Supply
In 2015, there were only around 50 hospitality brands and just seven non-hospitality brands in the space. A decade on, those numbers have surged to 145 hotel brands and 75 non-hotel brands. At last count, there were 779 completed branded residence schemes worldwide and 967 more in the pipeline to 2031.
But at the HVS Global Hospitality Services webinar Hotel Branded Residences – Hype or the New Normal?, the mood was less about hype and more about momentum, discipline and complexity as stakeholders sent a clear message: branded residences only work when brand, product, structure and capital are all pulling in the same direction.
With the level of growth seen so far and more still to come, the next logical question is why? Data says that globally, branded residences command an average 37 per cent price premium over comparable non-branded product. However, Chris Graham, managing director of Graham Associates & author of industry reports on branded residences warns to take these numbers with a pinch of salt.
“Don’t just take a headline figure and assume you can stick 30 per cent on your pricing. It depends entirely on the brand, the location, the design, and the amenities. In some markets, if you’re in a very competitive prime location, the brand premium won’t be so pronounced,” he warns.
James Price, senior vice president residential at Four Seasons agrees. “If you’re in the strongest markets, you’re also in the most competitive markets. The premium may not be as marked as in a secondary or emerging market, but what matters is that you’re in the right locations where you can genuinely deliver on the brand promise.”
Demand appeal
If the supply side has been busy, the demand side has also been flocking in droves to the ballroom.
Graham boils the buyer appeal down to two words: convenience and confidence.
“In emerging markets especially, bringing in a brand is one way of telling buyers: this will actually be delivered to the standards you expect. And there’s also a community angle. You’re likely to be surrounded by like-minded neighbours who aspire to the same brand,” Graham says.
STR’s Aoife Roche set that in a wider context of “hotelification” of real estate and a boom in luxury travel.
According to research by McKinsey, luxury tourism is expected to grow exponentially, reaching $391 billion by 2028, up from 2023’s $239 billion.
“We really are in the golden age of luxury travel. It’s not hard to see where branded residential is going,” Roche says.
Diversification, loyalty and revenue
From the operator side, branded residences are no longer a niche sideline. For Marriott International alone, the category now spans around 300 projects globally, with roughly 160 open and a similar number in the pipeline.
“It really comes down to three things,” said Jaidev Menezes, regional vice president, mixed-use development EMEA at Marriott International. “Diversification, loyalty and revenue. And all three reinforce each other.”
The logic is straightforward: branded residences allow Marriott to extend the Ritz-Carlton, St Regis, W or Westin experience into someone’s home rather than just a transient stay.
“Buying a branded residence, in our view, is the ultimate expression of loyalty,” he said. “The owners interact with us every day, often as valuable Bonvoy members. On top of that, you’ve got high-margin royalty fees linked to sales and long-term recurring management fee income without the volatility of hotel occupancy cycles.”
Four Seasons takes a similarly long-term view. The company is celebrating the 40th anniversary of its first residential project in Boston this year and now manages 59 schemes worldwide, with expectations to exceed 80 by 2030.
For James Price, senior vice president - residential at Four Seasons Hotels & Resorts, the starting point is always location and partner, and the assumption that Four Seasons will be there for decades.
“When you’re buying a Four Seasons residence, you’re getting Four Seasons looking after you in the long term. The work we do at the front end - from the governance structures and homeowner associations through to the layouts and back-of-house flows - is always with a 10, 20, 30-year lens.”
The legal lens
As the sector has scaled, so has its contractual complexity. Bird & Bird partners Simon Price notes that at its core, the agreement between brand and developer includes a technical and pre-opening services agreement, a management agreement and crucially, a marketing licence that authorises the sale of units under the brand name.
“Upscale and luxury brands will want a high degree of control over the sale process and marketing materials,” Price says, adding that brands will also build in termination rights if sales stall and indemnities if misuse of the brand causes reputational damage.
On the purchaser side, there is usually an overlay of homeowner associations which approve budgets, liaise with management and can hold significant power over future decisions. The structure of any rental programme or rental pool is also central, and in some cases may trigger securities law obligations.
Then there is the question of what happens if the brand goes away.
