Leaders of global hotel brands say opportunities abound for international growth, but getting the right hotels in the right markets is becoming more competitive.
During the "Boardroom Outlook: Global Reach" session at the 2024 Americas Lodging Investment Summit, Geoff Ballotti, president and CEO of Wyndham Hotels & Resorts, said deploying key money strategically to projects in high-demand markets is part of the recipe for success, but so is having highly desirable brands.
"It's a competitive market, and we're all competing for new construction," he said. "I think we're all using key money to get a deal."
Ballotti said one situation where key money might not be required is in his company's new partnership with SBE to launch a lifestyle brand, which has already garnered significant developer interest without added incentives.
Omer Acar, CEO of the Accor-owned Raffles and Fairmont brands, said the driver for chasing specific deals for hotel brands boils down to the old real estate adage: location, location, location.
"It's first identifying that great location," he said. "It doesn't have to be somewhere popular. It could be an isolated area, but it has to be demanded."
Acar pointed to Costa Rica as a destination that has grown into a high-demand market in the past 20 years.
BWH Hotels Group President and CEO Larry Cuculic said hotel companies also need to be creative in how they lure in investment beyond key money.
"Key money is an option for us, but because of our structure, we've been able to grow really rapidly in the soft-brand area. ... There's not a lot of investment necessary to come over and rebrand as a soft brand," he said. "We call it incentivizing through the fee structure."
Jolyon Bulley, CEO of the Americas for IHG Hotels & Resorts, said despite short-term economic headwinds, China remains one of the biggest potential growth markets for international hotel brands. Investors there remain "very positive about the future of the industry," he said.
The rebound in China so far has been largely in domestic travel, he said, and the next stage will be when Chinese travel resumes across the globe. He said costs and red tape with visas are the biggest obstacles.
"But when they come back, as we've seen pre-pandemic, they'll stay longer and they'll spend more," Bulley said. "And like other brands, our position in China is not necessarily in China for China all the time. Its the power of our brands in China for the outbound travel flow."
But for now, he said, airfares to and from China remain in the tens of thousands of dollars with overall airlift muted, and visa wait times from China to the U.S. have monthslong wait periods with millions of 10-year visas approaching their expiration dates.
Ballotti said hotel brands still have ample room for growth in the U.S., especially economy and midscale hotels positioned to benefit from massive infrastructure spending. But internationally Wyndham is more focused on "upscale brands."
He added many international developers are keying in on hotels that have unique food-and-beverage offerings.
Acar said unique experiences continue to be a key driver of international travel. Accor's approach across Europe and the rest of the globe will be to offer "products and services and experiences for different developers with different reasons and different purposes," he said.
"That's what makes it so great," Acar said. "You can go to our midscale products. You can go to our luxury products. We have Orient Express. We are building yachts. We are building trains. We want to cover that 360-degree experience part of hospitality."