3 Keys to a Successful Hotel Conversion in Today’s Market
As new hotel construction slows to its lowest point in years, conversions have emerged as a more practical and cost-efficient option for growth. Big brands like Hilton and Wyndham are leaning into conversions, particularly in secondary and tertiary markets. This presents a golden opportunity for owners and investors to make strategic moves. Whether you’re revamping an underperforming property or rebranding with a stronger flag, success boils down to three essential steps.
1. Choose the Right Brand for Your Market
A hotel conversion hinges on choosing a brand that resonates with local demand. This requires a data-driven approach to brand selection. Instead of looking at short-term trends, consider local occupancy, competitive performance, and projected ADR growth for the next 5 years.
Take Hilton’s recent strategy as an example. In smaller markets where new builds are not financially viable, conversions are thriving. Locations like Chattanooga, TN, Boise, ID, and Sioux Falls, SD—places with steady tourism and business demand—are seeing great success with converted properties.
Wyndham’s strategy mirrors this. Despite facing RevPAR challenges, Wyndham continues to grow, particularly in markets that cater to value-seeking travelers—college towns, drive-to coastal markets, and properties near major highways.
Pro Tip: Don’t just focus on brand recognition. Look at a brand’s net unit growth potential and how it fits into your market’s profile. A well-aligned brand can instantly boost bookings, loyalty, and marketing exposure.
2. Control Costs and Maximize Margins
The pandemic taught us a crucial lesson: it’s not just about top-line growth; profitability is about maintaining margins. As seen with companies like Expedia, managing expenses and making targeted improvements can yield solid returns even in slower demand periods.
Over-renovation is one of the biggest mistakes in conversions. While it’s tempting to overhaul the entire property, your ROI will be stronger if you focus on high-impact areas.
High-Impact Renovations:
Lobby & Public Spaces: First impressions are everything. A refreshed lobby can drive both booking conversions and positive guest reviews.
Guest Rooms: Upgrading beds, linens, and bathroom fixtures can significantly enhance perceived value.
Technology: Mobile check-ins, smart TVs, and high-speed Wi-Fi can immediately improve guest satisfaction and booking rates.
Low-ROI Renovations:
Back-of-House Upgrades: These are usually operational and don’t contribute directly to revenue generation.
Niche Design Elements: Overly thematic décor can limit flexibility and alienate certain segments.
Structural Changes: Expensive alterations are often unnecessary unless they’re for safety or compliance.
Even minor upgrades, like a lobby refresh or in-room improvements, can have a disproportionate effect on your RevPAR.
Pro Tip: Before committing to any renovations, ask: “Will this increase guest satisfaction or booking rates?” Focus on performance-driven changes, not perfection.
3. Monetize Ancillary Revenue
In today’s unpredictable market, diversified revenue streams are a powerful defense. Leading conversion properties aren’t relying solely on room rates—they’re maximizing every possible touchpoint to boost ancillary income.
This could be as simple as charging for pet fees, offering premium parking options, or creating unique packages in collaboration with local businesses. Wyndham has successfully tapped into these strategies, particularly in budget-friendly markets where guests are willing to pay for added perks.
Upselling is another effective strategy. Offering services like early check-ins, premium Wi-Fi, or late check-outs can generate significant revenue without additional operational strain.
Pro Tip: Think beyond room revenue. Identify opportunities to monetize each part of the guest journey, from booking to check-out, while staying aligned with your brand promise.
Hotel conversions are no longer just a fallback—they’re the growth opportunity for the next market cycle. With construction costs high, financing tight, and major brands aggressively pursuing re-flags, the time to act is now.
Owners who succeed in 2025 will:
Choose a brand that matches the local demand profile
Renovate with a focus on ROI, not just aesthetics
Unlock new revenue streams through smart upselling and ancillary services
Biometric technology, such as facial recognition, is reshaping airport experiences, offering seamless and secure passenger authentication. Intelligent technologies like smart locks and beds further enhance guest comfort and convenience.
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