:max_bytes(150000):strip_icc()/GettyImages-1214317367-a47f4a531d274f8da1e9519378eb9a48.jpg "The Million Hotel-Branded Rooms You Can Live in Forever—If You Can Afford Them")
Key Takeaways
- The number of “branded residential” properties is expected to nearly double in the next five years as hotel operators expand their footprints in a resilient luxury market.
- Ultra-high net worth consumers have “separated” from the wider economy, according to one hotel executive, who said last year that many branded properties “don’t make economic sense.”
Living in a luxury hotel has been a mainstay of childhood dreams for decades. Today, it’s increasingly a reality—for superrich adults.
“Branded residential” housing, which involves a luxury brand licensing its name to a property developer, is one of the hospitality industry’s fastest-growing businesses. The market grew twice as fast as the global hospitality and real estate markets in the past decade, according to real estate advisor Savills, with the number of properties nearly tripling.
What can customers buy? The 17 units at Rosewood Hotels’ Rosewood Residences Beverly Hills in Los Angeles range from 3,000 to 7,000 square feet and feature private terraces, chefs’ kitchens, and underfloor-heated bathrooms, each with “a striking, hand-finished cast iron soaking tub.” Units starting at about $10 million offer access to a 50-foot rooftop pool and spa, and personal training at an on-site fitness center.
Hotel operators, which have long been in the branded residence market, are ramping up their businesses to meet demand. With nearly 850 projects in the pipeline, the number of branded properties is expected to almost double in the next five years, Savills said. Marriott International (MAR) signed a record 55 residential deals last year, up 50% from 2024. The company ended the year with nearly 150 branded properties and another 175 in its pipeline.
Why This Is Important
The wealth of America’s richest has ballooned in recent years thanks in part to a strong post-pandemic stock market. Companies in the travel and hospitality industries, where demand for luxury experiences has been particularly strong, are investing heavily in high-end offerings to capitalize on the wealthy consumer’s resilience.
“In terms of branded residential, I would say we’re in our infancy,” said InterContinental Hotel Group (IHG) CEO Eli Maalouf at a conference in December. He estimated the company’s $10 million in annual residential licensing revenue will grow “at a significant rate” thanks to high demand for brands like Six Senses and Regent.
Maalouf in September, explained why chasing the “arm” of the K-shaped economy is a no-brainer for developers and hotel operators alike.
“They’re selling branded residential at $5 million to $20 million for apartments, and for people that are going to use them once or two weeks a year,” said Maalouf of a conversation he had with a property developer. “It doesn’t make economic sense,” he added, but “that ultra-high net worth [group] has really separated itself. Markets could be down 20%. They won’t be happy. It ain’t going to change their spending habits.”
High-income consumers have been the hotel industry’s saving grace in recent years. Demand for luxury experiences has remained strong while middle- and lower-income consumers, pinched by inflation and an uncertain job market, have cut back their discretionary spending.
Hilton Worldwide Holdings (HLT) on Wednesday said luxury brands accounted for 30% of total property openings in the fourth quarter of last year. Marriott on Tuesday said luxury was its fastest-growing segment last year.
The resilience of luxury travel is one facet of what economists are calling the “K-shaped recovery,” a reference to the shape of the graph comparing high-earners’ soaring wealth and lower-earners’ dwindling inflation-adjusted incomes.
