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Communal area at citizenM Miami World Center. Marriott International completed the acquisition of the brand in July 2025.
financing becomes cheaper, buyers accept lower returns to acquire assets.
Transaction and new-construction activity may still be stilted, but the 30-plus brands Marriott International has in its quiver remain at the ready to fly. The one sharp arrow continues to be luxury, which thrives in this K-shaped economy of haves and have nots.“ Luxury has been the strongest performing tier for us,” said Capuano. In the segment, Marriott features such brands as Ritz-Carlton and St. Regis. Since ground-up development has been harder to metabolize, Marriott, and its peers, have leaned on conversions for growth. Capuano said conversions account for as high as 40 % of new signings and openings.“ We’ ve built an infrastructure and a philosophical approach that even when we find ourselves in a booming economy, I don’ t anticipate a pullback from conversions. They’ ll be a more fundamental part of the growth story for big brand companies on a permanent basis,” he said.
IHG’ s Maalouf said that lenders are more friendly to conversions.“ You’ re adding newer product without adding supply to the market,” he said.
IT’ S EXPENSIVE OUT THERE A thaw in deal activity and growth in new development is not a panacea for other ills faced by the industry; namely, expenses up and down the P & L that threaten margins and operating income.“ Most expense items continue to grow at pace at or ahead of the historical base and it has put extraordinary stress on the return proposition of the investment,” Capuano said, adding that investors are using it as impetus to explore investments outside traditional hospitality, such as in the alternative-accommodations landscape.“ There is a fundamental dilution on the return model for investing in hotels,” Capuano said. Brand companies have aimed to ease the cost burden by examining affiliation costs, ramp-up standards and leveraging scale to save more in procurement.“ There is urgency around making these investments as compelling to our partners as they once were, because that’ s not where they are,” he said.
Noble’ s Shah tracks it closely and gives credit to the brands for trying to find solutions for owners that make hospitality investment more attractive.“ There is real dialogue and strong efforts by brands at looking at this operating model,” he said,
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