“Termination of the brand licence is a crucial consideration. Buyers may acquire on the basis of a particular brand and that brand may fall away if a management agreement expires or is terminated. Developers and associations need a plan B, and purchasers need to understand how their rights to services, amenities and use of the brand might change over time.”
Investors talk
For investors, branded residences have become one of the most effective tools to make complex projects work in a tougher environment.
Being able to sell residential units off-plan, often years before the hotel opens, brings cash in sooner, improves IRRs, reduces risk and widens the pool of lenders, notes Ina Plunien, senior vice president at Cedar Capital Partners
She adds: “If you can demonstrate that you’ve de-risked a big chunk of the development through pre-sales, it opens up more senior lending and can reduce margins. Depending on how the scheme is phased, you often also have ongoing sales beyond hotel opening, which creates a longer tail of cashflows.”
For debt providers such as OakNorth Bank, branded residences are attractive but not automatically bankable. Track record of the sponsor is crucial, said managing director of debt finance Deepesh Thakrar.
“We look very closely at whether the developer has done this before. Build costs and land prices are astronomical and GDVs are still a little variable. Something has to give. You also have to think about the tail: if it takes five years to sell out a scheme, does the sponsor have the holding power? Is there sufficient depth of demand?”
Thakrar also points to the secondary market as a genuine risk factor. “If you buy something for £5 million, will it still be worth at least £5 million in five years’ time? That’s a key concern.”
On service charges, both Plunien and Thakrar emphasised transparency. For a buyer spending several million on an apartment, the ongoing cost of maintaining five-star standards is not trivial.
“What will be charged at what stage must be clearly articulated. Alignment and clarity are extremely important here” says Plunien.
The next chapter
And while traditional co-located hotel-plus-residences have been dominant so far, standalone branded residences are on the rise.
Menezes says: “Five years ago, standalone was about 10 per cent of our EMEA pipeline. Today it’s around 40 per cent.”
Four Seasons is seeing similar momentum, with standalone projects in Dubai and Abu Dhabi performing strongly.
Experts note this is a result of buyers wanting brand assurance and service standards without paying for a hotel overhead and developers wanting the halo effect and operational backbone without the capex of a hotel.
Alongside standalone, they highlight the untapped opportunity in upscale and mid-scale branded residential product. Graham talks about the market as a triangle: the luxury apex has captured most attention but the mass of opportunity lies in the larger middle of rising middle-class wealth.
Roche agrees. “The sector isn’t just about ultra-high net worths. The aspirational lifestyle buyer, especially Gen Z and millennials, is a huge opportunity, particularly where projects lean into experience and community as much as pure luxury.”
Graham also sees wellness as a core driver of the next phase of branded residential growth, noting that high-net-worth individuals now rank longevity and wellness as their top travel and lifestyle priority and spotlighting evidence - including from RLA Global - that wellness-focused residential schemes can command an additional 10–25 per cent premium on top of standard property prices.
Senior living is another area he believes has been under-exploited. “We’ve already seen 55-plus branded enclaves selling out in some markets,” he said. “There’s a fantastic opportunity for brands to bring service, trust and design expertise into more mature residential communities.”
Discipline over hype
So will the branded residences boom survive the next turn in the cycle or a prolonged period of higher interest rates?
“I’d like to think that in real estate, discipline wins,” Plunien says. “If you have a well-set-up investment in a good location, with evidenced demand drivers and genuine product–brand alignment, there’s a strong case that branded residences can be resilient through cycles.”
For Menezes, the biggest risk is the proliferation of “flashy projects with no real operating infrastructure or service backbone”.
“One top tip for developers is to think long term. Look 30 years out. We’ve got to get the brand right, the legal structure right, the product right. Hotel brands need to stick to what they do best: design, operationalising, delivering services and amenities. If we get that wrong, the sector’s reputation suffers.”
In other words: the opportunity is immense, but so is the complexity.
To neatly capture where the sector is heading, Graham repurposes a quote: “Experiential luxury is growing faster than personal goods luxury, and designer homes are a natural bridge between those two worlds. Is there any greater experiential product than one you actually live in?”
For an increasing number of brands, developers, lenders and buyers, the answer is clearly no.
By Ifeoluwa Taiwo
