In a groundbreaking analysis by JLL's Global Hotels, it has been revealed that boutique hotels have outperformed most comparable U.S. hotels in terms of Revenue per Available Room (RevPAR) in the year 2023. This revelation comes as a significant indicator of shifting trends within the hospitality industry.
Amidst a landscape characterized by soaring development expenses and elevated interest rates, the growth of new hotel supply and construction has been notably restrained on a global scale. By the close of 2023, global hotel room supply saw a mere uptick of 3.4 percent, reflecting a decrease of 140 basis points compared to the growth experienced in 2019.
Regionally, the slowdown in construction activity has been most pronounced in the EMEA and Americas regions, dropping by 230 and 160 basis points respectively compared to 2019. This slowdown has particularly impacted the Americas and Europe, while regions like the Middle East and Greater China have experienced comparatively lesser effects due to varying construction and financing dynamics.
In response to these challenges, conversions have emerged as a crucial strategy for hotel brands to drive net unit growth (NUG) and enhance shareholder value. The year 2023 saw a remarkable surge in conversions, reaching an all-time high of 21,000 hotel rooms. This growth has spurred the rise of conversion-only brands like Spark by Hilton and witnessed conversions from diverse asset types including office spaces.
Moreover, hotel brands have actively pursued growth through strategic partnerships and mergers & acquisitions (M&A). Notable examples include Hilton's acquisition of Graduate Hotels and Marriott's partnership with MGM, enabling them to expand their presence across new geographies, hotel sectors, and customer demographics.
Zach Demuth, global head of JLL’s Hotel & Hospitality Group, emphasized the significance of conversions and strategic initiatives amidst the prevailing cost differentials between construction and acquisition. As the construction pipeline begins to gain momentum, the focus on conversions, partnerships, and M&A is expected to intensify, driving investment liquidity and fostering further growth within the global hotel industry.
In conclusion, the data from JLL's analysis underscores the resilience and adaptability of boutique hotels amidst evolving market dynamics. With a strategic emphasis on conversions and innovative partnerships, boutique hotels are poised to continue their trajectory of outperforming traditional counterparts, signaling a paradigm shift in the hospitality landscape.
Source/Photo: hotelmanagement.net