Choice Hotels International and Wyndham are both expecting to see a pick-up in conversion opportunities in the months ahead thanks to the difficult trading environment forcing independents to seek shelter under a brand.
And the tough financing conditions which have radically slowed development opportunities has greatly increased the importance of conversions to growing the systems at both companies.
Choice said that applications had increased 15% in the second quarter, although it stressed that not all of these would become franchisees.
For new build opportunities, however, there was a decline of 80%. And this decline is unlikely to reverse soon, believes Choice, as when capital comes back to the hotel business it is likely to be focused on existing assets rather than development.
Steve Joyce, Choice CEO, said he expected the action to remain in conversions for at least the next two years. Acquisitions were a possibility – Joyce is keen to add a full-service upscale brand – but they would have to fit Choice's pure-play franchising model.
At Wyndham, despite the increased opportunity with conversions, room growth is likely to come in at the bottom of the 3% to 6% range forecast for the year. This is primarily due to hotel openings taking longer than anticipated.