Meeting in the middle

“The under-demolished mid market” is a phrase which has been attributed to several sector luminaries over the years. We are inclined to credit it to Chris Rouse but you can take it up with us later. The universal truth remained; whoever claimed the saying, the mid market would be a whole lot better if someone nuked it from a safe distance. From space, for example. 

Not glamorous like luxury and not efficient like budget, these hotels hovered in the middle, close to indefinable, but often finding their way into the consumer press as the home of crappy food, trouser presses and depressing bars featuring stools for one. Best to move on and the focus of branded hotel development over the years reflected this, with yachts at one end and tech only at the other.

No more. Marriott International’s City Express deal triggered a reevaluation of what it called the “affordable midscale” segment and, yes, that particular deal was a lot about gaining a chunk of Latin America, but it also plugged a gap. At the time of the transaction in 2022, CEO Tony Capuano said it would provide “our customers with more choice through a new, approachable, moderate-priced offering, increasing opportunity for owners and franchisees as well as associates”.

Skip onto Q1 this year and Capuano was all about the sector, telling analysts: “Our new midscale brands, City Express by Marriott, Four Points Express and StudioRes, are seeing significant developer interest. Earlier this year, we also signed our first City Express deal in the region since acquiring the brand, and we are in multiple deal discussions for other properties across the CALA region. We have also now opened our first Four Points Express in Turkey and have other properties in the pipeline. We also recently signed our first midscale deal in APEC, a portfolio of more than a dozen hotels that are expected to be added to our system later this year.

“In the US & Canada, we have commitments for around 140 StudioRes properties and are actively working on deals for over 100 more.”

In fact, Marriott loves the mid market so much that its next brand will be “a conversion-friendly midscale brand” in the US and Canada.

Not to be outdone, last year saw IHG launch midscale conversion brand, Garner, with CEO Elie Maalouf commenting that it was “bringing to the midscale market a brand we know owners and guests want from IHG”.

Commenting on the most-recent call, Maalouf described “a great start to the year for our newer mid-scale brands …including a dozen signings globally for Garner as it accelerates in the Americas and secured its debut in EMEAA”.

It appears that, rather than convert your mid-market hotel into flats or a hole in the ground, plugging it into one of the big stables is now a better option and one which was not open to you before. And with budget brands reaching saturation in many of the mature markets, it makes sense to target a sector which has been widely overlooked. 

Alongside the demand requirements of hotel group pipelines are the demands of the consumer. At the end of last year, RSM described the demand for luxury hotels in the UK as “there and growing”. This was despite the UK being in grips of a cost of living bother. Average room rates of UK luxury hotels jumped 13.9% from £320.74 in November to £365.43 in December according to RSM/HotStats.

As in politics, so in hotels and the past few years have seen a polarisation in the sector. Luxury hotels are now crazy luxury. Private spas, private jets, almost-private yachts. The bar is being reset with each new opening and with that comes extraordinary development costs to match the room rates. The 1% is growing, which is great news for these hotels (although less so for politics) and everyone else is being left behind. Throw in that corporate travel budgets stopped allowing for shoe shining to be expensed some time ago and enter the mid market.

Time for a new catchphrase? Answers on a postcard. 


Image: Garner

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