Research article

Chain scale composition

Non-luxury schemes are growing their market share in an increasingly diverse market

Just as the locations of branded residences are diversifying, so too is the level of offering by chain scale. The branded residential sector has historically been, and remains, dominated by luxury brands. Luxury hotelier brands (as classified by STR chain scales) account for 60% of complete schemes, though this percentage is shrinking.

Non-luxury schemes now make up 42% of the pipeline for branded residential developments. Many of these lower chain scale properties are located in emerging markets such as Thailand and Vietnam (each with seven such schemes in the pipeline).

Upper-upscale and other non-luxury brands present a particular opportunity in emerging markets, with lower entry costs and hence less risk than luxury brands, allowing branded residences to reach new demand bases.

Other locations including South Korea, the United States, the UAE, and Malaysia each have multiple non-luxury schemes in the pipeline for the forecast period.

Further down the chain scales, upscale, upper-midscale and midscale are converging at a significantly smaller proportion of the number of branded residences when both the pipeline and current supply are considered. This diversification has the added potential to bring new buyers into the space.

Upper-upscale: growth segment

The fastest-growing chain scale by pipeline is upper-upscale, with 82 schemes under development over the forecast period, which is set to add over 16,000 residences to global supply. Vietnam and Mexico lead this pipeline with 11 upper-upscale schemes each. The United States, the UAE, and Egypt follow, each with five or more upper-upscale properties in development.

Westin and Hilton are the fastest-growing brands for upper-upscale schemes, adding 13 and 10 schemes over the forecast period, respectively, and adding a combined 3,800 residences. Marriott comes third with five properties, adding 545 residences in their pipeline for upper-upscale developments.

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