By Staff writer
From an investment standpoint, mid-market hotels have significant advantages over luxury and upper upscale properties
As the hotel market becomes more competitive and key sites become harder to find, hoteliers are shifting to the mid-market sector, which has been performing better than the industry as a whole, according to new data.
This trend for mid-market hotels is underpinned by government incentives, a growing middle class in key source markets and the rise of a younger, more cash constrained guest profile, according to research by the Knight Frank real estate company.
From an investment standpoint, mid-market hotels have significant advantages over luxury and upper upscale properties, such as lower capital investment, lower construction costs and timelines and lower land requirements.
For operators, this sector also has a lower staff to room ratio, higher profitability ratios and less revenue volatility, due to demand trends being less seasonal than in the luxury and upper upscale segments, the Knight Frank report concluded.
Looking forward to the next five years, Knight Frank said it expects to see an influx of quality, internationally branded mid-market properties come to market, which will likely benefit from strong demand levels.