just bought; their expedition (1804 to 1806) opened the public imagination to the vast territory west of the Mississippi. The infrastructure followed.
The National Road, also called the Cumberland Road (construction began in 1811), ran from Cumberland, Maryland, through Ohio to Illinois. It was the first major federally funded highway, and it carried a river of Conestoga wagons, stagecoaches, and families heading west. Inns spaced themselves roughly every ten miles, the distance a team could cover between rest stops. The Red Brick Tavern in Lafayette, Ohio, opened in 1837 and still operates as a restaurant. The Century Inn in Pennsylvania, built as Hill’s Tavern between 1788 and 1794, is commonly identified as the oldest continuously operating inn on the National Road.
Market segmentation appeared almost immediately. “Wagon stands” served the hauling trade; rough accommodations for teamsters and their cargo. “Stage houses” like Mount Washington Tavern in the Alleghenies catered to the affluent traveler willing to pay for better food and linen. Two tiers, two price points, same town.
Two tiers, two price points, same town.
The modern hotel industry’s obsession with brand segmentation has deeper roots than most operators realize.
Farther west, along the Santa Fe Trail and the Oregon Trail, lodging took whatever form circumstances allowed: trading posts, military forts, ranch houses, stagecoach relay stations. These were bundled enterprises (part general store, part livery, part sleeping quarters) and they operated under no one’s brand standard but their own.
The Golden Spike at Promontory Summit in 1869 created a new dynamic for lodging demand. Where the railroad went, guests followed, and grand hotels rose at the terminal points. Mackinac Island’s Grand Hotel opened in 1887. Henry Flagler built the Royal Poinciana in 1894 and The Breakers in 1896, betting that the wealthy would ride his Florida East Coast Railway south if he gave them somewhere magnificent to stay. The Greenbrier, rebuilt in 1913, applied the same wager to the mountains of West Virginia. Each was a bet that the railroad would bring the guests; each bet paid off.
Next post: The man who ran the most important restaurant chain in the American West—without owning a single building.
Jim is a partner and co-chair of Blank Rome’s Hospitality practice. He is widely recognized as one of the leading hotel lawyers in the world. Over the course of his career, he has built one of the preeminent hospitality practices in the industry—advising owners, developers, lenders, independent management companies, and capital providers on sophisticated hotel and mixed‑use projects around the globe. He devotes 100 percent of his practice to the hospitality sector, bringing clients deep industry insight and practical legal counsel. Learn more about his practice here.
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