In HM’s 2024-2025 Hotel Development Outlook, Choice Hotels Asia-Pac Head of Investments and Portfolio Growth, Trent Conroy, talks strategy to overcome current market challenges.
Choice Hotels Asia-Pac anticipates strong net unit growth in 2024, despite factors causing industry uncertainty. Growth rates are subdued across the region driven by weaker than forecast inbound tourism and persistent levels of inflation and interest rates. These factors combined with limited land availability, labour shortages and rising material expenses have increased construction costs especially across major tourist hubs in New South Wales and Victoria.
Rising development costs have created funding and yield challenges for new builds and renovation projects. The regional workers’ accommodation fund is witnessing high demand and oversubscription. As a result, developers and investors are increasingly drawn to brands with a strong balance sheet, financial support, and franchise model flexibility. Choice Hotels are seeing commercial developers, particularly for mid and upscale projects, approaching us in higher volumes than ever before.
Independent hotels are also increasingly turning to brands, driven by market dynamics and guest preferences. They’re seeking to leverage the strength and support of recognised brands in times of market uncertainty along with an established and trusted framework to meet guest expectations around service, sustainability, and customer personalisation.
Choice Hotels is witnessing strong in-bound interest, particularly in regional and rural locations where our leading market presence is recognised.
As market consolidation continues to rise, owners and operators appreciate the benefits of scale and are increasingly looking to grow their portfolios. This growth trend presents opportunities for corporate development and conversion strategies. Responding to this, Choice Hotels has adjusted its approach to support the aspirations of current and prospective franchisees. Leveraging our scale, strong balance sheet and franchisee-geared services we’re supporting our owners to turn a single hotel into a multi-unit portfolio.
As an asset-lite franchisor, we’ll always champion the clear benefits of franchising. It’s pleasing to see interest in the model continue to climb reinforced by the rise of competitive interest and requests for dual proposals, and growth in white-label management companies.
These development opportunities across investment-led and conversion deals have seen Choice Hotels Asia-Pac reimagine our Development and Investment team to include dedicated expertise under each approach. Corporate development and conversion working together under a united strategy ensures we can leverage the full suite of our franchise offering and drive rapid growth.
Read the full 2024-2025 Hotel Development Outlook in the June edition of HM Magazine.