“Most companies had been able to delay their brand-mandated property improvement plans as a result of the pandemic. These PIPs have now come due and are no longer being extended. As a result, owners and operators are looking at the ROI on these expensive PIPs,” he said, conceivably producing a motivating factor for conversion.
Conversions can include a variety of plays: brand to brand, independent to brand and vice versa, distressed assets, adaptive reuse (historic, office and other opportunities).
Setting the pace
“We see growing opportunity in the renovation and repositioning of existing hotels,” said Ben Rowe, founder/managing partner of KHP Capital Partners in San Francisco. The real estate private equity firm recently did two brand conversions, notably turning the former Le Méridien San Francisco into The Jay, Autograph Collection, and has two more in the works as of 2Q25, including the conversion of the Pan Pacific Hotel in Seattle into a 1 Hotel. He noted conversions represent 40% of KHP’s 18-hotel portfolio. “Over half of the deals we did in our last two funds involved a brand conversion,” Rowe said.
Conversions are a key strategic pillar for Grapevine, Texas-based NewcrestImage, according to Managing Partner and CEO Mehul Patel. “We anticipate a strong pace heading into Q2 due to shifting market dynamics,” he said. “Rising construction costs, interest rates and supply-chain challenges have made new-builds less viable. So, conversions are an attractive, cost-efficient alternative. We are proactively assessing distressed assets, repositioning underperforming hotels and identifying adaptive-reuse opportunities to expand our portfolio.”
The overall pace has been consistent over the last few years, with multiple hotels in various stages of renovation/conversions for Columbus, Ohio-based investment firm Rockbridge, which has “a robust pipeline of potential conversions,” said Matt Welch, managing director, investments. “It is difficult to bridge the bid-ask gap between buyers and sellers as the cost of these renovations are significant and difficult to finance efficiently. We have ongoing renovation projects throughout our portfolio, a variety of which are contemplating a brand change.”
Of its 82 hotels—63 majority owned—conversions represent 12% of Rockbridge’s portfolio. So far, there are two conversions planned for this year, Welch noted.
Denver-based Sage Hospitality Group’s President Daniel del Olmo pointed to a strong start to the year, completing three conversions: the transformation of W New Orleans into Hotel de la Poste; the conversion of the Hotel Alpenrock in Breckenridge, Colorado; and the repurposing of a residential building in Savannah, Georgia, into The Ann, which, he said, “marks the first Apartments by Marriott Bonvoy to open in the continental U.S.”
Sage is always looking for strategic conversion opportunities, del Olmo continued. “As we head into Q2, we have four to five transitions in the pipeline, including one conversion in the South that I’m especially excited about, as we’ll be collaborating with our in-house creative team at Sage Studio to bring it to life,” he said. “We remain open to conversion opportunities that align with our vision and add value to our portfolio.”
Real estate and development private equity firm TMGOC Ventures, Charleston, South Carolina, as of January 31 had 22 hotels in its portfolio, 19 of which are branded, and has executed on a number of conversion plays over the past 12 months.
Company CIO Krystal England noted, for example, “TMGOC has completed several management conversions, including transitions to Lexima Hospitality, our affiliate management company, as well as third-party managers.”
She added conversions represent “roughly 54%” of the portfolio, and TMGOC’s 2025 pipeline “contains a number of rebranding and management conversion opportunities.”
