At the Hotel Investment + Development Event (HIDE), organised by Hotel Analyst, a discussion focussed on how branded residences combine developer returns with hotel performance.
Opening the discussion, Simon Allison, chairman and CEO of HOFTEL, framed the debate around viability and value: are branded residences fundamentally dependent on being co-located with hotels, or can standalone schemes truly sustain themselves?
Sam Barrell, director of mixed-use development EMEA at Marriott, observed that while the US market is comparatively mature, EMEA remains emergent. He argued that branded residences can be a powerful enabler of hotel feasibility, particularly given the long timelines associated with hotel development. The ability to sell residences off-plan and pre-opening can significantly improve project viability and unlock financing.
However, Barrell stressed that Marriott underwrites hotels and residences separately. Co-location remains the preferred model, with standalone projects subject to far greater scrutiny. Entering a market without an existing hotel presence, he suggested, increases risk and raises questions about brand alignment and long-term operational sustainability.
Dan Wakeling, VP development, luxury and residential EMEA at Hilton, said that the company has historically focused on co-located schemes, although standalone models are beginning to emerge. While Dubai and Miami are leading markets, increasing competition in markets such as South Florida raises questions around how much premium can be sustained as more branded product enters the pipeline.
Roger Allen, group CEO of RLA Global, highlighted the relative lack of empirical studies when determining long-term value such as sales price over time – though this will come as the sector grows and matures. Allen added that if a net premium did not exist, developers would not be in the market. He referenced that licence fees, typically ranging between two-to-four per cent of gross development value, remain a “big ticket” item.
Brands apply rigorous scrutiny to protect long-term brand equity, often creating elevated expectations around product specification, amenities and service levels. While this can lead to extra costs, if the amenities are misaligned with buyer tastes, then the service charge will be difficult to amend in the future.
A clear tension emerged between development economics and hospitality fundamentals. While the attraction of branded residences lies in the ability to accelerate cash flow (through residential sales) and service debt early in the lifecycle, this can result in a disproportionate focus on the residential arm, with the hotel element becoming secondary.
Yet the premium developers seek to monetise is intrinsically linked to the credibility of the hotel; its brand standards, service standards, and amenities featured. Under-investing in the hotel could risk eroding long-term pricing power, particularly as more branded product enters competitive markets.
Brand selection is therefore key to differentiate product, but the developer’s lens remains commercial: does the premium translate into velocity, and can it be achieved at a level that justifies the additional cost? Allison concluded that developers are rarely focussed on a single asset but long-term positioning for future pipelines.
