Midscale Tier is a Hot Hotel Growth Sector

Midscale hotels—often categorized as 140 rooms or less—used to be referred to as limited-service hotels. Several major hotel chains are betting on the lower cost and speed of building midscale franchises and enhancing them, making midscale one of the hottest growth tiers in the hospitality sector.

Marriott, which entered the midscale segment last year with its StudioRes extended-stay brand, is preparing to launch a second midscale brand.

In January, Marriott broke ground on its first StudioRes hotel in Fort Myers, FL, which was developed by Concord Hospitality. In an earnings call earlier this month, Marriott CEO Anthony Capuano said the company has more than 300 potential StudioRes deals under discussion in nearly 150 U.S. markets.

“The ability to get midscale deals signed, financed, shovels in the ground and open more quickly than what we’ve seen with a lot of other tiers in our portfolio is another factor in our enthusiasm for our entry into the tier,” Capuano said during the call.

StudioRes is designed to attract owners and developers as Marriott’s most affordable cost-per-room product to build. “The cost of developing midscale will help [our] partners navigate what is still a challenging financing environment,” Capuano said.

The difficulty of securing construction financing in the current lending environment also has many hotel developers and owners turning to midscale conversions as a less-costly and faster way of growing their portfolios.

In December, IHG Hotels & Resorts opened the first location of its new full-service midscale brand, Garner, in Auburn, WA, a Seattle suburb, three months after it announced the new conversion brand.

IHG expects to open more than 500 Garner hotels during the next 10 years, according to a report in Hotel Dive.

B&B Hotels, a European midscale brand, has entered the U.S. market with the opening of a 218-room hotel near the Universal Studios theme park in Orlando.

B&B is planning hotels in Miami and Jacksonville. The French firm is aiming to grow its portfolio of more than 770 hotels into 3,000 in the next 10 years.

Marriott added about 81,300 rooms globally in 2023, with net rooms for the full year up 4.7% YOY, Capuano said during the earnings call. Marriott’s development pipeline encompasses 3,400 properties, or about 573,000 rooms.