UNLOCKING VALUE

THE RELIABILITY OF ECONOMY AND MIDSCALE HOTELS CANNOT BE UNDERESTIMATED, WITH THESE SEGMENTS CONTINUING TO ATTRACT NEW INVESTORS.

ACCOR

Brett Forer, Vice President Development Pacific

Midscale and economy hotels continue to thrive across both city and regional markets, offering the ideal mix of quality, affordability and local flavour. With an expanding global middle class and a strong appetite for travel, it’s no surprise these segments remain a firm favourite with guests, and a smart investment for owners.

At Accor, we’re proud to lead this space with iconic brands like Novotel, Mercure and Ibis, which continue to attract strong owner interest. These hotels meet the needs of both leisure and business travellers, delivering consistent, welcoming stays with a sense of place. Mantra also continues to perform strongly. As Australia’s largest hotel brand, with 75 properties nationwide, Mantra offers everything from inner-city hotels to spacious self-contained apartments in popular holiday spots. Mantra Melbourne Epping, just 15 minutes from Melbourne Airport and boasting state-of-the-art facilities, is a standout and perfectly suited to both short and long stays.

Looking ahead, Tribe Auckland Fort Street is set to open in September. A design-led brand born in Perth, Tribe is now making waves internationally with openings in Paris, London, Amsterdam and Bali. With 60 rooms, the Auckland hotel will be the first Tribe in New Zealand – bringing bold design and artful public spaces to the heart of the city.

Accor’s pipeline also includes Novotel Sydney Cabramatta, opening later this year in a high-growth corridor of Sydney’s southwest, and Mercure Melbourne La Trobe Street, an 18-storey new build set to open in 2026.

These properties highlight the enduring appeal of Accor’s midscale and economy brands, which offer both versatility for owners and high recognition among guests. As travel patterns continue to evolve, these properties are well placed to meet the needs of modern travellers.

CHOICE HOTELS ASIA-PAC

Trent Conroy, Head of Investments & Portfolio Growth

Australia’s regional economy and midscale hotel sectors are gaining traction, continuing to demonstrate operational resilience and growing investor appeal.

Commercial real estate and investment firm CBRE confirms this momentum, with the 2025 Hotel Outlook from February 2025 reporting national occupancy at 71%, RevPAR up 3.8%, and ADR holding steady. While capital cities continue their recovery, regional destinations are thriving, driven by robust domestic leisure demand and a growing preference towards accessible, value-led stays outside metro centres.

Dedicated regional accommodation funds are emerging, focused on building diversified portfolios across key regional growth corridors. New entrants to the sector are also driving demand, many of whom have franchising backgrounds in adjacent industries such as fuel and food retailing. These commercially minded operators understand the value of partnering with the right brand to support long-term success.

For owners and operators, Choice Hotels delivers the systems, support, and scale needed to thrive in regional markets. Our local team provides tailored advice and development pathways designed to meet owners where they are, whether they’re first-time entrants or seasoned multi-asset investors.

As the appetite for freehold and leasehold assets in the economy and midscale segments intensifies, demand is often outpacing supply. Real estate brokers report that some listings receive a high volume of enquiries on the day they hit the market, and we’ve witnessed high-quality assets sell in very short timeframes. In this competitive environment, the Choice development team is boosting resources to help our owners and operators secure assets, both on-market and off-market.

With the known constraints on new supply, investors are increasingly turning to conversions and refurbishments to create value. A recent example is the Alluna Motel in Armidale, New South Wales, acquired as an economy motel-style property. The owner has closed the business for renovations and will soon relaunch as a contemporary spa and health retreat under our Ascend Collection brand.

As a market leader in regional accommodation, Choice Hotels remains committed to growing this segment. We continue to welcome new and experienced owners into our network, backed by a team of local experts, dedicated to helping support strong financial performance and long-term capital returns.

EVT

Norman Arundel, Director of Hotels & Resorts Operations

One of the early pioneers of the Australian hotel business – who’ll remain nameless because I can’t quite vouch for the accuracy – was rumoured to have said: “I own 3-star hotels so I can afford to stay in 5-star ones… not the other way around.”

True or not, the point lands: the economy and midscale sectors deliver some of the smartest investment dynamics in the business.

Of course, like all segments, this market is evolving. But the fundamentals haven’t changed – strong locations and a simple, consistent value proposition still win.

EVT’s been in this space for years. Our Independent Collection – hotels like The Victoria, The Pensione in Perth and Hotel Motel in Adelaide – proves that well-run, well-positioned assets can punch well above their weight with guests and investors alike.

Now, with Lylo, we’re shifting things up. It’s turning the economy sector on its head – using the buzz of a lifestyle hotel with the accessibility of a hostel. Pods, ensuite rooms, private rooms, all tied together with smart communal spaces, customer led experiences and tech-led service. The result? Social accommodation that’s drawing in guests who’d never have looked twice at a traditional economy hotel.

For EVT, this isn’t just a side business segment. Economy hotels are a core part of our strategy. We’re committed – improving what we’ve got, expanding where it makes sense, and using Lylo to push the boundaries of what this category can be.

Because with economy hotels, value isn’t about being the cheapest, it’s about being the smartest, and that applies to hotel owners and guests alike.

