A Tighter Focus: Budget and Limited Service Hotels Now Form the Dominant Sector for Hotel Investment across Europe
Hotel developers, owners and operators are still trying to recover from the economic trough in hotel performance while also focusing on an appropriate strategy in terms of brand, product, deal structure and location to be well positioned for the recovery.
Whereas the development of midscale and upscale hotels usually carries a significant amount of development risk, owing to the duration and complexity of the development process, the new breed of budget hotels offers (relatively) very efficient development that is clear-cut, cost-effective and quick. This allows developers to reduce development risk and for the hotel/brand to become established in the market quicker.
According to Davis Langdon, the possibility to apply off-site modular methods of construction and to make use of previously unviable or converted development space has also brought renewed attention to the budget hotel sector. Generally, modular methods of constructio