IHG, Marriott, Hyatt Bet on Conversions as Midscale Gets Pricier

IHG, Marriott International, and Hyatt are expanding in midscale, but they are not relying mainly on new construction.

Instead, they are focusing on conversions, which means taking an existing hotel and rebranding it under one of their flags.

Midscale economics are making new hotel projects harder to justify

The pressure comes from basic hotel economics. Land is expensive, construction costs remain high, and borrowing has become more difficult. Those challenges affect the whole sector, but they are especially difficult for midscale brands.

Midscale hotels compete on value, so they usually cannot charge the room rates that upscale or luxury hotels can. That gives them less room to absorb rising development costs. Converting an existing hotel often makes more financial sense than starting a completely new project.

IHG is already showing how fast this model can scale

IHG has long been strong in midscale through Holiday Inn and Holiday Inn Express. Now, it is using Garner to show how quickly a conversion-focused brand can grow.

Garner launched in 2023 and reached 100 open hotels worldwide by 2026. IHG said this made it the fastest brand in the company’s history to scale globally. The company also said conversions accounted for 52 percent of its room openings in 2025, showing how central this model has become to its expansion strategy.

Marriott and Hyatt are chasing the same opportunity

Marriott is still earlier in its midscale push, but it is moving deeper into the segment through City Express by Marriott, Four Points Flex by Sheraton, StudioRes, and Series by Marriott. The company sees this as a way to fill an important gap in markets where it has traditionally been stronger in upscale and luxury.

Hyatt is taking a similar path in upper-midscale with Hyatt Studios, UrCove by Hyatt, and Hyatt Select. Its first Hyatt Select deal in Europe, the 140-room Hyatt Select Berlin Prenzlauer Berg, is expected to open in 2028. Hyatt says the brand works well for franchise partners because conversion costs are lower than for many of its other brands.

Asset-light growth is spreading beyond Western hotel groups

Large hotel groups are not the only ones leaning toward lower-capital growth models. The same broader logic was visible in H World’s 2025 results, where managed and franchised hotels became a bigger driver of expansion and profit improvement.

That trend matters here because it shows how major operators are increasingly choosing scale through lighter, faster, and less capital-heavy models rather than relying only on new construction.

Photo by runnyrem on Unsplash