In an environment where development finance is constrained or expensive to come by, hotel conversion projects naturally rise in popularity.
In the current market situation across many Western territories, conversions can account for around a third of new pipeline signings, for the major international hotel brand groups. Marriott recently revealed that, in Europe, more than 40% of its pipeline signings are either conversions of existing hotels currently trading under other names or brands, or else buildings that will be converted from other uses to create a new hotel.
Conversions make sense
For the major hotel brands and investors, there are generally two types of conversion to consider. First, there is the conversion that takes an existing hotel, revitalising the real estate and switching it to a larger, more established brand. During times when operational costs are unpredictable, and profits hard to come by, owners often look to the value a major hotel brand group can bring, and so switch from a lesser brand, or an own label. The marketing and distribution networks of groups such as Accor, Hilton, IHG and Marriott are simply peerless at delivering profitable hotel guests, despite the fees associated with deploying their brands.
The second type of conversion redeploys existing buildings previously in other uses. With changing demands in the retail and office sectors, savvy hotel developers are increasingly seeing opportunities to convert unused real estate into hotel use. Department stores, office blocks and even underground car parks are being converted across Europe to deliver new, innovative hotel developments. Environmentally, reuse of existing structures is more responsible than demolition.
Marriott reckons nearly 100 of its pipeline properties in Europe will be delivered by one sort of conversion or another, over the next three years. It points to signings in Italy, the UK, Spain and Turkey as examples of this.
Brands deliver revenue
Satya Anand, Marriott’s president of the EMEA region explained the rationale behind the signings: “Conversions with Marriott offer owners and franchisees the opportunity to leverage our well-established brands, competitive affiliation costs, the company’s powerful revenue generation engines and Marriott Bonvoy – our award-winning travel programme with more than 200 million members.”
The group’s select service brands – Boxy, AC, Four Points by Sheraton and Residence Inn, represent more than a quarter of the conversion total. And a further 20% will come via additions to the premium Tribute Portfolio and Autograph Collection.
To encourage more conversion signings, Marriott has developed its Four Points Express by Sheraton brand, which was officially launched in 2023 specifically to meet European market needs. The brand opened its first property in Bursa, Turkey and now has properties signed in Turkey and the UK that will take the brand to at least six open hotels by the end of 2025.
The UK hotel will be a 201 room conversion in central London, opening during 2024. Further pipeline openings in Turkey include the Four Points Express by Sheraton Bursa Nilufer, due to launch in 2026.