IHG HOTELS AND RESORTS

Cameron Burke, Director of Development, Australasia Pacific

The midscale hotel market across Australia and New Zealand is undergoing a meaningful evolution, driven by rising demand for quality, value-led experiences and a growing appetite for branded consistency amongst travellers.

At IHG we are proud to be leading this evolution through relentless focus on delivering globally trusted, high-performing brands. Through this lens, our trusted Holiday Inn brand family and newly introduced Garner brand are well positioned to capitalise on this demand and deliver compelling returns for our owners.

With increasing investor interest in regional markets driven by lower barriers to entry, we are seeing strong momentum in the repositioning of independent hotels to unlock latent value. A great example of this is the recently announced signing of Holiday Inn Townsville, which will see the 93-key Madison Plaza undergo a complete transformation and re-open in 2026. Conversions such as this enhance the asset’s value by driving stronger commercial outcomes, which is underpinned by the strength of IHG’s global distribution including our powerful One Rewards loyalty programme.

IHG’s newest midscale brand, Garner, is purpose-built for conversions and offers a streamlined entry path for owners and immediate access to the strength of IHG’s enterprise. With a focus on regional Australia, Garner is set capture the increasing demand for globally affiliated midscale accommodation in underserviced markets.

IHG’s midscale growth also extends to key CBD locations, with Holiday Inn Melbourne Bourke Street Mall set to open in August. We’re also looking forward to construction commencing on Holiday Inn and Suites Caloundra in 2026, in what is set to become the Sunshine Coast’s leading family-friendly hotel.

After a busy start to the year, we’re excited about the momentum IHG is building across the region and look forward to sharing more news on upcoming signings as we continue to expand our midscale presence throughout Australasia.

TFE Hotels

John Sutcliffe, Director of Development

The midscale segment continues to benefit from steady demand from domestic and international travellers seeking value from quality accommodation at an affordable price point. Despite this lower price point, guest expectations remain high in terms of service, amenity, location, and comfort.

TFE Hotels’ midscale Travelodge brand aligns with the current market demands of these value-driven travellers, with a focus on more of what guests want, and less of the things they don’t. Guests at Travelodge enjoy our focus on comfort, with our hand-picked comfy beds, later check-outs as standard, rooms with kitchenettes and substantial breakfasts. Excitingly, these hotels are ideally located in prime CBD locations in Australia and New Zealand’s top cities from Auckland’s Wynyard Quarter to Hobart’s Salamanca Place.

It’s important to note that impeccable service, well designed rooms, and exceptional local amenities are not reserved for high-end hotels, with these being an expectation of guests in all hotels, irrespective of price. Our Travelodge Hotel Hurstville is the perfect example of how this brand meets these expectations and more, with design studio Chada providing a design-led focus in the rooms and creating a soothing environment within which to relax. In-site cafes and bars round out the experience, meeting any F&B needs.

TFE Hotels’ continued focus on systems further enhances guest experience, with one profile of each guest across our global portfolio - ensuring that those returning to a TFE hotel arrive expected, with any special requirements in place upon their arrival. This focus on guest experience is coupled with TFE’s operating model, where owners receive strong returns, which has led to renewed long-term agreements in our Travelodge portfolio, as well as significant interest in new hotels for this brand in both CBD and fringe locations. We remain very excited about the future of this much-loved midscale brand.

Marriott International

Richard Crawford, Vice President Hotel Development Australia, New Zealand, and Pacific

As the world’s largest hotel company, Marriott International manages and franchises hotels across all tiers of accommodation. In recent times, however, we have increased our focus on the midscale segment, as part of our global strategy to offer more choice to our loyal customers.

In addition to our desire to cater to even more consumers, the hotel investment community is increasingly attracted to the ‘developer-friendly’ attributes of midscale hotels, which are characterized by smaller rooms and fewer facilities. In a high-cost construction environment, accentuated by escalating land prices, midscale hotels with small footprints and limited gross floor area can be game-changing ingredients to the viability of new-build hotel projects.

For Marriott International, the midscale segment is an exciting new territory for our company, which commenced with our acquisition of the City Express portfolio, comprising 152 hotels, in late 2022. This advancement grew Marriott to be the largest hotel company in Latin America and provided a platform for us to take our first midscale brand to other global markets.

More recently, we launched the midscale Four Points Flex by Sheraton, plus Series by Marriott, a midscale collection brand that will allow independent brands to retain their local identity while benefiting from the full power of Marriott’s global sales, marketing, distribution, and loyalty programs. Series by Marriott and Four Points Flex by Sheraton will be central to our focus on securing more conversions of existing hotels, particularly in tier two and tertiary markets across Australia.

These new brands will complement our flagship upper-midscale brands, Moxy and Fairfield by Marriott, which now number more than 140 and 1,200 global hotels respectively. In the Australia Pacific region, Moxy Sydney Airport has already opened, and will be followed by new-build Moxy hotels in Sydney CBD, Auckland and Queenstown. And in the coming months, we will announce the first Fairfield by Marriott in Australia.

The trend towards midscale brands speaks to the ‘less is more’ appetite of travellers and hotel owners alike, whose respective needs are changing the face of hotel development, at a time when more than ever, ingenuity and adaptability will be the keys to hotel investment success.