Exclusive: midscale the ‘sweet spot’ for developers amid record building costs, reports Choice

Choice Hotels Asia-Pac is reporting increased interest among developers in midscale and upper midscale offerings amid high construction costs.

Speaking exclusively to HM, Choice Hotels Director of Development Australia and New Zealand, Scott Armstrong, discusses challenges and opportunities in the midscale segment, including in regional Australia, and the impact of corporate travel.

Soft brands in favour
Choice Hotels Asia-Pac Development Director, Scott Armstrong

Choice Hotels’ International has found success in midscale accommodation across the globe for more than 80 years. Choice Hotels Asia-Pac has continued strength in this segment with 70% of our portfolio positioned in the midscale Quality and Comfort brands.

We’re experiencing unprecedented pipeline demand and conversion in midscale and upper midscale segments, particularly in regional Australia.

Regional areas boomed during metro lockdowns and rather than settle for their pre-Covid revenue, or fall behind in an increasingly competitive market, they’re looking to brands to increase their distribution presence, maximise their revenue potential and deliver more corporate travel.

The return of corporate travel remains core to consistent success of Choice Hotel Asia-Pac’s midscale and economy segments. During the first half of 2023, Choice reported a 65% year on year increase for Q1 and a 26% year on year increase for Q2 in GDS room nights.

In addition to growing hotels corporate business, loyalty programs continue to be an attractive key to success for the midscale and economy segments. Choice Hotels’ award-winning Choice Privileges loyalty program now has more than 550,000 members in Asia-Pac delivering repeat business and higher-value stays for properties across the portfolio.

Choice Hotels Asia-Pac has seen increased interest in the midscale and upper midscale segments from commercial accommodation developers looking to diversify their guest profiles and maximise return on investment.

With building material and fit out costs at record highs, developers see the midscale segment as a sweet spot to deliver a feasible accommodation product that appeals broadly with both the leisure and corporate markets.

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