Branded residences have become a major driver of mixed-use hospitality pipelines, with hotel keys reducing in new developments across the major international hotel brands, delegates at the Resort & Residential Hospitality Forum in Athens were told on the first day of the event.
Marriott International’s chief development officer Dana Jacobsohn said that within the Marriott pipeline of co-located hotel deals, the average number of hotel keys in open projects stands at 213 in open projects but for those in the pipeline, this has reduced to 164. She noted the decrease in the number of keys and pointed to the US where in 2023, of the top five mixed use schemes that opened, each had 63 keys or less.
“We know branded residential is so popular because it helps capitalise a project and it is easier to finance. Hotels are expensive to build, financing is challenging and it takes time for the return on investment, compared with selling a residence,” she explained.
She added: “The way we handle this, first everyone on our branded residential schemes has hotel experience, so we work to make sure each component of a mixed use hotel works. So if a 60 key hotel doesn’t work, we will guide a developer to do something different to make sure it stacks up,” she added.
Jacobsohn said that Marriott “strives to be the travel brand of choice”, and therefore the hotel group targets its customers to encourage them to spend within its brand eco-system.
“That’s why we are so focused on standalone residences. Globally, 28 per cent of our pipeline is standalone, in EMEA that is 40 per cent. That’s happening because we are finding new places to have residential where we may not have done 10 years ago. We have our first one in Spain near Marbella, so we’re finding new addresses and we’re not just focused in the luxury space. It’s about new locations, across more brands.”
Accor One Living Chief Business Officer Jeff Tisdall added that any mixed-use development must “stack up on the hotel side”, while for the residential branding it is essential that it will land favourably and find the right scale.
Wide range of opportunities
“Some things are changing, but we’re seeing a little bit of a shift towards residential. Also in we believe that in the resort market there are opportunities when working with partners that can operate in both sides, there are further opportunities to enhance,” he said. “Option one might be to keep all the keys, option two might be to sell off 10 per cent but with the likelihood they will be part of the leasing component.”
Like Jacobsohn, he saw a wide range of branding options, from lifestyle to luxury and ultimately premium, with niche branding opportunities that may lend themselves to boutique environments.
“Standalone has been in our strategy for about eight years now. We had paused because we were so busy with mixed use, but standalone really emerged as an opportunity for us to extend our brand and allowed it in some respect to go further. Now about 20 to 30 per cent of our pipeline openings are standalone in Europe and Dubai, Tisdall said.
“But branded residential is not a space we take lightly, it requires quite a bit of heavy lifting, both for the developer and operator to really see it through and to make sure that what is promised at the front end is delivered on the operational side.”
Focusing again on the US, Hilton global head of international Jonathan Wingo stated that the hotel giant had seen the number of residential units growing, although not as the 100 per cent condo-style hotels of the past, yet still as a sizable component of new development. Hilton is looking at around half of its development pipeline as standalone and half as co-located.
“It is important that the hotel can stand on its own. There is growing demand for resort residences that have a lease programme, as people tend to own more property around the world,” he said.
“It’s huge for our brand loyalists, extending the experience beyond our hotels. The standalone product can make sense and there is significant demand. Not every scheme will work, as there is a lot or residential being developed around the world and it is important to be discerning,” he added, pointing to the company’s standalone Dubai residences.
OBMI Business Development Director MENA Syrine El Ouerghi added that there has been a shift from design to lifestyle and experiences in terms of the interiors of the residences.
“We approach the properties in a different way that emphasises the entire guest experience. Customers are intent on getting the whole experience of the location, so we want them to be constantly immersed in the brand,” she said.
All three of the hotel groups have extended their loyalty schemes to encompass residential users and owners, allowing them to create more personal and bespoke offers for their customers wherever they travel around the world.
In addition, Tisdall said that Accor is looking at the senior living opportunity - notably those aged 55 years old and above - and how they create an offer for active mature buyers, with an all-encompassing proposition that also brings in well-being, highlighting interest, especially from Asia.